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GLOBAL FORUM ON TRANSPARENCY AND EXCHANGE OF INFORMATION FOR TAX PURPOSES

Peer Review Report Phase 2 Implementation of the Standard in Practice


BELGIUM

TABLE OF CONTENTS 3

Table of Contents

About the Global Forum  5 Executive Summary  7 Introduction11 Overview of Belgium  12 Overview of the financial sector and the relevant professions 15 Compliance with the Standards17 A. Availability of Information17 Overview17 A.1. Ownership and identity information 19 A.2. Accounting records 45 A.3. Banking information 49 B. Access to Information  55 Overview 55 B.1. Competent Authoritys ability to obtain and provide information  56 B.2. Notification requirements and rights and safeguards 70 C. Exchanging Information 71 Overview 71 C.1. Information exchange mechanisms 72 C.2. Exchange-of-information mechanisms with all relevant partners  79 C.3. Confidentiality 82 C.4. Rights and safeguards of taxpayers and third parties 84 C.5. Timeliness of responses to requests for information 84 Summary of Determinations and Factors Underlying Recommendations 93

PEER REVIEW REPORT PHASE 2 BELGIUM OECD 2013

4 TABLE OF CONTENTS Annex 1: Jurisdictions Response totheSupplementaryReport 97 Annex 2: List of All Exchange of Information Mechanisms inForce  99 Annex3:  List of Agreements Signed by Belgium that Still Need to be Ratified to Allow for EOI to the Standard103 Annex 4: List of All Laws, Regulations and Other Documents Received 104

PEER REVIEW REPORT PHASE 2 BELGIUM OECD 2013

ABOUT THE GLOBAL FORUM 5

About the Global Forum


The Global Forum on Transparency and Exchange of Information for Tax Purposes is the multilateral framework within which work in the area of tax transparency and exchange of information is carried out by over 100 jurisdictions, which participate in the Global Forum on an equal footing. The Global Forum is charged with in-depth monitoring and peer review of the implementation of the international standards of transparency and exchange of information for tax purposes. These standards are primarily reflected in the 2002 OECD Model Agreement on Exchange of Information on Tax Matters and its commentary, and in Article26 of the OECD Model Tax Convention on Income and on Capital and its commentary as updated in 2004. The standards have also been incorporated into the UN Model Tax Convention. The standards provide for international exchange on request of foreseeably relevant information for the administration or enforcement of the domestic tax laws of a requesting party. Fishing expeditions are not authorised but all foreseeably relevant information must be provided, including bank information and information held by fiduciaries, regardless of the existence of a domestic tax interest or the application of a dual criminality standard. All members of the Global Forum, as well as jurisdictions identified by the Global Forum as relevant to its work, are being reviewed. This process is undertaken in two phases. Phase1 reviews assess the quality of a jurisdictions legal and regulatory framework for the exchange of information, while Phase2 reviews look at the practical implementation of that framework. Some Global Forum members are undergoing combined Phase1 and Phase2 reviews. The Global Forum has also put in place a process for supplementary reports to follow-up on recommendations, as well as for the ongoing monitoring of jurisdictions following the conclusion of a review. The ultimate goal is to help jurisdictions to effectively implement the international standards of transparency and exchange of information for tax purposes. All review reports are published once approved by the Global Forum and they thus represent agreed Global Forum reports. For more information on the work of the Global Forum on Transparency and Exchange of Information for Tax Purposes, and for copies of the published review reports, please refer to www.oecd.org/tax/transparency and www.eoi-tax.org.

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EXECUTIVE SUMMARY 7

Executive Summary
1. The present report summarises Belgiums legal and regulatory framework as well as Belgiums practice in relation to transparency and exchange of information for tax purposes. 2. The international standard which is set out in the Global Forums Terms of Reference is concerned with the availability of relevant information within a jurisdiction, the competent authority ability to gain timely access to that information, and in turn, whether that information may be exchanged effectively with its treaty partners. 3. Belgium has a network of exchange of information mechanisms covering 113 jurisdictions, comprising 99 tax treaties and 14information exchange agreements. Belgium is also party to the EU Council Directive on Administrative Cooperation in the Field of Taxation (2011/16/EU), as well as to the joint OECD/Council of Europe Multilateral Convention on Mutual Administrative Assistance in Tax Matters. Belgium signed the protocol amending this convention on 4April 2011. 4. The Belgian Parliament adopted, on 14April 2011 (Moniteur Belge, 6May 2011, 1st edition, p.26576) a law, extending to third parties, the obligation to provide bank information on request of the Belgian tax authorities. The possibility allowed for domestic purposes in case of fraud indications is applicable to all Belgiums treaty partners covered by an agreement providing for exchange of information, under reciprocity. This ensures access to information held by Belgian financial institutions to 83 of Belgiums treaty partners. 5. However, it is also seen that 30 other partners of Belgium cannot yet benefit from the recent changes made to Belgian law because either the agreements concluded with these partners are not in force (21 jurisdictions), or they do not contain any exchange of information mechanisms, or the applicable exchange of information mechanism does not ensure reciprocity (9 jurisdictions). Therefore, it is recommended that Belgium continue its efforts to ensure the ratification and updating of these agreements.

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8 EXECUTIVE SUMMARY
6. Given the registration requirements for companies as well as tax requirements, the availability of information regarding ownership of companies and partnerships is very generally ensured in Belgium. Generally, the identity of shareholders in public limited companies and partnerships limited by shares is known. The 14December 2005 law eliminated bearer shares and established mechanisms which aim, on the one hand, to remove the possibility of issuing such shares and on the other, to transform these shares into registered or electronic shares whereby the identity of the holder is known. The conversion of bearer shares of listed companies was accomplished by 1January 2008. For other companies, this conversion will be completed by 31December 2013. The Belgian government enacted, at the end of 2011, a new law to accelerate the conversion of bearer shares not yet converted. As a result of these new provisions many shareholders have already asked for the conversion of such shares. In the period from January 2012 to August 2012, 150million bearer shares were converted to registered shares. Belgian authorities have mentioned that as of 31December 2012, approximately three to four percent of bearer shares have not yet been converted. 7. The Belgian legislation ensures the availability of accounting information. In effect, the legal obligations apply to entities subject to corporate income tax or legal entities income tax1 as well as all other entities whose purpose is commercial. Information held by banks or financial institutions is available given the anti-money laundering legislation. In practice, information legally required to be maintained is kept and made available to the Belgian authorities on request. This has been confirmed by the comments received from Belgiums EOI partners. 8. Belgiums exchange of information responsibilities lie with the central liaison office for direct taxes (hereinafter DLO) which is part of the Service Public Federal Finances, and is the competent authority and central point of contact for Belgiums treaty partners requesting information. To access information for EOI purposes, Belgiums tax authorities can rely on the wide range of information directly available in their databases. In most cases, incoming requests are referred to local tax offices who will answer incoming requests either by using information directly available to tax authorities or by obtaining the information from the person concerned or third parties. Belgium also exchanges information spontaneously and automatically with an increasing number of partners. 9. Since 2009, Belgium has reorganised the structures and processes in the EOI division to improve the quality and timeliness of responses provided

1.

A legal entity not subject to corporate income tax is subject to an income tax called legal entities income tax (in the case of foundations for instance).

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EXECUTIVE SUMMARY 9

to its partners. For the period 2009-11, Belgium has received 646 EOI requests from 29 different partners. 10. While being in a position to answer only 23% of its incoming requests in 90 days in 2009, Belgium was able to do so in 35% of the cases in 2011. New staff has been hired and the EOI division closely monitors incoming requests and ensures better support to the local tax offices involved in the EOI process. In addition, Belgium is currently implementing a system of providing status updates when it is not in a position to answer incoming requests within 90 days. Nevertheless, several peers reported that Belgium has not been able in all instances to provide either an answer in 90 days or an update of status when a reply within this timeframe was not possible. It is recommended that Belgium continues to improve its practices in this area. 11. The Belgian administration has access to all types of information and is in a position to use its domestic information-gathering powers for the exchange of information. The Belgian authorities have access to this information within the three-year time limit on tax assessment in Belgium. Access to information during a seven-year period must be justified to the Belgian taxpayer concerned by the request. In the international exchange of information, Belgium interprets this legislation as allowing it to access information during the seven-year period if the requesting party provides reasons to justify access for a period greater than three years. Tax avoidance is sufficient to justify an access to information for a seven year period. As a result of the practices of Belgiums authorities, access to information for seven year is always possible. Consequently, Belgium is fully able to access information as provided by the international standard. 12. Comments received from Belgiums treaty partners indicate that Belgium is fully committed to the international standard of transparency and exchange of information for tax purposes and that it is an important and valued partner, even more since 2011 when it started to exchange bank information. 13. A follow up report on the steps undertaken by Belgium to answer the recommendations made in this report should be provided to the PRG within twelve months after the adoption of this report.

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INTRODUCTION 11

Introduction
14. The assessment of Belgiums legal and regulatory framework and the practical implementation and effectiveness of this framework were based on the international standard for transparency and exchange of information as described in the Global Forums Terms of Reference and were prepared using the Global Forums Methodology for Peer and Non-Member Reviews. The following assessment is based on the laws, regulations and information exchange mechanisms in force or effective as at the end of January 2013, other information, explanations and material provided by Belgium and information provided by treaty partners of Belgium. During the on-site visit, the assessment team met with officials and representatives of the relevant Belgian government agencies, including the Service Public Fdral Finances (SPF Finances), registration and anti-money laundering authorities as well as representatives of notaries, lawyers and accountants. 15. The following analysis reflects the 2011, supplementary 2011 and the 2013 assessments of the legal and regulatory framework of Belgium and the practical implementation and effectiveness of this framework in the threeyear review period of January 2009 to December 2011. 16. The Terms of Reference break down the standards of transparency and exchange of information into 10 essential elements and 31 enumerated aspects under three broad categories: (A)availability of information; (B)access to information; and (C)exchanging information. This report summarises the legal and regulatory framework for transparency and exchange of information in Belgium as well as the practical implementation of that framework. In respect of each essential element a determination is made that either (i)the element is in place, (ii)the element is in place but certain aspects of the legal implementation of the element need improvement, or (iii)the element is not in place. These determinations are accompanied by recommendations as to how some aspects of the Belgian system might be strengthened. As outlined in the Note on Assessment Criteria, following a jurisdictions Phase2 review, a rating will be applied to each of the essential elements to reflect the overall position of a jurisdiction. However, this rating will only be published at such time as a representative subset of Phase2 review is

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12 INTRODUCTION
completed. This report therefore includes recommendations in respect of Belgiums legal and regulatory framework and the actual implementation of the essential elements, as well as a determination on the legal and regulatory framework, but it does not include a rating of the elements (see Summary of Determinations and Factors Underlying Recommendations at the end of this report). 17. The original and supplementary Phase1 assessments were conducted by a team consisting of two assessors and one representative of the Global Forum Secretariat: Shauna Pittman, Counsel, Canada Revenue Agency; Rajesh Sharma Ramloll, Assistant Solicitor General at the Attorney Generals Office in Mauritius; Rmi Verneau for the Global Forum Secretariat. The team evaluated Belgiums legal and regulatory framework for transparency and exchange of information and its relevant information exchange mechanisms. 18. The Phase2 assessment was conducted by a team consisting of two assessors and two representatives of the Global Forum Secretariat: Manon Hlie, Manager, Exchange of Information Services Section of the Canadian Revenue Agency; Rajesh Sharma Ramloll, Assistant Solicitor General at the Attorney Generals Office in Mauritius; Mlanie Robert and Rmi Verneau for the Global Forum Secretariat. The team evaluated the implementation and effectiveness of Belgiums legal and regulatory framework for transparency and exchange of information and its relevant information exchange mechanisms.

Overview of Belgium
19. A small state in Western Europe in terms of its area (30000 km), Belgium has a total population of 11million, making it one of the most densely populated European states with 360 inhabitants/km. Directly facing the North Sea, Belgium shares common borders with France, Luxemburg, Germany and the Netherlands. 20. Belgium is a highly developed country, in particular because of its maritime access and EU membership. In spite of its size, it was the 23th global economy in 2011 with a GDP of EUR355billion and a per capita GDP of EUR32000. The Belgian economy is mainly centred on the services industry which employs 75% of the working population. Industry accounts for almost a quarter of all jobs, and agriculture less than 1%. Exports and imports account for 80% of the Belgian GDP. Belgiums main economic partners are Germany, France, the Netherlands, the United Kingdom and the United States.

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INTRODUCTION 13

21. Belgium is a founding member of the EU and the Economic and Monetary Union of countries forming the euro area. Its capital, Brussels, is also the headquarters of the European Commission and most EU administrative authorities. In addition, Belgium is a founding member of the OECD and the UN, as well as NATO, which is headquartered in Brussels. It is also a member of other international organisations such as the IMF and the WTO. As a member of the OECD, Belgium takes part in the Global Forum.

General information on the legal and tax system Legal system


22. Belgium (or the Kingdom of Belgium) is a constitutional parliamentary monarchy. Since 1994, it has been a federal state consisting of three regions (the Brussels Capital Region, the Flemish Region and the Walloon Region) and three communities (Flemish, French and German-speaking). The regions are divided into 10 provinces and 589 municipalities. The official languages are Dutch, French and German. 23. At the federal level, the legislature consists of the Chamber of Representatives and the Senate, both elected for four years. The executive consists of the King as Head of State and the government led by the prime minister. The executive runs those aspects of the country which are the responsibility of the federal government under the Constitution. This applies to matters in the financial sphere. 24. The Belgian legal system is rooted in Roman and Germanic law known as civil law. At the federal level, the 1994 Constitution constitutes the pinnacle of the hierarchy of norms. While the Belgian Constitution does not refer to the position of international treaties in this hierarchy, the primacy of international law over domestic law has been confirmed by the case law of the Belgian Supreme Court of Appeal in so far as the international standard is likely to have a direct impact, or in other words to be sufficiently clear, comprehensive and precise, to generate rights and obligations for private individuals of its own accord. This is the case in so far as the value of a tax treaty in relation to Belgian domestic legislation is concerned.

Tax system
25. The Belgian tax system is based on the Constitution which outlines the dominant principles, namely the legality of taxation and equality vis-vis taxation. The tax system is administered by the SPF Finances which is divided into six administrations: lAdministration Gnrale de la Fiscalit (AGFisc the General Administration of Taxes), lAdministration de la Lutte contre la Fraude (Inspection Spciale des Impts, Administration for

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14 INTRODUCTION
fight against tax fraud hereinafter ISI), lAdministration Gnrale de la Perception et du Recouvrement (the General Administration for the Recovery of Taxes), lAdministration de la Trsorerie (the Administration of Treasury), lAdministration de la Documentation Patrimoniale (The Administration of Real Estate Documentation), and lAdministration des Douanes et Accises (Administration of Customs and Excise). In addition, supporting central services provide administrative services to these six administrations. 26. Natural persons or legal entities resident in Belgium are subject to taxation on world income. All natural persons whose domicile is in Belgium or whose seat of fortune is located in Belgium are regarded as residents. Barring any evidence to establish otherwise, and in simple terms, all natural persons entered in the National Registry2 are residents. All companies with their registered office in Belgium, their principal establishment in Belgium, or whos seat of management or of administration is located in Belgium are considered to be Belgian residents. Meanwhile non-resident natural or legal persons are taxed on their income from Belgian sources. 27. As a member of the European Union, Belgium takes part in the common system of VAT at a standard rate of 21% and a reduced rate of 6%. Professional income of natural persons is taxed at progressive rates of between 25% applicable to the taxable income bracket below EUR8350, and 50% applicable to the taxable income bracket above EUR36300. Income from capital paid to natural persons is taxed at a rate of 25%, or is subject to a rate of 15% or to exemptions. Companies are taxed at a rate of 33.99%, or, in cases in which taxable income does not exceed EUR322500, on progressive rates ranging between 24.25% and 34.5%. 28. In 2010, the total tax revenue in Belgium (including social security contributions) stood at 43.94% of GDP, with VAT representing 16.2% of tax revenue, personal income tax 28.1% and corporate income tax 6.2%. 29. Belgiums tax relations with its neighbours date back a very long time, since the country is party to the worlds oldest tax agreement still in force, namely the 1843 Franco-Belgian convention governing relations between the stamp tax authorities in France and Belgium. Today, Belgiums treaty network covers 113 jurisdictions, 99 of which are covered by double tax treaties and 14 others by tax information exchange agreements. Since March 2009 and its formal commitment to implementing the international standards of transparency, Belgium has signed 42 agreements and protocols
2. The national registry is an IT system the purpose of which is to ensure the registration, storage and communication of information relating to the identification of natural persons. The number in the national registry is also called tax identification number.

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INTRODUCTION 15

complying with the standard, in particular as regards the exchange of banking information, and continues to be active in this area. 30. As an EU member country, Belgium exchanges information in accordance with EU Council Directive on Administrative Cooperation in the Field of Taxation (2011/16/EU) in effect since 1January 2013. Belgium is also party to the joint OECD/Council of Europe Multilateral Convention on Mutual Administrative Assistance in Tax Matters and is a signatory to the protocol of 2010 amending this convention. 31. In the last three years (2009-11), Belgium received a total of 646 requests for information (264 in 2009, 134 in 2010 and 248 in 2011). According to the available figures, in the last three years, Belgium has exchanged information with 29 partners of which the most significant in terms of the number of requests received are France, Germany, Luxembourg and the Netherlands. Since 1July 2011, when the new provisions dealing with access to bank information entered into force, Belgium has received 22 EOI requests in relation to bank information (for the period 1July 2011 to 30June 2012). 32. The Minister of Finance has delegated the role of competent authority for direct taxes to SPF Finances which also represents Belgium in international organisations where issues concerning the exchange of information on tax matters are discussed, whether at EU, OECD or Global Forum levels.

Overview of the financial sector and the relevant professions


33. The Banque Nationale de Belgique (BNB) and the Autorit des Services et Marchs Financiers ( Financial Services and Markets AuthorityFSMA) are the two Belgian authorities responsible for the supervision of most financial institutions and financial services for the public3. Through their activities, they seek to protect savers and insured parties and to ensure the proper operation of markets in financial instruments. 34. Intermediary activities in financial services are the sole preserve of persons or entities registered with the BNB, the FSMA or the similar authority of the home country in the case of those that are established in another state of the European Economic Area. 35. According to the most recent statistics available, there are 53 credit institutions governed by the Belgian law (including 9 branches of credit institutions having their headquarters in foreign countries that are not members
3. Replacing the Commission bancaire, financire et des assurances (CBFA, or the Banking, Finance and Insurance Commission) which was the sole Belgian authority responsible for the supervision of most financial institutions.

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16 INTRODUCTION
of the European Economic Area) and 54 branches of credit institutions subject to the law of another member countries of the EEA that are established in Belgium and are primarily involved in receiving money deposited by the public or other recoverable funds and in granting credit on their own behalf. In addition, 21 investment firms have their registered office in Belgium and 14 branches of investment firms with their registered office elsewhere in the European Economic Area are established in Belgium. 21 portfolio management and investment advice companies, 7 management companies of undertakings for collective investment and 6 branches of such management companies subject to the law of another EEA country provide their services in the country. Finally, 162 collective investment undertakings are administered in Belgium. 36. In Belgium, the above mentioned financial professions as well as the following non-financial professions:casinos(9), dealers in diamonds (over 1800), security companies that provide services of surveillance and protection for transporting valuables(7), real estate agents (over 8800), notaries (over 1400), bailiffs (over 550), barristers (15000), accountants and tax advisers (6500), certified public accountants and tax consultants (almost 10000) are all regarded as constituting non-financial professions and enterprises under anti-money laundering legislation and are required, pursuant to this legislation, to conduct a customer due diligence.

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Compliance with the Standards

A. Availability of Information

Overview
37. Effective exchange of information requires the availability of reliable information. In particular, it requires information on the identity of owners and other stakeholders in an entity or arrangement as well as information on the transactions carried out by entities and other organisational structures. Such information may be kept for tax, regulatory, commercial or other reasons. If such information is not kept or the information is not maintained for a reasonable period of time, a jurisdictions competent authority may not be able to obtain and provide it when requested. This section of the report assesses the adequacy of Belgiums legal and regulatory framework on availability of information. It also assesses the implementation and effectiveness of this framework in practice. 38. Belgium has a sound legal and regulatory framework as regards the obligation to ensure that information concerning the identity of shareholders in companies and partnerships is kept available. All such entities have to provide the registry of the locally competent commercial court with a copy of their articles of incorporation (memorandum of association). An extract of this document is published in the Moniteur belge (Belgiums official journal) and the company concerned is then registered in the Banque Carrefour des Entreprises (BCE) constituting the Belgian register of legal entities. Information concerning the identity of shareholders that has to be disclosed at this point is limited to those jointly and severally liable for the companys debts.

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18 COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION


39. Thanks to other mechanisms, such as the share registers for instance, all information concerning shareholders in companies not listed on a stock exchange, namely socits prives responsabilit limite (SPRLs, or limited liability companies), socits cooprative responsabilit illimite (SCRIs, or cooperative companies with unlimited liability) and socits coopratives responsabilit limite (SCRLs, or cooperative companies with limited liability) is available to the Belgian tax authorities. 40. Information concerning shareholders in socits anonymes (SAs, or public limited companies) and socits en commandite par actions (SCAs, or partnerships limited by shares) is available in most situations. The law of 14December 2005 abolished bearer shares and requires them to be converted into registered or electronic securities4. As of 1January 2008, bearer shares can no longer be issued, and bearer shares in listed companies are abolished. The conversion process for bearer shares in unlisted companies will be completed by 31December2013, at the latest. In the meantime, the Belgian authorities have put mechanisms in place to facilitate this conversion and, in particular, introduced in 2011 a tax on conversion of bearer shares, the rate of which is increased in line with the delay in conversion. This tax has had the effect of encouraging conversions. 41. Information concerning partnerships and persons involved with foundations is available. Where trusts are concerned and even though the Belgian legislation does not provide for the institution of trusts of Belgian law, trusts may be administered from Belgium or assets located in Belgium may be owned by a trust. As a professional, a trustee is required to keep all information needed to determine his/her income, which would include information on the property in the trust, the settlor and the beneficiaries. In addition, the anti-money laundering legislation adopted by Belgium states that service providers must keep records regarding settlors and beneficiaries of trusts. 42. Any entity subject to corporate income tax or legal entities income tax is required to keep a record of accounting data and supporting documents for a seven-year period. This ensures the availability of this information. 43. Banks and financial institutions are required to perform a customer due diligence and to hold records of transactions conducted by their customers for a period of at least five years pursuant to anti-money laundering legislation, and for a period of seven years pursuant to accounting legislation. 44. Information received from jurisdictions with an EOI relationship with Belgium, as well as information received from Belgium, shows that Belgium
4. An electronic security is a security registered on an account with a clearing organisation (Euroclear Belgium or the National Bank of Belgium) or a recognised account holder (e.g.credit institutions)

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now actively exchanges bank, ownership and identity information and accounting records. Based on peer inputs, it is clear that Belgiums competent authority is able to provide such information for all types of legal entities and arrangements and that it is able to provide bank information since 2011.

A.1. Ownership and identity information


Jurisdictions should ensure that ownership and identity information for all relevant entities and arrangements is available to their competent authorities.

Companies (ToRA.1.1)
45. Five kinds of companies may be established in Belgium: The SA (public limited company) Company Code Book IV and Book VIII is a company consisting of at least two shareholders, with a capital of at least EUR61500. The SA has to be incorporated by notarial deed. In Belgium, the SA is above all the form of company preferred by large enterprises, but it is also chosen by small and medium enterprises given that, except in certain specific situations, their securities are readily transferable, which is not the case with other kinds of companies that can be set up in Belgium. 121900 companies in Belgium are public limited companies5. The SE (European Company) European companies are regulated by Council Regulation (EC) No 2157/2001 of 8October 2001 on the Statute for a European company (SE), which was transposed into Belgian law by Royal Decree of 1September 2004, allowing for the creation and management of companies with a European dimension, and not strictly falling under the territorial scope of the domestic companies legislation in force in the country where they have been incorporated. Pursuant to article10 of the EU Regulation, the laws that apply to SEs are those that apply to public limited companies (SAs). Accordingly, the laws that apply to Belgian SAs apply in the same conditions to SEs. There are 11 SEs in Belgium. The SCA (partnership limited by shares) Company Code Book IV, Book VIII and Book IX is formed between one or several partners who are jointly and severally liable (the active partners), and one or more limited shareholders whose responsibility is limited to the amount of their contributions (the limited-liability or dormant partners). The SCA consists of at least two shareholders, one of whom must be active and the other a limited (or dormant) partner. Shares are freely negotiable. With a minimum capital of EUR61500, the SCA must be formed by notarial deed. This type
5. Statistics from 2011, source: Federal Public Service Economy

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20 COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION


of company is rarely used. 2574 partnerships have been created in the form of a partnership limited by shares (SCA). The SPRL (limited liability company) Company Code Book IV and Book VI is formed by one or several persons whose responsibility is limited to the level of their contributions.The SPRL is the only Belgian law company that can be established by one person alone. The shares issued by the company are mandatorily registered shares that are only transferable under certain circumstances. Its share capitalmust be fully subscribed when the company is formed and amount to at least EUR18550. The articles of incorporation have to be drafted by notarial deed. There are 320200 SPRLs in Belgium. The SCRI (cooperative company with unlimited liability) Company Code Book IV and Book VII consists of at least three partners. No minimum capital is required to create it. It may be incorporated by notarial deed but incorporation by private deed is also accepted. 6200 Belgian companies take the form of SCRI. The SCRL (cooperative company with limited liability) Company Code Book IV and Book VII consists of partners, whose number and contributions may vary. The SCRL must be formed by at least three persons. It must be incorporated by notarial deed. Over 10400 Belgian companies take this form.

Publicity and registration formalities


46. In Belgium, SAs, SCAs, SCRLs and SPRLs have to be incorporated by notarial deed (i.e.one drafted by a notary). SCRIs, on the other hand, may be set up by private deed. However, irrespective of the deed and in compliance with article67 of the Company Code, a copy of the deed of incorporation, together with an extract of the deed, have to be deposited at the registry of the local commercial court competent for the place where the company has its registered office within 15 days following its incorporation (article68 of the Company Code). 47. Article69 of the Company Code stipulates that the extract of the deed of incorporation should include the following information: the form of the company and its corporate name; the precise address of its registered office; the length of time the company will be in existence where this is not unlimited; the precise identity of its jointly and severally liable partners, its founders and partners who have yet to pay up their contribution; in the latter case, the extract specifies the amount due from each partner;

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the amount of share capital; the amount of paid-up capital; the amount of authorised capital; the way in which the share capital or, otherwise, the partnership fund is formed and, where applicable, the findings of the report of the company auditor concerning contributions in kind; the identity of the persons authorised to administer the company and make binding commitments on its behalf, the extent of their powers and how they are to be exercised, whether action is taken singlehandedly, jointly or in groups; the detailed description of each contribution, the name of the contributor, the name of the company auditor, and the conclusions of his or her report, the number and nominal value of the shares, or in the event of no nominal value, the number of shares issued in return for each contribution, as well as where applicable the other conditions attached to the contribution.

48. In order to comply with the applicable Anti-Money Laundering (AML) and Counter Terrorism Financing (CTF) obligations (see more details below) on creation of a company (SAs, SCAs or SPRLs), the notary drafting the articles of incorporation must verify the identity of the founders and all the persons legally owning the shares of the new company (articles7 and 8 of the law of 11January 1993). In addition, notaries are required by law to deposit, within 15 days of incorporation, the deed of incorporation to the registry of the local commercial court (article68 of the Company Code). 49. La Chambre nationale des notaires (the National Chamber of notaries), the regulatory authority for the notaries (together with the 11 Chambres provinciales des notaires, the Provincial Chambers of notaries), has confirmed that these obligations are well respected in practice by notaries and are monitored by way of regular audits performed every three years by the supervisory authority. Registration authorities also confirmed that the timelines for registration are respected. This is mainly the combined result of the need to use in almost all instances, notary services to set up a company and the fact that an entity cannot start its activity without being registered. 50. When receiving a deed of incorporation, the registry of the local commercial court also verifies the basic elements of the information provided (name, type of legal entity, head office, signature). For legal entities that are not incorporated by notaries, the registry confirmed that, in practice, the private deeds of incorporation are also generally submitted on time as a legal entity cannot be established and undertake its activities without being registered. 51. The extract of the deed of incorporation filed with the commercial court is then published in the Moniteur belge. This is done by the court

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registry within 15 days following submission of the documents. The Belgian authorities confirmed that all documents submitted to the registry are kept for an unlimited period in individual paper files (one for each entity registered with the registry of the local commercial court). These documents can thereafter be easily accessed, if needed for EOI purposes. 52. The commercial court registry also places the information with the BCE, the registry of legal entities registered in Belgium. 53. Established under the law of 16January 2003, the BCE is a registry kept by the Service Public Federal Economy, the purpose of which is to register, safeguard, manage and make available information regarding the identification of enterprises (article3 of the law). Any Belgian legal entity, any foreign legal entity with a seat in Belgium and any establishment must be registered in the BCE. 54. Pursuant to article6 of the law of 16January 2003, the BCE contains, among others and for a period of 30 years from the day legal entities lose their legal personality or permanently cease their activity, the following information: the name, corporate name or business nameof the legal entity; the precise various addresses; the legal form and legal status; the date of incorporation and termination of the enterprise; the data identifying the founders, nominees and authorised representatives.

55. The information, registered in the BCE is accessible to other public services such as direct taxes and VAT offices for their own purposes. 56. In cases where the information about a legal entity seems inaccurate or erroneous, the legal entity will be asked to clarify the information. In general, information is considered inaccurate or erroneous when there is a discrepancy between currently held information or the information effectively available to another administrative authority and that published in the Moniteur Belge. If the legal entity concerned does not provide clarification, the BCE, through the Service Public Federal Economy, can investigate to verify the information, such as the address of a legal entity, and directly amend this information. If it is found that the legal entity is not present at the address mentioned, the BCE will give the legal entity a 30-day deadline to modify its information otherwise the incorrect information will be removed from the register. Approximately 0.18% of head office addresses and 0.14% of other types of address were withdrawn because they were not accurate.

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57. Pursuant to article373 of the Company Code, the management body of a co-operative with unlimited liability must submit a list in alphabetical order setting out the identities, occupations and domiciles of all co-operative partners to the local court registry every six months. Anyone can freely consult these lists and obtain copies. 58. In light of these requirements, the names of the founding partners of companies and, in generic terms, the identity of the active partners in SCAs (as jointly and severally liable partners) and partners (associs) in SCRIs are available to the Belgian authorities from the commercial court. Furthermore, in the case of jointly and severally liable partners, all changes with respect to the identity of the partners must be filed with the commercial court registry and published in the Moniteur Belge.

Register of registered shares


59. SPRL shares, like those of SCRIs and SCRLs, have to be registered6 (articles232 and 356 of the Company Code). The Code also states that each of these companies should hold at its registered office a register of these registered shares including the identity of shareholders of SPRLs and partners of SCRIs and SCRLs, as well as all share transfers within such companies (see articles233 and 357 of the Company Code). SPRLs, SCRIs and SCRLs cannot issue other types of shares. 60. SAs and SCAs are subject to the same requirement. When registered shares have been issued by these companies, they must know who their shareholders are and, for this purpose, have to keep a register of the shares including an exact description of each shareholder, the number of shares held, as well as the transfer, forwarding or conversion of the securities in question (article463 of the Company Code). These companies are also allowed to issue electronic shares that are further described in the section on bearer shares. 61. Any interested third party, including the tax authorities, may consult the register of registered shares and thus get information on the identity of the shareholders in an SPRL, or the partners in an SCRL or SCRI. In practice, the Belgian tax authorities report that they are always in a position to access this information. The information can be gathered by asking the person concerned or by performing an on-site visit. In any event, the Belgian authorities have confirmed that ownership information is provided by the companies when requested.

6.

In French, these shares are called nominative shares, that is, shares whose holder identity is known from the company. This identity is known because these shares must be registered in the registry of shares.

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Tax requirements
62. When a company is created, a copy of the extract of the deed of incorporation must be submitted to the enregistrement office7 of SPF Finances. Furthermore, before starting business, a company is obliged to apply for registration with the VAT auditing office for its place of activity. This formality is mandatory for anyone wishing to launch an economic activity whether as a main or secondary line of business. However, no information concerning the ownership of the company is required to be provided upon registration. 63. Upon registration with the VAT office, a legal entity must provide certain information, including the address, the location of the management and the location of the accounting records. The VAT office will verify this information before the activation of the VAT number. On-site visits can be performed to control the accuracy of this information. Sanctions will be applied if the information is erroneous, missing or if the legal entity has not registered or has registered late. In cases where the legal entity is not present at the address provided and does not answer requests for information from the VAT office, the VAT number can be cancelled. In practice, the information provided to the VAT office is of very good quality and accurate. In addition, with the access to the BCE, VAT authorities can check whether all new companies have duly asked to be registered for VAT purposes and thereafter ensure the accuracy of their own database. 64. There is no obligation to register with the administrative authorities responsible for direct taxation. The extract of the deed of incorporation published in the Moniteur belge by the registry of the commercial court and the recorded information entered in the registry of legal entities at the BCE, along with that provided to the VAT auditing office and the enregistrement office of SPF Finances are forwarded or made available to the appropriate administrative area office responsible for direct taxation. The different streams of information available in Belgium from the BCE, other tax authorities, and from the entities concerned ensure that accurate information in relation to companies is available to tax authorities in charge of direct taxes. 65. Belgian companies covered by this section of the report are subject to corporate income tax (articles2 and 179 of the Belgian Income Tax Code (CIR92). Accordingly, they are required to submit an annual tax return to the administrative authorities for direct taxation (article305 of CIR92). For the taxation year 2011, 95% of tax returns (for companies) were received on time. In less than 2% of the cases, companies were taxed automatically for failure to file a tax return or for incomplete return.
7. Enregistrement office: local tax office where all deeds and some private contracts subject to a stamp tax must be submitted.

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66. The documents, statements or information which have to be provided as specified in the declaration form are an integral part of the declaration. Amongst them are the following: the annual accounts (balance sheet, profit-and-loss account and possible appendices); the reports to the general assembly and its discussions (including the list of shareholders present);

67. However this material is not sufficient to enable SPF Finances to hold updated information on the identity of Belgian company shareholders under all circumstances. Yet Belgian legislation contains other provisions which provide for the availability of information on shareholders and in particular, the shareholders of SAs and SCAs.

Obligation to publicise major holdings in a company


68. Pursuant to EU regulations (Directive 2004/109/EC), on 2May 2007, Belgium adopted a law on the publication of major shareholdings in issuing bodies whose shares are eligible for trading on a regulated stock exchange. 69. Pursuant to article6 of this law, any natural person or legal entity that directly or indirectly acquires securities conferring on it a voting rights quota of 5% or more of all voting rights must inform the company as well as the Autorit des Services et des Marchs Financiers (FSMA). This notification is also required when the number of voting rights reaches or exceeds a quota of 10%, 15% or 20% and in the event of any further increases of 5%. 70. The issuing company that receives this notification must ensure that it is published on its website no later than three trading days following its receipt (article14 of the law of 2May 2007). In addition and pursuant to the same article, Belgian issuing bodies have to specify in the capital statement attached to their annual accounts the structure of their shareholding on the date the accounts were closed, as shown in the statements they have received about major holdings. 71. The effect of this obligation is that all shareholdings in listed Belgian companies in excess of 5% are public. 72. Further requirements directly derive from the legislation on bearer shares adopted by Belgium on 14December 2005 (see section A.1.2 on bearer shares below).

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Foreign companies Main establishment of a foreign company established in Belgium


73. Pursuant to article110 of the private international law code, which states that a legal entity is governed by the law of the state in the territory in which its main establishment is situated from the time at which it is formed, a foreign company may be governed by Belgian company law if it has its main establishment in Belgium. 74. In this situation, publication, registration and record-keeping formalities are similar to those applicable to companies directly established under Belgian law. The availability of information concerning the ownership of those companies described above is guaranteed under the same terms.

Belgian branch of a foreign company


75. Articles81-87 of the Company Code set out the rules for publication applicable to foreign companies branches with an establishment or branch in Belgium. Pursuant to articles81 and 82 of the Company Code, before establishing a branch in Belgium, companies governed by the law of another state must make the following documents and details public: the articles of incorporation (memorandum of association) and/or articles of association; the corporate name and legal form; the registry with which a file has been opened in the company name and the registration number of the company in that registry; the address and description of activities of the branch, as well as its corporate name if this is not the same as that of the company; the name and identity of the persons empowered to commit the company vis--vis third parties and to represent it in court; the annual and consolidated accounts of the company for the most recently closed financial year.

76. These documents are made public in the 30 days immediately following the occurrence of the decision or the event, by the filing with the registry of the commercial court in the jurisdiction of which the branch of the foreign company is located (articles83 and 84 of the Company Code). The documents are kept on record by the registry and the companies concerned are entered in the registry of legal entities held by the BCE. 77. The rules for the registration of foreign companies with the tax authorities are the same as those applicable to Belgian companies: they involve

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registration with the appropriate VAT office, while the office for direct taxation is informed of the companys existence by means of the information available from the BCE, the enregistrement office8 of SPF Finances and the department responsible for VAT.

In practice
78. Given that foreign companies (irrespective of their form), must, in similar conditions as companies incorporated in Belgium, register with the BCE, the direct tax authorities and the VAT authorities, information and documents they provide are subject to the same verification process as those for Belgium companies. In addition, the Belgian authorities confirmed that in practice, information pertaining to foreign companies is available on the same basis as for Belgian companies.

Anti-money laundering legislation and information held by nominees Anti-money laundering legislation
79. The anti-money laundering rules are set out in the law of 11January1993 as recently amended by the Laws of 18January 2010 and 26November 2011, by the Programme Law(I) of 29March 2012, of 27November 2012 and by the Royal Decrees of 6May 2010, 3March 2011 and 2June 20129. For the bodies and persons to whom the law applies, these rules include obligations regarding the identification of customers and verification of their identities. 80. Pursuant to articles2 and 3 of the law, the persons and entities subject to the obligation concerning client identification are: credit and financial institutions; investment companies; bailiffs and notaries; auditors, accountants and tax advisers; and lawyers, legal advisers, in particular when they act as trust or company service providers or where they are involved on behalf of their clients in any financial or real-estate transaction.

8. 9.

Enregistrement office: local tax office where all deeds and some private contracts subject to a stamp tax must be submitted. The current AML/CFT legislation mainly derives from Directive 2005/60/ EC of the European Parliament and of the Council of 26October 2005 on the Prevention of the use of the Financial System for the Purpose of Money Laundering and Terrorist Financing.

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81. Pursuant to article7 of the Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) law, these entities and professionals are required to perform a customer due diligence (CDD) and therefore identify their customers and clients when: a customer wishes to enter into business relationships which will make that person a regular customer; a customer wishes to a transaction outside the scope of the business relations referred to immediately above, - of which the amount reaches or exceeds EUR10000, whether the transaction is carried out in one or several operations that appear to be related; or which involves a transfer of funds in the sense of Regulation (EC) No.1781/2006 of the European Parliament and of the Council of November 15, 2006 on information on the payer accompanying transfers of funds;

money laundering or the financing of terrorism is suspected, outside of the situations described in the first and second points above; there are doubts about the truthfulness or accuracy of the identification data concerning an already identified customer.

82. Pursuant to articles7 and 8 of the law, when the customer is a company or a partnership, identification of the customer and verification of its identity include the corporate name, the registered office, the board members and knowledge of provisions governing the power to make commitments on the companys behalf. 83. Furthermore, and persons coming within the scope of the anti-money laundering legislation must identify the beneficial owner(s) of the customer and take appropriate measures commensurate with the risk, in order to verify their identities. Under the anti-money laundering legislation, beneficial owners are to be regarded as the one or more natural persons on behalf of whom or for the benefit of whom a transaction is conducted or a business relation initiated, or the one or more natural persons who ultimately possess or control the customer. This means in particular: the one or more natural persons who ultimately possess or control directly or indirectly more than 25% of the companys or partnerships shares or voting rights; the one or more natural persons who in some other way exert exercise(s) control over the companys management.

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84. Identification of the beneficial owner is concerned with the persons surname and first name and, to the extent possible, the date and place of birth. As far as possible, relevant information also has to be gathered about the persons address. In addition, appropriate measures commensurate with the AML/CFT risk profile of the client10 have to be taken to verify this information. 85. The bodies and persons within the scope of the law must update the identification data of the beneficial owners of a client with which they have business relationships when it appears that the information concerning those beneficiaries is no longer current. The frequency of such updates is dependent on the AML/CFT risk profile of the client. 86. Notaries are officiers ministriels in Belgium11. The functions they perform are strictly supervised to ensure the quality and the precision of their work, since they are subject to a double system of control (see below). Since the adoption of the law of 18January 2010 amending the law of 11January1993, la Chambre nationale des notaires, the regulatory authority for the notaries (together with the 11 Chambres provinciales des notaires, the supervisory authorities for notaries) has introduced measures to monitor and control the compliance of its 1400 members with AML obligations as well as a system of recommendations and sanctions for failure to comply with these obligations. Failure to comply with the AML/CFT law of 11January 1993 can be sanctioned by the supervisory authority with an administrative fine which could amount between 250 EUR and 1250000 EUR (article40 of the AML/ CFT law). Sanctions vary from a simple reminder to periodic controls and even to appointment of a guardian for supervision. For serious or repetitive offenses, a judicial procedure can be introduced, which can lead to suspension. La Chambre nationale des notaires is the administrative authority in charge of applying administrative sanctions. There are at the moment neither guidelines nor case law making direct links between breaches and sanctions. The Belgiums authorities have reported that sanctions for non compliance with AML requirements will be applied based on the seriousness of breaches. 87. Powers granted to the Chambre des notaires (together with the 11 Chambres provinciales des notaires) in support of its supervision obligations are extensive. They include powers to examine due diligence records, as well as financial and accounting information that a notary is required to maintain. In addition, every three years, other controls are performed to verify
10. 11. Further information on the way this AML/CFT profile risk must be considered is described in a regulation of the CBFA dated 23February 2010. Notaries, as officiers ministriels, are designated by the King and perform public services missions. They represent, by delegation, the authority of the State and are responsible for the proper application of laws.

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the quality of work, such as conservation of files. Since the adoption of the new AML law in 2010, audit of compliance with AML requirements is now part of the supervision performed by the Chambre nationale des notaires (together with the 11 Chambres provinciales des notaires). Considering that the law introducing these new obligations is recent (2010) the new measures to monitor and control the compliance of notaries were implemented in 2012. Three years will be necessary to complete a first round of audits and to get an overall picture of the results. 88. The Institut des experts-comptables et des conseils fiscaux (accountants, certified public accountants and tax advisers supervisory authority the Institute) has also adopted measures and sanctions to monitor the implementation of AML/CFT obligations applicable to its 4300 independent members performing activities subject to these requirements. 89. Each firm having more than ten accountants, tax advisers or certified public accountants needs to designate one compliance officer who is responsible for implementing and monitoring AML/CFT obligations for the firm. For smaller firms, although there is no requirement to specifically designate one person, each professional must ensure that its practices comply with AML/CFT obligations. 90. In addition, each member of the Institute needs to complete and file a triennial questionnaire. The purpose of this questionnaire is to verify the quality of work and practices and ensure the respect of the legal obligations by accountants and tax advisers (including questions on the identification of the clients, training of staff, unusual transactions). Since the introduction of the law providing for AML/CFT supervision and control obligations in respect of accountants and tax advisers, the scope of this questionnaire has been developed to better monitor compliance of members with AML/CFT obligations. The results of the questionnaire will be used to identify potential problems and determine needs for additional controls. 91. In addition to the questionnaire, the Institute has supplementary sources and powers to verify the compliance of its members, such as information from other administrative reports that need to be filed to the institute and on-site visits. 92. The Institute can impose administrative fines and disciplinary sanctions on its members although this has not been tested in practice as the current AML/CFT law and its subsequent implementation measures were only adopted in 2010 and 2011(failure to comply with the AML/CFT law of 11January 1993 can be sanctioned by the supervisory authority with an administrative fine which could amount between 250 EUR and 1250000 EUR pursuant to article40 of the AML/CFT law). According to representatives of the Institute, the new procedures to monitor and control the respect

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of AML/CFT obligations by accountants and tax advisers will be fully operational by 2014, considering the time needed to perform a complete round of audits and to obtain an overview of the results. 93. Lawyers are also subject to the same AML/CFT obligations. Lawyers are supervised and controlled by the French and German speaking Bar (lOrdre des Barreaux francophone et germanophone) or the Dutch speaking Bar (lOrdre du Barreau nerlandophone) the Bars. The two Bars have a total of 16000 members, but AML/CFT obligations are only applicable to lawyers acting as proxies in financial and real estate transactions or involved in creating companies. In practice, approximately 1000 lawyers are concerned by AML/CFT obligations. Lawyers acting as service providers for companies are also covered by AML/CFT obligation. Lawyers are required to provide appropriate AML/CFT training to their employees (all persons that are working under the supervision of a lawyer and that are not lawyers themselves) and inform their clients with regard to the AML/CFT obligations. 94. Designated non-financial businesses and professionals (DNFBPs) are subject to AML/CFT requirements since 2004, but AML/CFT controls and supervisory obligations are quite recent (2010), thus the prevention and monitoring measures are still being implemented. In March 2012, the Bars created a group of five members that are working to put in place a system of supervision and control. They are also working on training plans for members and Presidents of each Bar. 95. Lawyers, like accountants and tax advisers, will need to designate a compliance officer who is in charge of the AML/CFT obligations for each firm having more than ten professionals. Moreover, an annual control by questionnaire will be introduced. This questionnaire, along with a monitoring process will be used by the President of each Bar to detect potential problems and needs for further controls and investigations. In case of non-compliance, disciplinary sanctions will be applied (in collaboration with the President of the Bar and the disciplinary measures committee). Failure to comply with the AML/CFT law of 11January 1993 can also be sanctioned by the supervisory authority with an administrative fine which could amount between 250 EUR and 1250000 EUR. (article40 of the AML/CFT law). 96. The law providing for the supervision and control of AML/CFT obligations by DNFBPs was introduced in 2010. Nevertheless AML/CFT obligations have been in place for these professionals since 2004, but without supervision, and will be strengthened with the recent adoption of legal obligations in this area. In practice, the professionals supervisory authorities have worked intensively over the past two years on informing and training to make sure that AML/CFT obligations are well known and respected. They have also reported that the level of knowledge of AML/CFT obligations by DNFBPs is very high in Belgium.

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Nominees
97. There is no specific provision in Belgian tax law that deals with the specific question of nominees. Anti-money laundering legislation, however, establishes an obligation regarding identification of customers for a whole series of service providers. In particular, all legal and natural persons covered by the provisions of the AML/CFT law must identify their clients as well as all nominees acting on behalf of their clients. The identification of the nominee is ensured in the same way as described above (see article7 para2 and 3 of the law). 98. In addition, under the general obligations arising from CIR92 and, in particular, the obligation for all taxpayers or third parties to forward to the Belgian authorities any information enabling them to determine the amount of taxable income, whether this income is that of the nominee or of the real shareholder, the obligation to keep information on property held through nominees is ensured in Belgium. 99. Nominee ownership is regulated by the AML/CFT law in Belgium. Therefore the practices described above also apply in respect of nominee ownership. Professionals met during the on-site visit confirmed the extremely narrow scope of nominee ownership. They reported that to the best of their knowledge, non professional nominees do not/are not likely to exist in Belgium and, more broadly, no issues were reported with regard to nominee ownership information. Belgiums tax authorities also advised that they have never received any incoming request dealing with nominees but are ready to use their information gathering powers to collect such information if so requested by a treaty partner.

Conclusion
100. Given the registration requirements for companies, the practices of the Belgium authorities as well as the comments received from Belgiums treaty partners, it is possible to conclude that the availability of ownership information pertaining to companies is, in Belgium, in line with the standard set out in the Terms of Reference.

Bearer shares (ToRA.1.2) Obligations stemming from the abolition of bearer shares
101. On 14December 2005, Belgium adopted a law to abolish bearer shares. Pursuant to this law and since 1January 2008, it has only been possible to issue electronic12 or registered securities in Belgium. Furthermore, on 1January 2008 all bearer shares issued by companies listed on a regulated
12. An electronic security is a security registered on an account with a clearing

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market, and which were listed on a securities trading account, were automatically converted into electronic securities. 102. Unlisted companies will have to convert bearer shares issued between the publication of the law and 1January 2008 by 31December 2012, and securities issued prior to the publication of the law by 31December2013 at the latest. In the intervening period, and in order to accelerate the conversion, Belgian legislation provides that: Any person who acquires bearer shares conferring on it a voting rights quota of more than 25% of all voting rights must declare this acquisition; Any person who disposes of bearer shares pursuant to which its voting rights quota falls below 25% must declare this disposition; The voting rights attaching to bearer shares that have not been converted within the periods provided by law will be suspended when the period granted by the Belgian legislation to transform the shares expires; Finally, if the bearer shares are not converted by 31December 2013, shareholders will lose the right to convert them and the issuing company must, from 1January 2015, sell these shares (whether in electronic or registered form) to other purchasers (after conversion by the issuing company) failing which they will be subject to a fine equal to 10% of the value of the securities for every year that the obligation to identify is delayed.

103. Hence, in case where the shareholder has not converted its bearer shares before 31December 2013, the shares are converted by the issuing company and registered under the name of the issuing company (which does not give any ownership rights to the issuing company), with all the voting rights suspended. From 1January 2015, these converted shares will be sold by the issuing company (before the sale, the issuing company must inform the public of the sale in the Moniteur Belge (Belgiums official journal) and give the shareholder a one-month period to claim its shares). 104. The income from the sale will be deposited to the Caisse des depots et consignations (official depositary of the government) until a person can prove his or her rights on such amount and claim restitution. Article12(1) of the law of 14December 2005 provides for the Caisse des depots et consignations to keep a record of the identity of the person making the claim. Restitution claimed after 1January 2016 will trigger a 10% administrative
organisation (Euroclear Belgium or the National Bank of Belgium) or a recognised account holder (e.g.credit institutions)

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fine per year (calculated from 31December 2015) on the value of the amount deposited to the Caisse des depots et consignations. 105. As a consequence, when the 14December 2005 law has produced all of its effects, the identity of shareholders in Belgian companies will be known, following two systems: the system of registered shares described above which enables the company to know its shareholding, since it must keep a registry of such shares; the system of electronic securities, in which the identity of the shareholder will be known to the account holder.

106. In addition to the conversion measures, the Belgian Parliament adopted at the end of 2011 new legal provisions to speed up the conversion of bearer shares (articles168 to 173 of the Code des droits et taxes divers, TitreIV ). These new provisions, applicable from 1January 2012, provide for a tax that applies when the holder of bearer shares asks for their conversion. The rate of this tax increases with the delay in conversion, from 1% of the value of shares for conversions made in 2012, to 2% of the value of the share for conversions made in 2013. This new tax must be paid either by the financial intermediary, if the shares are held in a securities account, or in other cases by the company itself at the time shares are deposited for conversion. In 2014, shareholders will no longer be entitled to convert bearer shares. 107. The payment of the tax is due on the last day of the month following the conversion, along with a special declaration reporting the calculation of the tax. Administrative penalties apply in case of late payments as well as when the special declaration is incomplete or inaccurate. 108. The adoption of this new tax relating to the conversion of bearer shares has already had an effect. In the period from January 2012 to August 2012, 150million bearer shares were converted to registered shares. The Belgian authorities have mentioned that as of 31December 2012, approximately three to four percent of bearer shares have not yet been converted. Therefore, it appears that the introduction of this new tax on conversion has been effective in accelerating the conversion of bearer shares and the Belgium authorities have reported that the number of bearer shares still in circulation is likely to be rather limited. 109. Under the current legal framework, all bearer shares will be converted to nominal shares by the end of 2013 at the latest. In addition to this requirement first introduced in 2005, Belgium introduced in 2011 a new system to ensure a swifter conversion of bearer shares. From the information received, it appears that this new framework has produced the expected effect.

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Partnerships (ToRA.1.3) 110. Belgian law provides for the establishment of two kinds of partnerships: The Socit en Nom Collectif (SNC, or general partnership) Company Code BookIV and BookV is one formed by at least two partners who are jointly and severally liable for all its commitments. The shares of an SNC cannot, in principle, be transferred. No minimum capital is required to form an SNC. The partnership may be formed by notarial or private deed. The Socit en Commandite Simple (SCS, or limited partnership) Company Code Book IV and Book V is a partnership formed by one or several partners who are jointly and severally liable (the active or general partners), and one or more limited partners (the dormant partners) whose liability is limited to the level of their contribution. Limited partners cannot engage in management activity, even through a power of attorney. No minimum capital is required to form such a partnership. A SCS may be formed by notarial deed but this is not mandatory. 111. Partnerships are governed by the Company Code and, more particularly, BookIV, which contains common regulations applicable to all companies and partnerships established under Belgian law. The publication and registration formalities are the same as those that apply to SAs, SCAs, SPRLs, SCRLs and SCRIs and described above in sub-section A.1.1. As for companies, this information is kept for an indefinite period in individual paper files by the registry of the local court of commerce. 112. An extract of the deed of incorporation of the partnership must be filed within 15days with the registry of the commercial court which keeps the documents on record. The publication in the Moniteur belge is the responsibility of the registry, which then ensures that the partnership is entered in the BCE acting as the registry of legal entities. 113. The information contained in the extract of the deed of incorporation, which is held by the registry of the commercial court and published in the Moniteur belge and in the BCE, is similar to the information provided by SAs and SCAs. The list of the founders of partnerships and of partners who have unlimited liability is readily accessible public information. It is thus possible to obtain the identity of SNC partners and SCS general partners. All transfers of shares leading to changes in the identity of partners who are jointly and severally liable must, in addition, be published (article741 of the Company Code). 114. The Belgian registration authorities confirmed that in practice there is no difference in the incorporation procedure between partnerships and companies, and all elements in relation to companies discussed in sub-section

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A.1.1 above also apply to partnerships. These authorities also reported that information on partnerships that needs to be provided to registration authorities is provided. 115. The SNCs and SCSs are not required to maintain a registry of partners and the number of shares held by each. However, as the transfer of shares is subject to approval of the partners under Belgian law (articles38 and 209 of the Company Code), SNCs and SCSs always know the identities of all of the holders of shares, whatever their function in the partnership (either unlimited or limited partner), and this information can be obtained by the Belgian authorities upon simple request (section B, Access to Information). 116. The formalities for registration with the tax authorities are similar to those described above for companies. The extract of the deed of incorporation of the partnership must be filed with the enregistrement office of the Belgian tax authorities (SPF Finances). In addition, before beginning its activity, a partnership is required to apply for registration with the VAT auditing office for the area in which it intends to do business. The application for registration is mandatory for anyone wishing to start an economic activity as a main or secondary line of business (article50 of the VAT Code). 117. Partnerships are under no obligation to register with the authorities for direct taxation. The information published in the Moniteur belge (e.g.when the partnership is formed) and contained in the registry of legal entities of the BCE, as well as the details sent to the VAT auditing office and included in the deed of incorporation registered with the SPF Finances enregistrement office, are forwarded or made available to the authorities for direct taxation. As described above for companies, local offices for direct taxation will rely on information received through the BCE, VAT and enregistrement offices and the partnership itself to register this partnership. In practice, the Belgian authorities did not raise any specific difficulty to get information on partnerships and to register these entities for tax purposes. 118. Under Belgian law partnerships have legal personality and are subject to corporate income tax (articles2 and 179 of CIR92). They are required to submit an annual tax return to the authorities for direct taxation (article305 of CIR92). 119. The documents, statements and information which must be provided according to the declaration form are an integral part of the declaration and have to be appended to it. They include the following: the annual accounts (balance sheet, profit-and-loss account and possible appendices); the reports to the general assembly and its discussions (including the list of those present).

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The information available at SPF Finances is thus identical to the information that can be obtained from the registry of legal entities or the commercial court registry. 120. This set of laws and regulations ensures that the identity of SNC and SCS partners is available and updated.

Conclusion
121. Information provided upon creation or modification is first verified by the notary then by the BCE upon registration. Moreover, identity information for partnership is principally available to the tax authorities. Tax authorities verify the information received upon registration and also when returns are filed. Tax authorities have confirmed that the information is available for them and is provided when requested. Thus, given the registration requirements for partnerships, the practices of the Belgian authorities as well as the comments received from Belgiums treaty partners, Belgium ensures the availability of ownership of information pertaining to partnerships.

Trusts (ToRA.1.4)
122. It is impossible to establish trusts under Belgian law. Moreover, Belgium is not a signatory to the Hague Convention of 1July 1985 on the Law Applicable to Trusts and on their Recognition. 123. That said, chapter XII of the private international law code recognises and regulates certain aspects of trusts established under foreign law. Article122 of this code includes a definition of a trust, while article123 recognises that Belgian courts are competent for hearing cases concerning a trust administered in Belgium or assets located in Belgium and placed in trusts. 124. Thus although Belgium is a civil law country and, in that respect, does not authorise the establishment of trusts as such, it does recognise that trusts formed abroad may have effects in Belgium in that they can be administered from within Belgium or possess assets there. In particular, Belgium has adapted its legislation to prevent the legal ramifications of a trust from compromising the public policy contained in the Belgian legislation, such as rules governing succession. 125. As regards the availability of information concerning the settlors, trustees and beneficiaries of trusts, Belgian civil law requires neither the registration of trusts nor the prior disclosure of this information. Only a legal action by order of a judge could result in this information being made public.

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126. Furthermore, Belgian tax law does not contain provisions regarding the information that has to be held by trustees resident in Belgium and involved in trusts established pursuant to foreign legislation. 127. According to the analysis developed by the Belgian administration in two administrative decisions, the income received through a discretionary trust is considered to be earned by the trustee and is subject to personal or corporate income tax, depending on the nature of the trustee. In the case of a fixed interest trust, the income of the trust is however considered to be earned by the beneficiaries and is taxable in their hands. In this case, the Belgian administration may ask the taxpayers or the trustee for all information which will allow it to determine the amount of income. 128. From a general perspective, if information is considered necessary for Belgian tax assessment purposes, the taxpayer has an obligation to disclose such information to the tax authorities. This may include information about settlors, trustees and beneficiaries. Furthermore, trustees resident in Belgium, as professionals, are subject to record-keeping requirements for the determination of their own income. Thus in the case of a trust, all records that are necessary for determining whether the trust income is taxable in the hands of the trustee or not must be kept. This includes the names of the settlors and named beneficiaries of the trust or the nature of the assets in the trust that have generated the income. 129. With regard, therefore, to general tax requirements in Belgium pursuant to which all taxpayers must be capable of providing information to the Belgian tax authorities whenever taxable income has to be determined, a trustee resident in Belgium must be in a position to provide SPF Finances with information on the settlors and beneficiaries of trusts that (s)he administers from Belgium. 130. There is nothing in Belgiums laws that prevents a professional from acting as a trustee in Belgium. Assets might also be owned in Belgium through a trust created under a foreign law. Nevertheless, whilst mentioning the possible existence of Belgian professional trustees, legal and notarial practitioners as well as accountants, tax advisers and certified public accountants report that they are not aware of cases of assets owned through a trust in Belgium. They also emphasised the difficulty of reconciling the holding of real estate or assets through a trust created under common law principles with civil law principles that apply in Belgium. They consider that these situations, if they exist, should be extremely rare and with unpredictable and untested legal consequences. 131. The Belgian tax authorities do not have knowledge of any cases where trust ownership might have been disclosed for tax purposes. They consider this to be the result of the absence of recognition of trusts by Belgium.

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They also reported that they have never received any request pertaining to foreign trusts but are ready to use all means available to collect relevant information for their partners.

Anti-money laundering Legislation


132. Lawyers, tax advisors as well as all professionals who act as trust service providers come specifically within the scope of the anti-money laundering legislation when they help their clients to prepare or conduct transactions concerning the formation, administration or management of trusts (article3 of the law of 11January 1993 as amended). Pursuant to article7 and article8, paragraph1 of the foregoing law, these service providers must keep information on the identity of their clients and the beneficiaries of trusts. As result, professionals acting as trustees in Belgium are obliged to identify their clients (settlors and beneficiaries) and when the beneficiary is a legal person must identify those who have an interest of 25% or more in the entity.

Conclusion
133. In practice, the administration of foreign trusts by resident trustees is not widespread in Belgium. Belgian authorities have never received any request dealing with trusts or service providers acting as trustees. It can be concluded that Belgium has taken all reasonable measures to ensure that information is available to its competent authorities that identifies the settler, trustee and beneficiaries of trusts administered in Belgium or that have assets in Belgium.

Foundations (ToRA.1.5)
134. In Belgium, foundations are non-profit entities usually set up for purely charitable purposes. However, since 1998, foundations may be established for private purposes, that is to say, foundations in which the founder may dedicate property for a private purpose devoid of any self-interest. This category could include, for example, the safeguarding of an art collection, the keeping of a business within the family, or the maintenance of a child with special needs. 135. Under Belgian legislation and in compliance with article27 of the law on foundations of 27June 1921 as amended by the law of 2May 2002, the establishment of a foundation is the result of a legal act emanating from one or several natural persons or legal entities, which involves allocating assets to achieve a particular goal devoid of any self-interest. The foundation may not result in any material gain for its founders, its directors or any other person

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unless, in this last instance, such gain is part and parcel of the foregoing disinterested goal. The foundation includes neither members nor partners. To be valid, it must be constituted by notarial deed. A Belgian foundation does not have beneficiaries. 136. Article28 of the law on foundations states that a foundations articles of association should state the following, at a minimum: the surnames, first names, place of residence, and date and place of birth of each founder or, in the case of a legal entity, the corporate name, the legal form and the address of the registered office; the official name of the foundation; the precise description of the aim or aims underlying the establishment of the foundation, as well as the activities it intends to implement to achieve these goals; the address of the seat of the foundation, which must be located in Belgium.

137. Article31 of the law states that the commercial court registry keeps a file on record for each private foundation and public interest foundation which has its seat or operational seat in the judicial district concerned. The foundation is also registered by the acting notary or, if not, by the above court registry in the register of legal entities of the BCE. 138. In compliance with the same article, the information which is required to be placed in the file includes: the articles of association and their amendments; the amalgamated text of these articles following their amendments; the legal documents concerning the appointment, the rescission and the termination of the responsibilities of the directors and, where applicable, of the persons authorised to represent the foundation. These documents specify the extent of the powers of the persons concerned and how they should be exercised; the annual accounts of the foundation; the decisions and legal documents concerning the dissolution and liquidation of the foundation.

139. The following information is published in the appendices to the Moniteur belge: the articles of association and their amendments;

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the legal documents regarding the appointment, the rescission and the termination of the responsibilities of the directors and, where applicable, of the persons authorised to represent the foundation; these documents specify the extent of the powers of the persons concerned and how they should be exercised; the decisions and legal documents concerning the conversion of a private foundation into a public interest foundation, in accordance with article44; the decisions and legal documents concerning the dissolution and liquidation of the foundation.

140. Thus, since the articles of association and their amendments must be the subject of a notarial deed entrusted to the registry of the commercial court and published in the Moniteur belge, the information concerning the founders of private foundations and members of their boards is known to the Belgian public authorities. In practice 141. All foundations must be created by notarial deed. As a professional subject to AML obligations, a notary must, upon creation of a foundation, verify all information on the foundation including identity information on the founders. In addition, a verification of the object of the foundation as well as a formal verification of the deed is performed by the clerks office of the commercial court. If the object of a foundation is illegal or against public policy, its legal existence will not be recognised. 142. During the lifetime of a foundation, a foundation that (i)does not respect its object, (ii)has not accomplished all its goals, (iii)does not respect its articles of incorporation, the law, or public policy or (iv)has come to the end of its term, can be dissolved by the Court, upon request of one of its founders, directors or the Belgian public authorities. 143. The Belgium authorities have not reported any specific concerns as regards the availability of ownership information in relation to foundations for the period under review. Furthermore, no requests dealing with these matters have been received from Belgiums treaty partners.

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Establishment of provisions to ensure the availability of information (ToRA.1.6) Penalties for failure to legally document the establishment of bodies or to register them
144. Persons or entities that have not filed the full text of their articles of association with the commercial court registry within three months from the date of the articles are punishable by a fine of EUR50-10000 (articles90 and 91 of the Company Code). This fine applies to Belgian companies and Belgian branches of foreign companies. It is incurred for failure to submit either the legal documents required at the outset or the subsequent documents amending them. Furthermore, companies failing to register do not acquire legal personality. 145. In cases of non-filing or late filing of documents with the commercial court registry, a fine of EUR25-250 is incurred for every months delay (article256(1) of the Code of stamp duties, mortgage duties and court fees). 146. In addition, the law of 16January 2003 setting up the BCE provides for administrative and criminal sanctions for failure to comply with its provisions, and in particular as regards the registration requirements (articles62 para2 and 5 and article63). 147. As regards private foundations, the law of 27June 1921 states that a foundation will only acquire legal personality from the day that its articles of association and the legal documents certifying the appointment of its directors are placed in the file held at the court registry. The failure to register deprives the foundation of legal personality. 148. Regarding sanctions for the failure to keep the share register in SAs and SCAs or in SPRLs, SCRLs, SCRIs, the Belgian Company Code provides that company directors and managers are jointly responsible towards the company itself or any third parties for any damage caused by an infringement of the companys statutes, or management errors (see articles263, 408, 528 and 657 of the Company Code). The Company Code also provides for criminal sanctions for errors in entries in the share register (see articles348, 388 and 649). Failure to comply with these requirements is punishable by imprisonment from one month to three years and a fine of EUR26 to 3000 (see article496 of the Penal Code). Finally, Belgian case law (decision of the Court of Appeal of Brussels, 24June 1981), states expressly that if a company does not respect the legal requirements for maintaining a register of shares, it is responsible vis-a-vis the injured shareholder. 149. Deeds of incorporation of legal entities are generally filed within the 15-day limit. As previously mentioned, notaries involved in the creation or modifications of legal entities respect the filing deadlines. For legal entities

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not created by notaries, as confirmed by the Belgian authorities, deeds are generally filed in time as the filing is required to prove, in particular, ownership in the entity toward third parties and to start a business activity. 150. Belgiums partners have not identified any cases for the period under review where ownership information requested on companies or partnerships was not provided because the information had not been maintained or updated.

Disclosure of major interests


151. Non-compliance with the obligations may have civil, administrative or criminal consequences and, in particular, can result in the following: no person can take part in voting at the general assembly of a company by casting a number of votes greater than that linked to the securities (s)he has declared to be in his or her possession, in compliance with articles514, 515, paragraph1, or 515(a), paragraph1, at least 20 days before the date of the general assembly (article545 of the Company Code). However, if the shareholder concerned knowingly takes part in voting, (s)he may be criminally liable to a fine of EUR275-55000; if the required declarations have not been made in accordance with the prescribed procedures and schedule, the president of the commercial court for the jurisdiction in which the company has its registered office may: - order the suspension of all or some of the rights linked to the securities concerned for a period of up to a year; - suspend the holding of a general assembly already convened for a fixed period, as (s)he determines; - order the sale, under his or her supervision, of the securities concerned to a third party unconnected to the current shareholder, within a period which (s)he determines and is renewable.

Legislation on the abolition of bearer shares


152. The law of 14December 2005 states that companies that have not complied with their obligations to identify holders of bearer securities must sell those securities on January 1, 2015, failing which they will be subject to a fine equal to 10% of the value of the securities for every year that the obligation to identify is delayed. In relation to the tax on conversion of bearer shares, administrative penalties are applicable when the payment is late or if the special declaration is incomplete or inaccurate. In practice, these sanctions have not been applied yet, since the law entered into force only in 2011.

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Anti-money laundering legislation


153. When the Cellule de Traitement des Informations Financires (CTIF, the Financial Intelligence Processing Unit) detects an infringement of the 11January 1993 law against money laundering and terrorism financing, it may inform the auditing or supervisory authorities, or the disciplinary authorities, so that these authorities can take the appropriate measures and hand down administrative penalties. 154. In the event of failure to comply with the law, these authorities may, pursuant to article40, impose an administrative fine in the amount of at least EUR250 but no greater than EUR1250000. 155. The existence of these penalties specifically provided for in the legislation to prevent money laundering and the funding of terrorism does not compromise the use of other administrative or disciplinary penalties imposed in accordance with the governing legislation. 156. As regards the application of sanctions by supervisory authorities, The Chambre nationale des notaires (together with the 11 Chambres provinciales des notaires) has for instance a set of administrative and disciplinary sanctions for failure to comply with AML/CFT obligations. Sanctions can take the form of a simple reminder for a first default considered not serious, they can impose an accounting supervision for financial default, a guardian can be appointed for a more serious or repetitive default. For serious default, each of the 11 Chambres provinciales des notaires can refer the case to the judicial process, where a suspension can be pronounced. In any events, the Chambre nationale des notaires can notify the CTIF if the AML/CFT obligations were not respected by a notary. 157. There is a variety of sanctions under Belgiums laws to ensure that information required to be maintained is, in fact, maintained. Most of Belgiums laws provide a range of penalties, including monetary fines depending on the level of infraction and imprisonment in the more serious cases. In addition, the tax authority is able to respond to requests for ownership and identity information for all types of legal entities and arrangements. Information received from jurisdictions with an exchange of information relationship with Belgium indicates this.
Determination and factors underlying recommendations
Phase1 Determination The element is in place Factors underlying the recommendations Recommendations

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Phase2 Rating To be finalised as soon as a representative subset of Phase2 reviews is completed.

A.2. Accounting records


Jurisdictions should ensure that reliable accounting records are kept for all relevant entities and arrangements.

General requirements (ToRA.2.1)


158. The Terms of Reference sets out the standards for the maintenance of reliable accounting records and the necessary accounting record retention period. It provides that reliable accounting records should be kept for all relevant entities and arrangements. To be reliable, accounting records should: (i)correctly explain all transactions; (ii)enable the financial position of the entity or arrangement to be determined with reasonable accuracy at any time; and (iii)allow financial statements to be prepared. Accounting records should further include underlying documentation, such as invoices, contracts, etc. Accounting records need to be kept for a minimum of five years. 159. The obligation for businesses established in Belgium to keep accounting records is found in the law of 17July 1975 concerning accounting for enterprises, and more particularly in articles3, 4, 6, 7, 9 and 10. Regulations relating to annual accounts, consolidated accounts and publicity formalities are incorporated in the Royal Decree on the implementation of the Company Code. 160. The general accounting requirements in the law of 4September 1975cover the following: natural persons acting as business persons; business companies or companies with a commercial status, the business goals of a company being set out in the articles of association; public bodies that carry on business, financial or industrial activities; any other body with or without its own legal status, pursuing business, financial or industrial activities. Professional trustees are covered by these obligations.

161. The accounting practice of legal entities (article3 of the law) must cover all transactions, assets and entitlements of any kind, and their debts, obligations and commitments of any kind. All accounting is based on a system of books and accounts and conducted in line with the customary regulations for double-entry bookkeeping. Any entry is backed by dated supporting evidence and includes a reference to that evidence. After being

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balanced with data in the inventory, the accounts are descriptively summarised to form the annual accounts. 162. Medium and large enterprises have to carry out double-entry bookkeeping in accordance with the legal framework, establish an annual inventory and draw up annual accounts. These accounts are submitted for the examination and approval of the general assembly convened for this purpose. In the 30 days following their approval, they have to be submitted to the National Bank of Belgium (BNB) which checks their content. The annual accounts may be consulted on the BNB website. This website includes information on legal entities which since 1992 have directly deposited annual or consolidated accounts with the BNB, or which are supposed to submit annual accounts to it in light of their legal form and circumstances. 163. General or limited partnerships, whose turnover in the most recent financial year, excluding value added tax, is no more than EUR500000 may keep simplified accounting records as long as all their transactions are entered promptly, reliably and fully in chronological order in at least three books, namely a cash book, a purchase book and a sales ledger. At least once a year, these enterprises are also required to establish an inventory of all assets, receivables, debts and obligations, as well as all resources earmarked for operational purposes (article5 of the law). These accounts are also available on the BNB website. Finally, even though these two types of partnerships may keep simplified accounting records, they must nevertheless submit an annual tax return to the tax authorities (see below). 164. In order to guarantee the continuity of these accounting documents, their pages are numbered and they form a continuous series, each in accordance with its own particular purpose. 165. Books and documents from which one can determine the amount of taxable income have to be kept for possible consultation by the authorities, in the office, agency, branch or any other professional or private premises of the taxpayer in which they have been held, drawn up or addressed (article315 of CIR92). These premises correspond to the seat which is the focal point for management activity, as well as the administration of interests and company business. 166. Each entity liable to corporate income tax or legal entities income tax is required, pursuant to article305 of CIR92, to submit a declaration of income on an annual basis. The company or legal entity must attach its annual accounts (balance sheet, profit-and-loss account and possible appendices) to the declaration as well as all reports to the general assembly and the minutes of its meetings. These declarations can be audited by SPF Finances. 167. In practice, companies and partnership that are required by law to submit their accounts to the BNB largely comply with this obligation, as

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mentioned by the Belgian authorities. The compliance rate exceeds 90%; defaults generally come from companies that are inactive. 168. Default to submit annual accounts is an indicator to the investigation department of the Commercial Court. Supplementary charges are levied automatically in case of default to submit annual accounts but entities may oppose a case of absolute necessity. These supplementary charges are between EUR120 to 400 during the ninth month following the end of the financial year, between EUR180 to 600 from the tenth to the twelfth month following the end of the year and between EUR360 and 1200 from the thirteenth month following the end of the year. This contribution is levied by the BNB on behalf of the SPF Finances. For 2009, 48018 entities had to pay extra charges for delay in submitting the annual accounts; 48821 in 2010 and 52257 in 2011. In addition, if the annual accounts are not filed within the legal time limits, any damage suffered by third parties will be deemed to have resulted from this non-compliance. The burden of proof thus lies with the enterprise: it has to prove that the damage suffered by the third party is not due to the non-filing or late filing of the annual accounts. Finally, at the request of any interested party or the public prosecutor and if the entity has failed to file its account for three consecutive financial years, the Commercial Court can dissolve the entity. 169. Thus considering the accounting and tax legislation, as well as comments received from foreign counterparts, Belgium ensures the availability of accounting data from which it is possible to accurately review all transactions, to assess the financial position of all entities, and to prepare financial statements. Underlying documentation (ToRA.2.2) 170. Belgian accounting legislation lays down that any entry must be backed by dated supporting evidence and must contain a reference to that evidence (article6 of the law of 4September 1975). 171. Furthermore, since Belgium is an EU member and thus party to the intra-community VAT system, Belgian businesses are subject to special requirements regarding evidence of transactions carried out. In particular, it is necessary to keep all documents that can be used to review intra-community flows of goods and services, including invoices issued and received, goods delivery notes, or the contracts under which purchases and sales have been conducted. 172. These different requirements ensure that the accounting data which Belgian businesses have to keep on record include the supporting documents needed as evidence of the transactions carried out. Belgium authorities also answered more than 4100 incoming VAT requests over the last three years and in these requests, Belgiums VAT partners mainly ask for underlying

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documents justifying delivery of goods or provision of services, such as invoices, contracts and other supporting documents. The large number of requests received as well as the capacity of Belgiums authorities to provide answers gives broad assurance that underlying documentation is kept in compliance with the standard in Belgium. 173. Comments received from peers also confirm that Belgium is able to provide underlying documentation on request. It is consequently concluded that the underlying documentation is kept by all relevant Belgium entities in compliance with the standard.

Document retention (ToRA.2.3)


174. Pursuant to accounting legislation, all businesses are required to keep a record of their accounts for seven years from 1January of the year following the closing date of accounts (article8, paragraph2 of the law). Supporting documents have to be kept for seven years as originals or copies and methodically classified. This period is reduced to three years in the case of documents not required to provide proof vis--vis third parties (article6 of the law). 175. Tax legislation (direct taxation) states that all books and documents which can be used to determine the amount of taxable income have to be kept for possible consultation by the authorities until the end of the seventh year or seventh financial year subsequent to the assessment period (article315 of CIR92). 176. With regard to VAT, article60 of the VAT Code specifies a recordkeeping period of seven years (a special period of 15 years applies to transactions the purpose of which is the construction or purchase of a building with payment of VAT). 177. Given the tax and accounting requirements set out in the various laws in force in Belgium, the safekeeping of accounting information for a period of at least five years is guaranteed. 178. Tax auditors met have confirmed that in practice, they never had any difficulty in accessing for five years accounting information requested by partner jurisdictions. The CIR92 grants Belgian tax authorities an access to information for a period of three or even seven years. Entities subject to this obligation are aware of these rules and keep necessary accounting data for the time period provided by the tax legislation. They also confirmed that when requested, the information is always available and provided by the person concerned. 179. For both commercial and tax requirements, the time period during which accounting records must be kept by Belgian entities is fully consistent

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with the Terms of Reference. For the period under review, there have not been any instances where Belgiums peers had difficulty in obtaining accounting records due to an inadequate documentation retention period.
Determination and factors underlying recommendations
Phase1 Determination The element is in place. Phase2 Rating To be finalised as soon as a representative subset of Phase2 reviews is completed.

A.3. Banking information


Banking information should be available for all account-holders.

Record-keeping requirements (ToRA.3.1)


180. Article47, paragraph1 of the law of 11January 1993 imposes an obligation upon organisations to identify and verify, by means of a conclusive document, the identity of customers who enter into business relationships with the organisation pursuant to which they will become regular customers. Article5 of the CBFA (the Banking, Finance and Insurance Commission) regulation of 23February 2010 (replacing the regulation of 27July 2004) states that in fulfilling their legal obligations to identify their customers, organisations must take any appropriate measure to prohibit customers from opening anonymous accounts or ones under false or assumed names, and to verify compliance with this ban. 181. Customers are only allowed to open numbered accounts in compliance with special regulations determined by the organisation that fix the conditions under which such accounts may be opened and how they should function. In addition, these conditions and procedures cannot compromise the application of the provisions of the AML/CTF legislation concerning the identification of the customer and of economic beneficiaries, special measures regarding distance relations, the keeping of data on record, and the customer due diligence obligation (article8). 182. The use of numbered accounts is restricted by financial organisations to persons who can justify a real need for discretion (this system allows the identity of the account holder to be hidden from the front line employee). The opening of these accounts is, in practice and as required by the BNB, subject to increased identification measures (verification of the reasons justifying

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the need for a numbered account and hierarchical authorisation). Complete information on the account holder must be available. 183. In practice, Belgiums authorities have reported that banks are required to perform customer due diligence before entering into relationships with their clients when these clients open a numbered account (see below for details of these customer due diligence requirements). In addition, financial institutions have internal regulations providing specific conditions that must be met when numbered accounts are opened. A strict monitoring is also applied to these accounts by financial institutions. Belgiums authorities confirmed that the identity of holders of such accounts is known in all instances, although in practice front line employees do not have access to this information to ensure confidentiality. In all cases, information on holders of numbered accounts is known by the management of the financial institution and provided to Belgiums authorities when requested. Therefore, this system of numbered account does not hinder the availability of ownership information pertaining to holders of such accounts. 184. The situations in which bodies and persons subject to the law are required to identify their customers are as follows: when they enter into business relationships which will make them regular customers; when the customer wishes to carry out: - a transaction of which the amount reaches or exceeds EUR10000, whether the transaction is carried out in one or several operations that appear to be related; or a transaction even where the amount is less than EUR10000 whenever there is a suspicion of money laundering or terrorism financing; or consisting in a transfer of funds within the meaning of Regulation (EC) No 1781/2006 of the European Parliament and of the Council of 15November 2006 on information on the payer accompanying transfers of funds;

where there are doubts about the truthfulness or accuracy of the identification data regarding an existing customer.

185. The rules regarding the conservation of records in Belgium provide that all financial institutions will preserve all documents necessary to reconstitute transactions. In particular, article15 of the law of 11January 1993, as amended, provides that all financial organisations will, for a period of at least five years, keep a copy of registrations, invoices, and documents concerning transactions such as to permit them to be precisely reconstituted.

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186. Finally, article3 of the EU Council Directive 2003/48/EC of 3June 2003 on Taxation of Savings Income in the Form of Interest Payments (Savings Directive) requires that financial institutions paying interest to their clients keep information on account holders who are not Belgian residents but are residents of other EU member states or jurisdictions not being EU members but involved in the automatic exchange of information organised by this directive. 187. The BNB is the supervisory authority for banks, insurance undertaking and stockbroking firms in Belgium and is in charge of controlling the implementation of AML/CFT requirements by these entities. The BNB explained that it has a very detailed annual program of audit for financial institutions, controlling all their regular activities, including their compliance with AML/CFT rules. On the basis of documents that must periodically be filed by financial institutions with the BNB, an annual rating is established for each financial institution. When these ratings are established, plans of controls are prepared on a risk-based approach. 188. Desk based audits can be performed from the office based on information already in possession of the BNB, such as information coming from periodic contacts with the compliance officer of the financial institution, annual reports submitted by the institution, annual financial statements and breaches to the law reported by the CTIF (Belgiums Financial Intelligence Processing Unit). Audits can also be performed directly on the premises of the institution (on-site visits). Financial institutions are notified of on-site visits only a few days in advance and during these visits, inspectors of the BNB can access and copy all documents. Audits usually encompass AML/ CFT obligations. In addition to these annual audits based on risk analysis and ratings, financial institutions are usually subject to a more thorough verification every six years at least or more frequently. This in-depth supervision of financial institutions performed by the BNB, automatically includes an on-site visit where the verification team has access to all information and documents of the institution. On this occasion, they also verify paper files and accounts with a higher risk. They always verify whether identification requirements are met and documented and the respect of other AML/CFT obligations. This verification has a very positive impact on the level of compliance of Belgian financial institutions with AML/CFT requirements. 189. In the event a financial institution does not comply with its legal obligations, sanctions and penalties can be applied. The BNB has authority to decide on administrative measures applicable to each situation. When a default is found, the BNB will first discuss with the financial institution. The BNB reported that these discussions will lead, in collaboration with the financial institution concerned, to an assessment of whether corrective measures are necessary and the nature of these measures. The financial institution

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then has a pre-determined timeframe to implement these corrective measures and their implementation is checked at the end of the period. The purpose of this collaborative process is to improve the level of compliance of the institution concerned. 190. In the most serious instances, the BNB also has necessary powers to take additional measures, such as to revoke the right of the institution to open new bank accounts until the default has been settled. A special commissioner can also be designated by the BNB to work directly within the institutions premises until the situation has improved. Because these are administrative measures, these decisions are not made public and are not described as sanctions. However, the BNBs representatives have reported that these measures have a very positive impact on financial institutions willingness to take necessary steps to remedy their deficiencies. This system largely explains the very high collaboration of financial institutions with the BNB in dealing with any default and the high level of compliance of Belgian financial institutions. 191. Where these measures have not created the expected effect, formal sanctions are possible. Financial sanctions up to EUR1250000 can be applied to a financial institution for non compliance with its AML/CFT obligations. To this end, the case must be deferred to a sanction commission13 which will decide the nature and level of sanctions. This sanction will be made public and a right of appeal exists for the institution to contest the legality of the sanction. The BNB has reported that the number of sanctions applied in recent years by the sanction commission has been very limited. This is the result of the on-going collaboration between the BNB and financial institutions as well as the system of incentive corrective measures implemented by the BNB.
13. The sanction commission of the FSMA is composed of ten members. They are appointed by Royal Decree (and therefore are independent of the management committee of the FSMA). Six of these members have to be judges, be it in office or retired. By law, two of them have to be judges of the Council of State (i.e.the highest administrative court in Belgium), two of them have to be judges of the Cassation Court (i.e.the highest civil court in Belgium) and two of them have to be other judges. The remaining four members do not have to belong to a specific profession (currently two law professors, one notary public and one lawyer). Members of the sanction commission have to be independent in the sense that they may neither have worked for the FSMA in another day-to-day function during a five-year period preceding their appointment nor may they work for (or provided services for) companies that are subject to the permanent supervision of the FSMA (or for professional organisations representing such companies). The current composition of the sanction committee can be consulted at www.fsma.be/ en/News/Article/press/div/2011-10-03_sanctions.aspx.

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192. The FSMA is the supervisory authority for other institutions that are not under the authority of the BNB, such as insurance brokers, mortgage companies, portfolio management and investment advice companies, and currency exchange offices. Like the BNB, the FSMA also has a system to monitor and control the compliance of these persons with AML/CFT obligations. Supervision and audits performed by the FSMA gives however a greater importance to the compliance with AML/CFT obligations considering the types of institutions under control. Considering the number and the small size of institutions under its supervision, some categories are controlled on an annual basis, such as currency exchange offices. The sanction process is similar to that of the BNB and like the BNB, rectification measures will generally be applied first. In 2010, three administrative sanctions were applied by the FSMA (at that time the CBFA) and no sanctions were applied in 2011. 193. Given Belgiums AML/CFT law as well as its implementation in practice by financial institutions and the supervision performed by both the BNB and the FSMA, Belgiums legal and regulatory framework ensures banking information pertaining to any account holders is maintained by financial institutions. 194. In addition, many of Belgiums treaty partners have reported that since the entry into force of the new legislation giving access to banking information on 1July 2011, they have been able to obtain relevant and accurate banking information.
Determination and factors underlying recommendations
Phase1 Determination The element is in place. Phase2 Rating To be finalised as soon as a representative subset of Phase2 reviews is completed.

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B. Access to Information

Overview
195. A variety of information may be needed in respect of the administration and enforcement of the relevant tax laws and jurisdictions should have the authority to access all such information. This includes information held by banks and other financial institutions as well as information concerning the ownership of companies or the identity of interest holders in other persons or entities, such as partnerships and trusts, as well as accounting information in respect of all such entities. This section of the report assesses Belgiums legal and regulatory framework and the effectiveness of its practice and whether it gives the authorities access powers that cover the right types of persons and information and whether taxpayers rights and safeguards that are in place would be compatible with effective exchange of information. 196. Pursuant to the Belgian Income Tax Code (CIR92), the Belgian tax authorities have extensive powers of access to information for their own purposes. In particular, these powers enable them to request information from any taxpayer or third party likely to be in possession of the information sought to assess income or collect tax. The Belgian authorities use these same powers for the international exchange of information. 197. According to the law adopted on 14April 2011, the Belgian fiscal authorities have powers to access banking information. This possibility, allowed for domestic purposes in case of fraud indications, applies to all Belgiums treaty partners covered by an agreement providing for exchange of information, under reciprocity. The requirements to request, for domestic purposes, financial institutions to provide bank information (tax fraud indications, prior request sent to the taxpayer and notification of the taxpayer) are directly fulfilled in the case of international exchange of information. In that situation, the simple request received from the treaty partner is considered as being sufficient to allow Belgian revenue authorities to ask financial institutions to provide information.

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198. For its own purposes, the Belgian administration has access to information during a period of three years, or a period of seven years if it informs the Belgian taxpayer required to furnish the information of the reasons for which the extension to seven years is requested. In the case of a request for information from a treaty partner, the Belgian administration interprets its legislation as allowing it to access the information during the seven year period, as long as the requesting party justifies the extension. This interpretation is reflected in the practices of Belgian officials in charge of gathering information for exchange of information (EOI) purposes. 199. The requests for exchange of information both to and from Belgiums EOI partners vary in complexity and cover a wide range of material. To answer these requests, Belgiums authorities use their broad access powers to collect this information either by letter or directly on the premises of businesses. Based on the comments received from Belgiums treaty partners, over the last three years Belgium has been in a position to provide information on request in most cases. Since 2011 this has included bank information. Belgiums CIR92 was amended to give the tax authorities access to bank information for EOI purposes from that date. A number of treaty partners indicated that they were unable to obtain bank information prior to this. However, the law giving access to banking information has now been tested in practice in several instances and feedback received from Belgiums peers is very positive. 200. Further, application of rights and safeguards in Belgium do not unduly prevent or delay effective exchange of information in practice.

B.1. Competent Authoritys ability to obtain and provide information


Competent authorities should have the power to obtain and provide information that is the subject of a request under an exchange of information arrangement from any person within their territorial jurisdiction who is in possession or control of such information (irrespective of any legal obligation on such person to maintain the secrecy of the information).

201. As regards access to information for the purpose of international exchange of information, the Belgian tax administration can invoke the very extensive information accessing powers granted to it by CIR92. Pursuant to these powers, the Belgian authorities may compel taxpayers, third parties or other public authorities to provide them with all kinds of information.

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The Belgian competent authority


202. In Belgium, the Service Public Federal Finances (SPF Finances)14 is the competent authority for exchange of tax information. The AGFisc is the point of contact for EOI requests in the field of direct taxes (as well as VAT), whether made under a bilateral agreement, the EU Directive 2011/16/ UE of 15February 2011, or the joint OECD/Council of Europe Multilateral Convention on Mutual Administrative Assistance in Tax Matters. The Administration des Douanes et Accises, the Administration de la Perception et du Recouvrement and the Administration de la Documentation Patrimoniale are each in charge of EOI requests in relation to their specific field of expertise (recovery of taxes or excise duties for instance). 203. More specifically, SectionIII/1A of the AGFisc (the central liaison office for direct taxes DLO) acts as competent authority for direct taxes, and processes incoming requests received from other jurisdictions. This Section was created in September 2009, and comprises 11 employees (five Dutch speakers and six French speakers). Besides exchange of information on request, the DLO is also in charge of automatic and spontaneous exchanges and the implementation of the EU Savings Directive. 204. The DLO is identified on the SPF Finances website as the competent authority for EOI requests. Moreover, the list of all competent authorities in Belgium is transmitted to the OECD, to the EU as well as to the treaty partners of Belgium. 205. The AGFisc is divided into regional divisions, which are also divided into local tax offices for direct taxes (449) and local tax offices for VAT (127). In addition, control offices are competent for audits of all taxes, direct and indirect. When the DLO receives a request from a partner jurisdiction, the request will first be verified at the DLO level to make sure it is valid in law and complete. If the requested information is not in possession of the DLO, the request will then be transferred either to another administration or to the competent local tax office (based on where the information is available), within one month of the reception. The processing of incoming request will be further described under section C.5 of this report.
14. The SPF Finances is divided into six administrations: lAdministration Gnrale de la Fiscalit (AGFisc the General Administration of Taxes), lAdministration de la Lutte contre la Fraude (Inspection Spciale des Impts) (the Administration for fight against tax fraud hereinafter ISI), lAdministration Gnrale de la Perception et du Recouvrement (the General Administration for the Recovery of Taxes), lAdministration de la Trsorerie (the Administration of Treasury), lAdministration de la Documentation Patrimoniale (The Administration of Real Estate Documentation) and lAdministration des Douanes et Accises (Administration of Customs and Excise).

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Obligation of taxpayers 206. Articles315 and 315(a) of CIR92 state that the Belgian tax authorities may require taxpayers to provide accounts, documents, computerised data and information. Furthermore, pursuant to article316 of the same code, every taxpayer is required to provide to the tax administration all information that may be requested, for the purposes of verifying the taxpayers tax situation. 207. The checks and requests for information can relate to all transactions to which the taxpayer has been party, and the information gathered as a result may also be used for the purposes of the taxation of third parties (article317 of CIR92). 208. Finally, article319 of CIR92 states that taxpayers are required to grant tax officials, free access during all business hours to their professional or other premises in which activity is carried out, or presumed to be carried out. This is to enable the officials to determine the nature and scale of the activity concerned and to verify the existence, nature and quantity of goods and items of all kinds that these persons possess or keep on the premises as well as to examine all accounts and documents kept there.

Obligations of third parties


209. Pursuant to article322 of CIR92, the administration may, with regard to a given taxpayer, hear third parties, undertake audits, and require natural persons or legal entities, as well as associations with no legal personality, to produce all information that the authorities deem necessary. When witnesses are heard, their testimony is given under oath pursuant to article934 of the judicial code. The taxpayer is summoned to the hearing of witnesses (article325 of CIR92). 210. The production of this information may also be required in relation to any person or group of persons, even when they are not identified by name with whom the persons or entities questioned have dealtdirectly or indirectly as a result of (their) transactions or activities (article323 of CIR92). 211. State administrations (including the prosecuting authorities and the court registries which in Belgium are responsible for the registration of legal entities), the administrative authorities of political subdivisions and local authorities and other public bodies are obliged to provide all information in their possession when requested to do so by the tax authorities, and to let the authorities consult any item or document that may be needed for taxes to be levied correctly. In this situation, the examination of documents relating to judicial procedures is subject to the express authorisation of the federal prosecutor, the public prosecutor or the auditor-general (article327, paragraphs1 and 2 of CIR92).

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Powers of investigation and access to information


212. When the information requested by a treaty partner is already in the Belgian tax administrations possession, it can be exchanged without regard to any prescription period. 213. The authorities may undertake inspections, audits and the assessment of taxes or additional taxes, even where the taxpayers declaration has already been accepted and the taxes arising from it paid. Such inspections and audits may, pursuant to article333, paragraphs1 and 2 of CIR92, be conducted during the taxable period (year in which income is earned) as well as during the three years following 1January of the assessment year (year that follows the taxable period.). 214. However, in cases in which tax avoidance is suspected, these inspections and audits may also be conducted during the seven-year period beginning on 1January of the assessment year. In this case, the authorities have to inform the taxpayer beforehand about the reasons justifying the extension of the audit or inspection period (article353 and 354 of CIR92). If this notification is not forthcoming, taxation will be rendered null and void (article333, paragraph3 of CIR92). This notification process does not grant any right to the person concerned to appeal the provision of information and therefore, cannot unduly prevent or delay effective exchange of information. 215. In matters of international exchange of information, the Belgian administration interprets the provisions of its domestic law as allowing it to access information in case of tax avoidance during a seven year period on the simple provision, by the requesting partner, of the reasons for which access to information during a period greater than three years is necessary. The scope of this provision has been further investigated during the Phase2 review. The position is as follows: Where information is held by third parties, the Belgian tax authorities can collect information going back seven years prior to the request without notifying the taxpayer concerned. This has been confirmed by two court decisions15; in the few instances where Belgiums authorities would have to notify the person subject of the request in Belgium16, the foreseeable relevance of the request will be a sufficient reason to meet the tax avoidance condition and to obtain information for a sevenyear period. Tax auditors in the course of the review have not reported any specific difficulty to access information for seven years because of specific or restrictive conditions provided by Belgiums laws.

15. Cour de Cassation Decision of 14/10/1999 and decision of 18/11/2010. 16. When the person subject of the request in the requesting country is also the person subject of the request in Belgium.

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216. In addition to having the power to ask taxpayers and third parties to provide information upon request, any SPF Finances official, regularly responsible for carrying out an examination or an audit is lawfully authorised to take, seek or gather relevant and non-excessive appropriate information, which contributes to ensuring the assessment or collection of any other tax introduced by the state (article335, paragraph2 of CIR92).

Ownership, identity and banking information (ToRB.1.1)/ Accounting records (ToRB.1.2) Ownership and identity information/accounting records
217. In order to obtain this information, the Belgian competent authority, or the Belgian administrative authority which it calls upon to gather the information, acts just as it would on its own initiative or at the request of another Belgian authority. 218. In this situation and in order to access information on the identity of persons involved in a legal entity or an arrangement established or administered from Belgium, the Belgian tax authorities may invoke the measures in articles315 and 322 of CIR92 to ensure that the information requested is provided either directly by the taxpayer, or whoever is believed to be holding it. The same reasoning applies to the provision of accounting data. 219. As previously mentioned, according to the Belgian tax authorities, access to information is ensured during a period of seven years.

Banking information
220. Belgium adopted, on 14April 2011, a law amending the rules on access to information held by third parties (article322 of CIR92) which provides the following: Paragraph 2 provides that, for domestic purposes, where the administration has, in the course of an enquiry, one or several tax fraud indications, a banking, change, credit or savings establishment is considered as a third party which is subject, without restriction, to the provisions of paragraph1. This means that this financial institution must provide to the tax authorities all information requested. However, to this end, the administration must first use the procedure provided for in article316 of CIR92 and directly ask the taxpayer to provide the requested information within 30 days. Paragraph 3 establishes a national register kept by the Belgium National Bank (BNB) and to which any banks, change, credit and savings establishments must communicate the following data: clients identity,

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accounts numbers and contracts. Information maintained in this register can be obtained for domestic purposes by the Belgian tax authorities when a tax enquiry shows one or more tax fraud indications. Paragraph 4 provides that paragraphs2 and 3 of the article also apply when a foreign state requires information: either under the EU Council Directive on Administrative Cooperation in the field of taxation 2011/16/EU since 1January 2013; or under an exchange of information mechanism contained in a double taxation agreement which is applicable or another international agreement under which reciprocity is ensured (a multilateral convention, for example).

In this case, the incoming request from the foreign state either made under a DTC; a TIEA or a multilateral tool is still considered as tax fraud indication and the tax administration grants, notwithstanding paragraph2, the access to the information on the basis of the requesting states incoming request.

Analysis of the law of 14April 2011


221. Belgian legislation distinguishes two separate situations, bank as a taxpayer and bank as information holder: Bank as a taxpayer: when the Belgian revenue authorities audit the fiscal position of a financial institution, article318 of CIR92 still states banking confidentiality as a principle. This principle remains applicable for the assessment of the income tax17. This means that during the tax audit of a bank, the Belgian administration is not allowed (with exceptions) to collect information for the tax assessment of the bank clients. Bank as third party: when the Belgian revenue authorities audit the tax position of a specific taxpayer, they can require a bank to provide information in order to complete the audit of this taxpayers tax position.

222. The rules of article322 of CIR92 provide that for the domestic needs of the Belgian administration, access to such information is only possible when there are fraud indications, fraud being understood in broad terms

17.

It is reminded that banking confidentiality provided for by the Belgian law was strictly limited to this matter and not applicable in the field of VAT, inheritance tax, stamp taxes, customs or excise duties

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and comparable to tax avoidance18. This possibility is also open to all jurisdictions having concluded with Belgium a treaty including an exchange of information provision, under reciprocity, the incoming exchange of information request being considered as a sufficient condition to allow access to bank information. Similarly, it is possible, for international exchange of information, to access the information contained in the national register kept by the BNB on the basis of the information contained in the request for information. 223. The Belgian authorities have confirmed that this possibility is open under all treaties including an exchange of information mechanism providing for the exchange of information necessary or foreseeably relevant for the application and enforcement of the domestic laws concerning taxes of all types and names, whether the information exchange provision contains provisions comparable to paragraph5 of article26 of the OECD Model Convention or not. 224. In practice, and for domestic purposes, the procedure in Belgian law provides for two distinct steps before accessing information held by financial institutions: The person concerned by the request must first be asked by notice to provide the information requested on the basis of article316 of CIR92 in the month following the notice; If the person concerned by the request has not provided the requested information, the Belgian tax authorities ask the financial institution to provide this information. In this situation, the taxpayer must first be informed of fraud indications leading the administration to require the provision of this information from the financial institutions (article333/1 of CIR92).

225. These two prerequisites are not applicable in the case of an information request received from one of Belgiums treaty partner. In that situation, the Belgian authorities have direct access to information held by financial institutions. 226. Belgian domestic law provides for access to bank information for domestic purposes not only where a tax enquiry shows indications of fraud, but also where an incoming request is received under a tax treaty from a foreign administration, subject to the requirement that the foreign administration may itself be in a position to access bank information for exchange of information purposes and reciprocate.
18. According to the parliamentary reports published in Belgium before the adoption of the law, and in particular the examples mentioned in these report, there are not ties between the reference to tax fraud indication and any criminal qualification of the facts.

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Information gathering in practice Information directly available to tax authorities


227. Upon receipt of an incoming request, the DLO will try to provide an answer to the requesting jurisdiction based on information available at the central level. 228. In Belgium, a lot of information is automatically provided to the tax authorities by other government administrations or by third parties such as employers, social security institutions or financial institutions. Information on wages; pensions; unemployment compensation payments; insurance income; gains on real estate; professional lease payments; social security payments and reimbursements; gifts to charities and contributions to pension plans are for instance automatically and periodically reported to tax authorities. 229. Once received, the information is processed and made available to tax officials through various databases, like Belcotax-on-Web (BOW), the tax information system where information received from third parties can be found. More than 30million data are available in this database. 230. The DLO also used SITRAN, the tax database that contains general information on taxpayers such as names, addresses and their local tax offices. This system is used to do research on individual taxpayers and legal entities when some details in relation to the person subject to an incoming request are missing. 231. For tax purposes, the AGFisc has access to the register of natural persons where addresses, dates of birth and family situations of Belgian nationals as well as residents of Belgium can be found. This database is linked to a computer application that provides tax information on individual taxpayers, such as their tax category (employee, administrator, independent), the competent tax office, the date the Belgian tax return was received, the existence of a notice of assessment. The register of non-resident natural persons lists non-resident individuals with a tax file in Belgium. It contains name, information on spouse, foreign address, profession, the existence of a return if any, competent tax office and the existence of a notice of assessment, if any. 232. Other information systems are accessible to tax authorities, in particular: The Matrice cadastrale (CADMAP), the register of all real estate properties The Banque Nationale de Belgique database (Belgium National Bank BNB) where companies and partnerships financial statements are made available;

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Banque Carrefour des Entreprises (BCE) which comprises information on resident and non-resident legal entities. Legal entity documents such as articles of incorporation, head office, directors, partners, etc maintained by the SPF Justice.

Collection of ownership information and accounting records


233. While much information is already available to the DLO, in the vast majority of cases, the request is transferred to the local tax office in charge of the person concerned. The DLO reported that this option is preferred as people at the local level are in a better situation to precisely explain the tax position of the subject of the request and thereafter to provide a complete and accurate answer to the requesting jurisdiction. 234. When the request is transferred to the local tax office, it is addressed to the chief auditor of the service concerned. The chief auditor allocates the case to one of its agents, based on the content of the request and availability. The official concerned usually has three months to collect this information and provide his/her answer to the DLO. 235. Once received, the official in charge of handling the incoming request will check whether this information is available in one of the databases it has access to. This will typically be the case when tax returns or elements of income are requested. In such situations, an answer will be provided by the DLO within one month (timeframe granted by the DLO in event when no further investigation is needed to collect the information). If the requesting information is not directly accessible, it will be collected from the person concerned or from a third party in possession of this information. 236. The collection of information from the person concerned or from a third party can be done by written means, directly on the premises of the person in possession of the information or during a tax audit. In practice, it is usually done by written means. To answer incoming EOI requests, the CIR92 does not in most cases provide any specific timeframe for the person concerned to answer. As a matter of practice, tax authorities usually grant 30 days to answer a request (this timeframe can be extended if the request is complex). 237. If the person concerned fails to provide the information in the determined timeframe, a reminder will be sent at the expiration of the 30-day period, or an on-site visit will be undertaken. An additional deadline can be granted if specifically requested and justified by the person concerned. After this second notice, if the information is not provided, sanctions might be applied (see section B.1.4 below) or the Belgians authorities will use other means to collect the requested information (on-site visit or tax audit).

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238. In the most complex cases or when it seems that this means will be more appropriate, Belgiums tax authorities are allowed to do on-site visits of business premises without further justification. Article319 of the CIR92 allows on-site visits without notification, but this power is limited to cases where there is a risk of concealment or destruction of documents. Usually these on-site visits are agreed in advance with the person concerned. 239. If the person concerned is subject to a tax audit, the audit team can be requested to obtain the information. A tax audit can also be carried out to collect the information. 240. In sum, Belgiums tax authorities have several complementary tools to collect ownership information and accounting records requested by a treaty partner. All these tools are flexible and can be used without being specifically justified and this gives broad assurance that Belgium will be in position to provide information on request. In practice, Belgiums authorities have confirmed that these measures are efficient as they are able to collect the requested information without further actions in almost all instances. This is also confirmed by Belgiums partners who are satisfied with the information provided by Belgium although sometime its provision is delayed (see section C.5 below on the answer timeframe).

Collection of banking information


241. Unlike the gathering of ownership information and accounting records, the collection of banking information is only done at the DLO level. Before the new law on access to bank information was enacted in 2011, only the DTC between USA and Belgium provided for exchange of bank information. These requests were already handled at the DLO level. After Belgium adopted its new law on access to bank information, the management of requests for banking information was maintained at this level to ensure better monitoring and also to give some support to financial institutions in complying with their new obligations. 242. All requests relating to bank information are directed to the relevant institution by the DLO within one month of receipt of the request. The financial institution has one month to answer. Any extension of this timeframe must be duly justified by the financial institution concerned. Requests for extension are accepted when financial institutions claim that an additional period is necessary to compile and provide the requested information. Banking information can be requested even when the incoming request relates to a period prior to the entry into force of the new law. Belgium authorities reported that information was successfully received from financial institution when the information requested pertained to a period prior to July 2011.

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243. Since the adoption of the new law amending the rules on access to bank information, Belgium has received 22 EOI requests from various partners in relation to banking information (for the period from 1July 2011 to 30June 2012) and obtained the information in 20 cases. The average answering timeframe in 2011 (1July to 31December) was 115 days and 84 days for requests received in 2012. For the two remaining cases, Belgium has reported that financial institutions refused to provide banking information because they were not fully aware of the new provisions regulating access to bank information. In one case, after further explanation of the new legal framework, the requested information was obtained from the financial institution. For the other case, a request received in 2011, the Belgian authorities have clarified that they contacted the financial institution concerned and from the information received, determined that three other financial institutions had to be contacted to satisfy the request. Two of these financial institutions have already replied and a partial answer has been sent to the treaty partner. Information from the third institution is still pending. This case is being closely monitored by the Belgian tax authorities who indicated that the information should be obtained soon. 244. With the adoption in 2011, of the new law providing rules on access to bank information, Belgium is in a position to access bank information in accordance with the standard. One of Belgiums treaty partners has nevertheless mentioned that, to the best of its knowledge, one provision of the new law has not been implemented yet. The Belgian authorities have clarified that this provision deals with the creation of a central point of contact at the BNB level. With the creation of this central point of contact, which will be in place from 1January 2014, all holders of bank accounts in Belgium will be recorded in a specific database. This will facilitate the handling of incoming requests. It is however clear that even without this central point of contact, Belgium is from both legal and practical perspective in a position to exchange banking information to the standard since 1July 2011. 245. Some of Belgiums EOI partners reported that there were cases in which Belgium refused to provide banking information. All of these requests were received prior to the adoption of the law on access to bank information. Since 1July 2011, all EOI requests for bank information have been responded to as confirmed by comments from Belgiums treaty partners. Belgium is also able to respond to requests for bank information in relation to a taxable period starting after 1July 2011, even when the information needed predates this date.

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Use of information gathering measures absent domestic tax interest (ToRB.1.3)


246. The concept of domestic tax interest describes situations in which a contracting party can only provide information to another contracting party if it has an interest in gathering this information for its own needs. 247. The Belgian legislation contains nothing to restrict the use of domestic information-gathering powers to situations in which the information is required by the Belgian tax administration for its own use.

Compulsory powers (ToRB.1.4)


248. A refusal to answer or an erroneous or incomplete answer to a request for information may result in administrative penalties pursuant to article445 of CIR92. Under this provision, any infringement of the provisions of CIR92 or its implementing regulations, and thus any refusal to reply to a request for information from the Belgian authorities, is punishable by an administrative fine of EUR50 to EUR1250. 249. The Belgian authorities confirmed that the determination of the fine will be based on whether the person concerned had the intention of avoiding taxes or not. Where the intention was not to avoid taxes, the fine will be between EUR50 to EUR625. When there was an intention to avoid taxes, the fine will be higher (between EUR625 and EUR1250). The amount of the fine will also take into consideration whether this is the first refusal, erroneous or incomplete answer from the person requested to provide information. 250. If the person concerned still refuses to provide the requested information despite a first administrative fine, the case can be referred to a judge who may pronounce a criminal sanction, where the conditions are satisfied (articles449-463 of CIR92). These criminal sentences may result in a fine of EUR250 to 125000 and or imprisonment for a period of eight days to five years. Under exceptional circumstances, a common law judicial procedure (for example, emergency interim proceedings) might be used when the regular procedure is ineffective in resolving the dispute within the required time period. In emergency situations, and in particular when the assessment period in the requesting state is at risk of expiring, the Belgian administration is likely to ask the president of the first instance tribunal to order the person to whom the request was made to provide the requested information under emergency interim proceedings. The Belgian administration can also ask that the person be imposed a penalty if the court order is not respected. These penalties and sanctions are applicable to all persons including financial institutions that do not answer a request for information or who provide an erroneous or incomplete answer.

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251. False testimony, a false declaration made by an interpreter or consultant, or a subornation of witnesses in one of the cases of enquiry authorised by articles322 (request for information from third parties) or 325 (hearing of witnesses) is punishable, pursuant to the provisions of articles220-224 of the Penal Code (article451 of CIR92), by imprisonment for two months to three years. 252. Failure to appear or refusal to testify in enquiries authorised by articles322, 325 and 374 of CIR92 is also punishable by imprisonment for eight days to six months and/or a fine of EUR125 to EUR12500 (article452 of CIR92). 253. The Belgian authorities confirmed that the amount of voluntary answers to information requests is very high and thus, they rarely need to rely on administrative fines or even less on criminal sanctions to obtain information. 254. It seems clear that Belgium has the necessary powers to compel the provision of information and answer the incoming requests. In practice, Belgium has not experienced any situations where information could not be provided because of ineffective compulsory powers or sanctions.

Secrecy provisions (ToRB.1.5) Bank confidentiality


255. Banking confidentiality in Belgium is not provided for in the Constitu tion or criminal law. The activity of bankers and, more generally, of all professions in the economic and financial sector, is not covered by professional secrecy. For the Supreme Court of Appeal in Belgium, bankers are not subject to real professional secrecy but to what is customarily known as a duty of discretion. Thus bankers who disclose information gathered in the course of their professional activities are guilty of misconduct for which they may be held civilly but not criminally liable. 256. Notwithstanding these secrecy rules, Belgium legislation grants an access to banking information to all Belgiums treaty partners, under reciprocity, as described above.

Accountants privilege
257. Article58, paragraph3 of the law of 22April 1999 on the accounting and tax professions provides that article458 of the Penal Code, which deals with professional secrecy, applies to accountants, certified public accountants and tax advisers. However, when the tax authorities examine the tax situation of the accountants client, the accountant must provide the tax

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authorities with all the books and records and other information necessary for the purposes of determining the clients taxable income. Only the information provided to the accountant on a confidential basis cannot be provided to the tax authorities. An accountant can take advantage of professional secrecy with respect to the information given by his client in secret, but this is subject to five exceptions: When the client expressly allows the accountant to disclose the information; When the accountant himself/herself is under a criminal investigation; When the accountant is on trial with his/her ex-client; When the accountant is faced with a situation of necessity; When the law requires the accountant to disclose his secrets (for example, in the case of money laundering), or when the accountant is summoned to provide testimony in court or before a parliamentary enquiry commission.

258. In addition, accountants secrecy is not applicable when the accountant is acting as a representative (proxy) for his client. 259. When a person subject to professional regulation refuses to provide certain documents or oral information on the basis of professional secrecy, the tax authorities must seek the intervention of the competent disciplinary authority who will determine whether the information is covered by professional secrecy, and if necessary, the conditions pursuant to which the information can or cannot be disclosed (article334 of CIR92). In case of disagreement with the decision of the competent disciplinary authority, the tax authorities can appeal to a judge that will decide whether or not accountants secrecy is applicable. 260. Belgiums authorities also reported that the legal obligation to provide accounting documents lies with the legal entity or the trustee in the case of a trust. The entity or trustee must provide this information if requested to do so by Belgiums tax authorities and wherever this information is stored. This is usually done in writing. If the information is not received in time, the Belgian authorities can access it through on-site visits, which is very rare. It is only in the event that this information is not provided by the person concerned, would the Belgian authorities rely on the accountant. In practice, accounting information is usually provided by written means within the appropriate timeframe. 261. Local tax auditors met confirmed that in practice, they are always able to access accounting information for both domestic and EOI purposes, as this information has to be provided by the person concerned or by the

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accountant acting as a representative. The Belgium authorities have advised that the accountant privilege has never hindered the access to information for assessment of tax. In addition, comments from Belgiums peers have indicated that the Belgian authorities have always been able to provide accounting information. Consequently, the accountants privilege that exists in Belgium does not prevent Belgiums authorities from exchanging information in accordance with the standard.
Determination and factors underlying recommendations
Phase1 Determination The element is in place. Phase2 Rating To be finalised as soon as a representative subset of Phase2 reviews is completed.

B.2. Notification requirements and rights and safeguards


The rights and safeguards (e.g.notification, appeal rights) that apply to persons in the requested jurisdiction should be compatible with effective exchange of information.

Not unduly prevent or delay exchange of information (ToRB.2.1.)


262. The CIR92 does not contain any provisions requiring the tax authorities to notify a taxpayer about whom information is requested. There are therefore no restrictions in practice in accessing information due to a notification procedure. No comments have been received from treaty partners suggesting that the provision of information might be delayed by Belgium because of rights and safeguards.
Determination and factors underlying recommendations
Phase1 Determination The element is in place.d Phase2 Rating To be finalised as soon as a representative subset of Phase2 reviews is completed.

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C. Exchanging Information

Overview
263. Jurisdictions generally cannot exchange information for tax purposes unless they have a legal basis or mechanisms for doing so. A jurisdictions practical capacity to effectively exchange information upon request relies both on having adequate mechanisms in place as well as an adequate institutional framework. In Belgium, the legal authority to exchange information is derived from bilateral mechanisms (double tax conventions and TIEAs) as well as domestic law. This section of the report examines whether Belgium has a network of information exchange arrangements that would allow it to achieve the effective exchange of information in practice. 264. Belgium has a vast network of agreements including provisions on the exchange of information for tax purposes 113 agreements signed to date. Of these 113 agreements, 92 are in force (of which 83 are in line with the standard) and 21 other agreements to the standard (7 DTCs and 14 TIEAs) still need to be ratified. 265. The law adopted by Belgium on 14April 2011 allows for exchange of information in accordance with the international standard of transparency with 83 jurisdictions. In addition, the adoption on 15February 2011 of the new EU Council Directive on Administration Cooperation in the Field of Taxation allows for the exchange of banking information with two additional partners from 1January 2013 (Austria and Luxembourg). Finally, Belgium signed, on 4April 2011, the protocol to the OECD/CoE Multilateral Convention on Mutual Administrative Assistance in Tax Matters. This will ensure exchanges to the standard with one more partner (Moldova). 266. A number of agreements and protocols to the standard signed since Belgiums commitment to the standard in March 2009 are not yet ratified (except for the DTC with the Democratic Republic of Congo, which was ratified on 24December 2011). While solutions are being sought by the Belgian authorities to improve this situation, it is nevertheless recommended that Belgium continues to ensure the swift ratification of all the treaties signed.

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267. Each of the treaties entered into by Belgium guarantees that the parties involved will not be obliged to reveal information regarding an industrial, business or professional secret, or information subject to attorney-client privilege, or to disclose information that would be contrary to public order. 268. While this report is focused on the terms of its EOI agreements and practices concerning EOI on request, Belgium is also involved in spontaneous and automatic exchange of information, e.g.under the EU Savings Directive 2003/48/EC. 269. Over the last three years, the Belgian authorities have reorganised the EOI structure to concentrate all EOI programmes within one dedicated team, namely the central liaison office for direct taxes (DLO). Efforts have also been made to improve the timeliness of responses to incoming requests in particular by (i)hiring five new staff; (ii)ensuring better support for local tax offices; (iii)creating a new database (STIR-Int) to manage the deadlines (that has evolved to now manage the status updates) and (iv)implementing the use of the European form eFDT at the level of the DLO (soon to be applicable to local tax office agents). Since the reorganisation that started in 2009, the percentages of requests answered within 90 days and within 180 days have increased, from 41% in 2009 to 60% in 2011. 270. In addition, since the entry into force of the EU Council Directive on Administrative Cooperation in the Field of Taxation 2011/16/EU on 1January 2013, all internal processes have been reorganised to reduce the different timeframes to answer incoming requests. Belgium expects this should result in further improvements over the coming years. 271. In general, the comments received from Belgiums treaty partners on Belgiums exchange of information practices are very positive. They show that Belgium is a valuable treaty partner able to provide complete answers to the majority of the many EOI requests they receive every year in less than 180 days and in the form requested.

C.1. Information exchange mechanisms


Exchange of information mechanisms should allow for effective exchange of information.

272. Belgium has signed 113 agreements, of which 83 are in force and in line with the standard. and 21 still need to be ratified (this includes the 14 TIEAS signed since March 2009). During 2009-11, Belgium responded to more than 600 EOI requests. Belgiums main EOI partners are France, Germany, Luxembourg and the Netherlands. Belgium also actively exchanges information with Argentina, Austria, Bulgaria, Canada, Czech Republic, Greece, Hungary, Italy, Japan, Lithuania, Norway, Poland, Portugal, Russia, Slovakia, Spain, United Kingdom and United States.

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273. As a member of the European Union, Belgium is involved in the European common VAT system and as a consequence in the VAT exchange of information that takes place under the EU regulation (EC) 1798/200319. During 2009-11, 4100 requests for information were received and 3317 international requests were made by Belgium, with regard to VAT. 274. Belgium is also involved in exchanging information automatically. This takes place under the scope of the EU Savings Directive 48/2003/EC pursuant to which EU members (with the exception of Austria and Luxemburg), as well as other jurisdictions that are party to agreements20, exchange data on an annual basis concerning the savings income received from Belgium paying agents by taxpayers located abroad. Automatic exchanges also take place under the DTCs signed by Belgium or the EU Mutual Assistance Directive 77/799/EEC on a reciprocal basis. This has been replaced, since 1January 2013, by the EU Council Directive on Administrative Cooperation in the Field of Taxation 2011/16/EU. 275. With regards to automatic exchange, during 2010-11 Belgium received more than 1million pieces of data and sent more than 2.5million pieces of data to 27 jurisdictions. This relates to business income, employment income, directors income, pension income, income from public functions and other income. For 2011-12, Belgium also received over than 250000 pieces of data and sent more than 700000 pieces of data to 33 jurisdictions under the EU Savings Directive. 276. Belgium exchanges information spontaneously under the EU legal and regulatory framework21, as well as under its DTCs. During 2009-11, Belgium received 547 spontaneous exchanges and sent 362 pieces of data spontaneously to other jurisdictions, mainly with Austria, France, Germany, Hungary, Italy, Luxembourg, the Netherlands, Norway, Poland, Portugal, Spain, Sweden, Turkey and United Kingdom. 277. In addition to DTCs and TIEAs, cross border cooperation agreements have been concluded with France and the Netherlands for direct taxes and VAT. Belgium is also party to multilateral audit for direct tax, VAT and excise tax either under the EU Fiscalis program or outside this program. The information can be exchanged on request or spontaneously.
19. A new regulation (EC) 904/2010 was adopted by the European Council on 14October 2010 and entered into force on 1January 2012. 20. Anguilla, Aruba, British Virgin Islands, Cayman Islands, Guernsey, Isle of Man, Jersey, Montserrat, the Netherlands Antilles and Turks and Caicos. 21. EU Mutual Assistance Directive77/799/EEC replaced, since 1January 2013, by the EU Council Directive on Administrative Cooperation in the Field of Taxation 2011/16/EU and Regulation (EC) 1798/2003.

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Foreseeably relevant standard (ToRC.1.1)


278. The international standard in information exchange assumes that information should be exchanged upon request to the widest possible extent. However, it does not allow fishing expeditions, meaning speculative requests for information which appear to have no clear link with an ongoing audit or investigation. The balance between these two competing aspects is expressed in the concept of foreseeable relevance contained in paragraph1 of article26 of the OECD Model Tax Convention, which states the following: The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions of this Convention or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States, or of their political subdivisions or local authorities, insofar as the taxation thereunder is not contrary to the Convention. The exchange of information is not restricted by Articles1 and 2. 279. Most of the treaties signed by Belgium contain the terms necessary, relevant or foreseeably relevant. The commentary on article26 of the OECD Model Convention considers that the terms necessary or relevant mean the same thing for the exchange of information as the expression foreseeably relevant. Thus most treaties entered into by Belgium can be recognised as complying with the standard of transparency. 280. It is noted that the tax convention concluded with the former USSR on 17December 1987, which is still in force for relationships with Turkmenistan, Kyrgyzstan, Moldova, and Tajikistan, does not contain any information exchange mechanisms. Belgium has signed a new convention with Tajikistan. Moldova will be covered in the future by the OECD/CoE Multilateral Convention on Mutual Administrative Assistance in Tax Matters.

In respect of all persons (ToRC.1.2)


281. Effective information exchange presupposes that the obligation of a jurisdiction to provide information should not be limited by the residence or nationality of either the person to whom the requested information relates, or the person who possesses or holds the information requested. For this reason, the international standard in information exchange states that the mechanisms for exchange can permit an exchange of information concerning all persons. 282. Aside from the treaty concluded with the former USSR which covers Turkmenistan and Kyrgyzstan, Moldova and Tajikistan (see above), all of Belgiums treaties contain measures providing for the exchange of

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information about any person. None of the information exchange mechanisms restricts the scope of information exchange to just some persons, such as, for example, those that are considered residents of one of the two states.

Obligation to exchange all types of information (ToRC.1.3)


283. Jurisdictions cannot undertake effective information exchange if they are unable to exchange information which is held by financial institutions, nominees or persons acting in an agency or a fiduciary capacity, or because the information relates to ownership interests in a person. 284. Article26(5) of the OECD Model Convention provides that a contracting state may not decline to supply information solely because it is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity, or because it relates to ownership interests in a person. 285. Belgium provides access to bank information to all of its treaty partners in position to ensure the reciprocity that is to say 83 jurisdictions: covered by an exchange of information mechanism providing for the exchange of information necessary or foreseeably relevant for the administration or enforcement of the domestic laws concerning taxes of every kind; able to exchange banking information whether the exchange of information mechanism contains provisions comparable to paragraph5 of article26 of the OECD Model Tax Convention or not.

286. However, Belgium cannot exchange bank information with Switzerland, as this jurisdiction is not able to ensure reciprocity without provisions similar to paragraph5 of Article26 of the OECD Model Tax Convention. In relation to Austria and Luxembourg, the exchange of banking information is now possible with the entry into force of the new EU Council Directive on Administrative Cooperation in the Field of Taxation. 287. Finally, Belgium has also concluded 21 information exchange mechanisms (7 DTCs and 14 TIEAs) that still need to be ratified so that the law on access to bank information will be applicable to these agreements22.

22. Andorra, Anguilla, Antigua and Barbuda, The Bahamas, Bahrain, Belize, Dominica, Gibraltar, Grenada, Isle of Man, Liechtenstein, Macao, Monaco, Montserrat, Oman, Qatar, Saint Kitts and Nevis, Saint-Lucia, Saint-Vincent and the Grenadines, Seychelles and Uganda.

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Absence of domestic tax interest (ToRC.1.4)


288. The concept of domestic tax interest describes situations in which a contracting party can only provide information to another contracting party if it has an interest in obtaining the desired information for its own tax purposes. Inability to provide information which is based on any such domestic tax interest does not comply with the international standard. The contracting parties should use domestic information-gathering powers, even if these are used solely for the purpose of obtaining and providing information for the other contracting party. 289. The protocols and conventions signed by Belgium since 2009 contain article26(4) of the OECD Model Convention, requiring that the contracting parties use their information-gathering powers to exchange the required information without any reference to a domestic tax interest. Furthermore, the 2006 convention between Belgium and the United States includes this provision. The 14 information exchange agreements reached by Belgium also contain this provision. 290. Belgium is, however, in a position to exchange information with its treaty partners in situations in which it has no domestic tax interest, even without the reference to article26(4) of the OECD Model Convention.

Absence of dual criminality principles (ToRC.1.5)


291. The dual criminality principle states that assistance can only be provided if the matter under investigation (and prompting the request for information) would constitute a criminal matter in the requested country if it had arisen in that country. If it is to be meaningful, information exchange must not be restricted by the enforcement of a dual criminality principle. 292. None of information exchange mechanisms established by Belgium provide for the application of the dual criminality principle.

Exchange of information in both civil and criminal tax matters (ToRC.1.6)


293. Communicating information may be necessary for both tax and criminal purposes. The international standard is not limited to exchanges of information for criminal purposes and may also include exchanges for tax administration purposes (also referred to as civil tax matters). 294. All information exchange mechanisms concluded by Belgium provide for the exchange of information for both criminal and civil matters.

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Provide information in the specific form requested (ToRC.1.7)


295. According to the Terms of Reference, exchange of information mechanisms should allow for the provision of information in the specific form requested (including depositions of witnesses and production of authenticated copies of original documents) to the extent possible under a jurisdictions domestic laws and practices. 296. There are no restrictions in the information exchange mechanisms concluded by Belgium that might prevent it from providing information in the form requested, as long as this is consistent with its administrative practices. 297. The Belgian competent authority is prepared to provide information in the specific form requested to the extent permitted under Belgian laws and administrative practices. According to the comments received from Belgiums treaty partners, it seems that there were no instances where Belgium was not in a position to provide the information in the specific form requested or under an acceptable format.

In force (ToRC.1.8)
298. The exchange of information cannot occur unless a jurisdiction has information exchange mechanisms in force. Where such mechanisms have been signed, the international standard requires a jurisdiction to complete the measures needed for them to take effect expeditiously. 299. Belgiums network of bilateral agreements covers to date 113 jurisdictions, of which 83 are in line with the standard and currently in force. 21 agreements concluded by Belgium and in conformity with the international standard have not yet been ratified. It is therefore important that Belgium ensures the swift ratification of these agreements. 300. The main reason for this delayed ratification is that the Belgian Council of State considered in 2010 that tax treaties (DTCs and TIEAs) are mixed treaties, that is to say, treaties that come within the jurisdiction of the federal state and of the federated entities (regions and/or communities). That mixed character of the tax treaties (and TIEAs) has been confirmed on a political level by the Interministerial Conference of Foreign Policy on 20January 2011. In the case of a mixed treaty, each region and/or community is a party to the negotiation (limited to the elements of the treaty for which they are competent) and to the signing of the treaty and will have to ratify the treaty. 301. An agreement between the regions, communities and the federal state on cooperation, negotiation, signature and ratification of treaties is in place (agreement of 8March 1994) and covers matters of shared responsibility. Based on this cooperation agreement, the regions and communities must be

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advised of a request for negotiation received from a jurisdiction if the treaty covers or might cover a matter for which they are competent. In that case they are entitled to participate in the actual negotiations. Even if they decide not to participate in the actual negotiations, the regions and communities have to be consulted on all elements of the negotiation for which they are competent. This consultation is done via periodic meetings. A treaty can only be agreed upon by Belgium if all federated entities concerned agree with the elements of the treaty for which they are competent. 302. Once the text of the treaty is agreed and initialled, it is submitted for final approval to the federal Minister of Finance and to the competent Ministers of the regions and communities. All treaties must be translated into Dutch and French, and also into German if the German-speaking community is party to the treaty. 303. Each treaty must then be signed by the (federal) Minister of Foreign Affairs (although the signing powers can be delegated to other persons, as for example to an ambassador) and by the competent Ministers of all the regions and communities concerned (this power can be delegated by the regions and communities to the federal state Minister or, for example, to the ambassador). Belgium prefers the tax treaties to be signed only in English version, so that the translation into French, Dutch or German are only needed for the purpose of their ratification, which accelerates the signing process. 304. Once signed, the text of the treaty is published on the website of the federal Ministry of Finance and sent for information to the federal Parliament. A ratification file is addressed to the Inspectorate of Finances and then to the (federal) Minister of Budget for approval. 305. The ratification file, along with the advice of the Inspector of Finances and the approval of the Minister of Budget is subsequently sent to the Council of Ministers for approval and then to the Council of State for advice. After the Council of State has delivered its opinion, the treaty is transferred to the (federal) Parliament to be adopted by the two chambers of the Parliament. The King then ratifies the treaty. 306. In summary, a mixed treaty must receive assent not only from the federal Parliament but also from the parliaments of the regions and/or communities concerned. This means that the (federal) ratification procedure will also have to be carried out at the level of the regions and/or communities. The process of ratification of international treaties is thereby protracted (see annex 2 where the list of all agreements signed by Belgium since its commitment to the standard can be seen). 307. The above-mentioned process of tax treaty negotiation and ratification involving the regions and the communities is totally new, and thus slows down the whole process of treaty negotiations, and in particular the

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ratification of treaties. To improve the situation, a working group has been created with participants of the federal state, the regions and communities. The objective of this working group is to facilitate communication, to help regions and communities to implement this new process and finally to speed up the ratifications. Improvements are expected shortly, however for the moment, the ratification of treaties is delayed.

In effect (ToRC.1.9)
308. In order for information exchange to be effective, the contracting parties have to take the necessary measures to comply with their commitments. 309. The Belgian legislation allows for the exchange of banking information, under reciprocity.
Determination and factors underlying recommendations
Phase1 Determination The element is in place. Factors underlying the recommendations 21 agreements concluded by Belgium and providing for the exchange of information in accordance with the standard still have to be ratified. Recommendations Belgium should ensure the swift ratification of all the treaties signed.

Phase2 Rating To be finalised as soon as a representative subset of Phase2 reviews is completed.

C.2. Exchange-of-information mechanisms with all relevant partners


The jurisdictions network of information exchange mechanisms should cover all relevant partners.

310. The standard requires that jurisdictions exchange information with all relevant partners, meaning those partners who are interested in entering into an information exchange arrangement. Agreements cannot be concluded only with counterparties without economic significance. If it appears that a jurisdiction is refusing to enter into agreements or negotiations with partners, in particular ones that have a reasonable expectation of requiring information from that jurisdiction in order to properly administer and enforce its tax laws it may indicate a lack of commitment to implement the standards.

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311. In Belgium, the tax treaty division within the Service Public Federal Finances (SPF Finances) is in charge of negotiating EOI agreements. This division is staffed in total with 16 persons, five of which are in charge of translation and logistics, three are principally dealing with European Union matters and the remaining eight are in charge of all other missions of the division, including treaty negotiations. 312. When Belgium receives a request for treaty negotiation, its policy is to always accept it. After its formal commitment to implement the international standard in 2009, priority was first given to update its network of existing treaties to bring them to the standard. Since the law giving access to bank information was adopted, priorities have evolved. Priority is given to the renegotiation of treaties (either through new DTC or Protocols) with important partners (such as the United Kingdom, Poland, and Mexico) and to the negotiation of TIEAs. Negotiation of DTC with new partners is decided on the basis of criteria such as economic interest and double taxation issues. In any event, Belgium has only exceptionally refused to enter into negotiation with another jurisdiction. Belgium will not enter into treaty negotiations if the other jurisdiction refuses to include a full version of article26 of the OECD Model Tax Convention (including paragraph5) in the treaty. For this reason Belgium refused to negotiate a DTC with one partner last year. 313. Belgium also mentioned that from the middle of 2010 all negotiations were stopped because of the Council of State opinion that all these (and future) DTCs and TIEAs were mixed and should involve the Belgian federated entities. Thus, negotiations with several partners (including Switzerland) were interrupted at that moment and have been resumed recently. 314. Belgiums network of bilateral agreements covers to date 113 jurisdictions from all over the world, 92 of which are already in force and 21 signed but still to be ratified. Out of the 92 agreements currently in force, 83 allow for the exchange of bank information and thus are in line with the standard. The 21 agreements still to be ratified (7 DTCs and 14 TIEAs) are also in line with the standard. 315. Besides these new treaties, Belgium has signed 25 protocols with the following countries, in order to introduce information exchange provisions reflecting Article26 of the OECD Model Tax Convention: Australia, Austria, Bahrain, Congo, Czech Republic, Denmark, Finland, France, Germany, Greece, Iceland, Japan, Korea, Luxembourg, Malaysia, Malta, Norway, Netherlands, Rwanda, San Marino, Seychelles, Singapore, Spain, United Kingdom and Vietnam (see Annex2). All these protocols were signed between 2009 and the middle of 2010 (with the exception of Vietnam signed in 2012) and amend the EOI provisions contained in the respective DTCs to make them consistent with the international standard. These protocols (except Congo) still need to be ratified. However, with the entry in force of the law of 14April 2011, Belgium can

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already exchange information to the standard with all these jurisdictions except Austria and Luxembourg. 316. Belgium is party to the new EU Council Directive on Administrative Cooperation in the Field of Taxation adopted on 15February 2011. Since the entry into force of this directive (1January 2013) Belgium has relationships in accordance with the international standard with the two EU member countries Luxembourg and Austria that are not covered by a DTC or TIEA to the standard. Finally, Belgium signed on 4April 2011 the protocol to the OECD/CoE Multilateral Convention on Mutual Administrative Assistance in Tax Matters. When this protocol is ratified, this will allow exchanges in accordance to the standard with Moldova. 317. The Belgian treaty network covers to date: its 4 neighbour countries;23 its 26 of EU partners; 3 European Economic Area (EEA) jurisdictions; all G20 members but one; 32 OECD members; 78 of the Global Forum member jurisdictions.

318. Thus, as shown above, Belgiums four neighbouring countries, its 26 EU partners, and 32 OECD member countries now have an agreement with Belgium complying with the international standard of transparency. 319. Since March 2009, Belgium has made a lot of progress in updating its network of treaties to the standard. Belgium has focused during the last three years on exchange of information. As a result, Belgiums network of treaties to the standard now provides for exchange of information to take place with all relevant partners.
Conclusion and factors underlying recommendations
Phase1 Determination The element is in place. Factors underlying the recommendations Recommendations Belgium should continue to develop its EOI network to the standard with all relevant partners.

23.

France, Germany, Luxembourg and the Netherlands.

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Phase2 Rating To be finalised as soon as a representative subset of Phase2 reviews is completed.

C.3. Confidentiality
The jurisdictions mechanisms for exchange of information should have adequate provisions to ensure the confidentiality of information received.

Information received: disclosure, use and safeguards (ToRC.3.1)


320. Governments could not become involved in exchanging information without being certain that the details communicated will be used solely for the purposes specified in the relevant information exchange agreement, and that they will be kept confidential. Information exchange mechanisms should thus contain confidentiality provisions indicating exactly the persons to whom the information may be circulated and the purposes for which the information can be used. Furthermore, the domestic legislation in force in the countries concerned usually contains strict regulations on protecting the confidentiality of information gathered for tax purposes. 321. All treaties signed by Belgium contain provisions relating to confidentiality which are based on the terms of article26(2) of the OECD Model Convention. All TIEAs signed by Belgium contain provisions relating to confidentiality which comply with the terms of article8 of the OECD TIEA Model. 322. Furthermore, article337 of the Belgian Income Tax Code (CIR92) deals with professional secrecy and provides that all persons involved in the enforcement of tax laws or who have access to the offices of the tax authorities must maintain absolute secrecy with regard to any information which they may have been able to consult in the course of their duties. However, they may pass on to other government departments, including the prosecuting authorities and court registries, as well as to the communities, the regions and public institutions, the information which these departments, entities and institutions need in order to discharge their responsibilities. 323. Failure to comply with the rules of professional secrecy set out in article337 is punishable, pursuant to the provisions of article458 of the Penal Code, by imprisonment for eight days to six months and a fine from EUR100 to EUR500. 324. In practice, strict confidentiality rules exist in the process of collecting and exchanging tax information within the Belgian tax administration. Confidentiality is always emphasised when a request is transferred to the local

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tax office or to other administrations. When received by a local tax office, the request is placed in the file of the person concerned, but in a separate confidential section for information from other jurisdictions. Internal audit is performed to monitor the respect of these confidentiality measures. External audit is also performed by the Court of Auditors (la Cour des Comptes). 325. Information available in databases is restricted to the need-to-know users and the use of each database is monitored (all consultations are logged and can be traced). Only staff of the DLO and the agent in charge of the request from the local tax office have access to the specific file in the database. The DLO has implemented an audit process in its administration, which includes the respect of confidentiality measures. In addition, during the process of collection of information, the Belgian tax authorities do not have to give the reasons for which the information is requested. Consequently, all information received from the treaty partner is kept confidential. 326. No members of the Global Forum have raised doubts about the ability of the Belgian authorities to respect confidentiality nor have any cases been reported where this obligation was violated. The Belgian authorities confirmed that they have never encountered a confidentiality problem in practice.

All other information exchanged (ToRC.3.2)


327. The provisions concerning confidentiality which are included both in the relevant agreements and in Belgian domestic legislation do not distinguish between information received in reply to a request or information that forms part of the request. These provisions apply in the same manner to requests, attached documents, and all communications between the jurisdictions involved in the exchange.
Determination and factors underlying recommendations
Phase1 Determination The element is in place. Phase2 Rating To be finalised as soon as a representative subset of Phase2 reviews is completed.

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C.4. Rights and safeguards of taxpayers and third parties


The exchange of information mechanisms should respect the rights and safeguards of taxpayers and third parties.

Exceptions to the requirement to provide information (ToRC.4.1)


328. All the information exchange arrangements to which Belgium is committed ensure that the parties concerned will not be required to supply information that would involve disclosure of an industrial, commercial or professional secret, information that might be subject to attorney-client privilege or information the disclosure of which would be contrary to public policy (ordre public). 329. From the answers provided by peers, there have not been any instances where the rights and safeguards of the taxpayers were not preserved by Belgium.
Determination and factors underlying recommendations
Phase1 Determination The element is in place. Phase2 Rating To be finalised as soon as a representative subset of Phase2 reviews is completed.

C.5. Timeliness of responses to requests for information


The jurisdiction should provide information under its network of agreements in a timely manner.

Response within 90 days (ToRC.5.1)


330. For exchange of information to be effective, it needs to be provided in a timeframe which allows tax authorities to apply the information to the relevant cases. If a response is provided but only after a significant lapse of time the information may no longer be of use to the requesting authorities. This is particularly important in the context of international cooperation as cases in this area must be of sufficient importance to warrant making a request. 331. Over the last three years (2009-11), Belgium received a total of 646 requests for information (calculation based on the number of letters received); 264 requests received in 2009, 134 in 2010 and 248 in 2011. According to the available figures, in the last three years, Belgium exchanged information with

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29 partners of which the most significant, in terms of the number of requests received are France, Germany, Luxembourg and the Netherlands. 332. For these years, the percentage of requests where Belgium answered within 90 days, 180 days, one year or more than one year, were:
Information Information Information provided provided provided between 90 between 180days Year within 90 days and 180 days and oneyear 2009 2010 2011 23% 29% 35% 18% 16% 25% 33% 22% 17.5% Information provided in more than a year 17% 19% 0.5% Unanswered or partially answered 9% 14% 22%

333. On average, the Belgian authorities fully answered incoming requests within 90 days in 29% of cases. Approximately 20% of requests were fully responded to in between 90 and 180 days and 24% between six months and one year. 12% of the requests received by Belgium were fully answered after more than one year and 15% were unanswered or partially answered. The answering period is calculated from the moment the EOI request is received. 334. As regards the high percentage of unanswered requests received in 2011, the DLO reported that all these requests (56) were received from one partner. These requests sought information about persons that do not exist in Belgium, as confirmed by the Belgian tax authorities. Belgium has notified the partner of this situation and informed the treaty partner that they stand ready to make further enquiries, if requested. The treaty partner has recently answered that it has nothing to add to the requests thus these requests are now considered closed for the Belgian tax authorities. As for requests partially answered or unanswered in 2009 and 2010, these are requests that are particularly complex and for which the collection of information by local tax offices needs time and the DLO is closely monitoring these requests. Belgium also clarified that this can also concern requests for which Belgium has asked its partner for additional information and is still waiting these clarifications. 335. The Belgian authorities gave several reasons for the sometimes delayed timeframe to answer incoming requests such as; the increase of workload during the last years, the complexity of incoming requests, the time required for translation and the limited number of staff to answer an important number of requests. Five new agents were hired at the end of 2011 which helped accelerate the treatment of incoming requests since then. 336. However, it should also be noted that over the last three years, the percentages of requests that were answered within 90 days and within 180 days have greatly increased, from 41% in 2009 to 60% in 2011. This is due

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to the important reorganisation started in 2009 including the hiring of new staff, additional support provided to local tax offices, implementation of a new computer application that helps follow up the requests and deadlines, and the use of European common forms (eFDT) by the DLO team. 337. In addition, with the new EU Council Directive on Administrative Cooperation in the field of Taxation 2011/16/EU that entered in force on 1January 2013, the Belgian authorities have revised and reduced their standard time limit to answer a request to comply with the requirements of the new directive (following this directive, the information must be exchange within six months of the receipt of the request for complex cases, except when the requested party already has this information available; In the latter cases, answers must be provided within two months). The DLO also indicated that it will continue its reorganisation and additional training is planned to develop the use of eFDT by local tax officials, starting in 2013. 338. Over the course of this peer review, many of Belgiums partners mentioned that, generally speaking, Belgium does not advise the requesting jurisdiction of the status of the request when a response cannot be provided within 90 days. The Belgian authorities agreed that this is a shortcoming in their cooperation and that it was due to the insufficient number of staff to answer an important number of requests before 2011. They are nevertheless improving this situation with the development of a computerised tracking programme (see below) and since 2011, five new agents were hired.

Organisational process and resources (ToRC.5.2) Organisational process


339. All incoming EOI requests are received by the DLO. When received, the request is registered into the new computerised application (STIR-Int)24 and is attributed by the Head of DLO to one staff member, based on availability of agents, language spoken by the person concerned by the request and complexity of the request. When the request is attributed to the agent, a task is automatically created for this agent through Task Manager (an information system linked with STIR-Int). 340. When a request is received from a partner jurisdiction, the agent in charge of the case first verifies: (i)the completeness of the request, in particular that an EOI agreement supports the request (ii)whether the request comes from the competent authority of the requesting party; (iii)the existence of reciprocity; (iv)the fact that the requesting party has pursued all means available on its own territory to obtain the information; (v)and the
24. This computerised application will be described below.

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foreseeably relevance of the request received. If the requesting jurisdiction has not pursued all means available on its own territory to obtain the information, Belgium will first ask, in writing, the requesting jurisdiction to pursue all means available in its own jurisdiction before processing the request. 341. In cases where the request is unclear or not complete, the DLO team will try first to find the information. If the information is still not complete, the Belgian authority will then advise the requesting party to provide additional information for the request to be processed. 342. When the Belgian tax authorities cannot identify the person concerned by the request, the competent authority can transfer the request to a research department within the AGFisc that will try to identify the person concerned. The research service must come back to the competent authority within three months. 343. Information in possession of the DLO is limited to basic elements such as address of the person concerned, date of filing of tax returns and information on income available in Belcotax on Web (BOW). If the request is limited to information available to the DLO, it will answer directly the request. However, the DLO generally prefers to transfer the request to the local tax office in charge of the person concerned. This option is preferred as people at the local level are in a better situation to precisely explain the tax position of the subject of the request and thereafter to provide a complete and accurate answer to the requesting jurisdiction. 344. When the information requested is not available in the databases to which the DLO has access, the request will be transferred to the local level or to another public service. In some cases, translation will be needed. A request in French that needs to be addressed to a Dutch speaking local tax office is translated into Dutch before being transferred and vice versa. English requests will also be translated if too complex to be understood. Generally, requests are translated directly by the DLO and only complex translations are sent to the translation service of the SPF Finances. As mentioned by the DLO, if the request is sent to the translation service, the average translation period is one month. 345. Transfers of requests to local tax offices are made electronically (e-mail automatically created by STIR-Int). The official in charge of processing this request has to transfer it to the local tax office within one month of receipt. A three-month period will usually be granted to the local service to provide its answer. 346. Before the expiration of this period, a reminder will automatically be generated in STIR-Int and made available to the responsible official of the DLO. The agent will send a first reminder to the local tax office, granting an additional one month period to answer. At the expiration of this additional

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month, a second reminder will be sent to the local tax office with a two-week deadline to provide the requested information. If the information has still not been received by the DLO, the Regional Director in charge of the local tax office will be contacted by the Head of DLO. In practice, the Belgian authorities mentioned that three reminders are sent only in less than ten cases per year (considering that approximately 250 EOI requests are received each year) and that the third reminder to the Regional Director is very efficient and in general solves all outstanding cases. 347. When the requested information is received, from the local tax office, by the DLO, the responsible official has one month, after reception to send the requested information to the treaty partner. The information received will first be verified to make sure it is complete. If not, the DLO will provide to the requesting partner an interim reply containing this information and will ask the local tax office to obtain additional information to completely answer the request. Information provided to treaty partners are translated into English if this was expressly requested by the treaty partner otherwise it is provided in French, or in Dutch if requested. 348. In addition to DTCs and TIEAs, cross border cooperation agreements have been concluded in the field of direct taxes with France and the Netherlands. Exchange of information based on cross border cooperative agreements are under the supervision of the appropriate competent authority. 349. The DLO reported that the different timeframes for processing incoming requests were determined before the SPF Finance was restructured in 2009 and during a period where the service was understaffed. With the new structure and with new employees, the timeframes to process incoming requests have improved and the percentages of requests answered within 90 days and within 180 days have greatly increased over the last two years. New timeframes were also introduced in conjunction with the entry into force of the new EU Administrative Cooperation Directive. Finally, since early 2013, automatic updates are generated by the new computer system, STIR-Int. 350. Whilst it is recognised that Belgium has improved its situation as regards the provision of information within 90 days, it also appears from statistics and feedback received from Belgium partners that Belgium was not in a position in all instances to provide either the requested information in a timely manner or an update of status. This situation is the result of internal deadlines implemented before Belgiums adherence to the standard. Belgium is encouraged to continue improving the current situation, in particular in the context of the implementation of the new EU Administration Cooperation Directive. Belgium should also ensure that EOI services set appropriate internal deadlines to be able to respond to EOI requests in a timely manner by providing the information requested within 90 days of receipt of the request, or if it has been unable to do so, to provide a status update to requesting parties.

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Resources
351. The DLO is staffed with 11 officials responsible for processing the cases and the section of ISI in charge of EOI for tax fraud and tax avoidance cases is staffed with three officials. In addition to answering EOI requests, the DLO is also responsible for other tasks in relation to EOI such as participating to various international meetings in relation to EOI, organising the administrative assistance within the SPF Finances, participating to IT projects in relation to EOI and point of contact for treaty partners, local services and financial institutions. While the team seems to be adequately staffed to perform its duties, the DLO mentioned that this situation is recent and that prior to 2012, only six officials were responsible for EOI. There has been an insufficiency of staff which resulted in five new agents joining the service at the end of 2011. 352. Circulars and instructions were drafted by the competent authority to support local tax offices and agents dealing with EOI. Instructions about international EOI were drafted in 1996 and updated in 2012. These instructions focused on cross border EOI, legal basis for EOI, new provisions to access bank information, types of forms, new application STIR-Int, etc. Three circulars in relation to EOI were drafted, one about article25 of the USA/Belgium DTC (2008) and two others in relation to the adoption of the law allowing exchange of bank information (2011). 353. Since the reorganisation of the SPF Finances in 2009, all employees of the DLO have received specific EOI training. This training is in two steps: (i)a general training on the process, legal basis and obligations in relation to deadlines and confidentiality; and (ii)an on-the-job training with the assistance of the more experienced agents. In addition, training or team meetings are organised each time a new software/database is put in place or each time a new relevant legislation is adopted. 354. Information on international EOI is now available on the intranet of the AGFisc, such as general information on international administrative cooperation, EOI request forms for non-EU partners, electronic request forms for EU partners and e-learning in relation to these forms. Additional information will be available in the intranet in the coming months. In addition to circulars and instructions, a manual is being drafted, that will help the training of the agents in the local tax offices. 355. Moreover, STIR-Int, a new computer application, specifically designed for international EOI (on request, automatic and spontaneous) was implemented in January 2012. With this new application, each file includes the incoming and outgoing communications of all forms (mails, fax, and letters) and related documents. Each file also includes the identification of the person concerned (natural person or legal entity), the domestic and international competent

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authorities, a brief analysis of the file and a follow-up on the progress (status) of each request. STIR-Int can also compile statistics and create automatic reminders. Since 1January 2013 STIR-Int also includes requests and other types of exchanges of information made under a cross border agreement by the local competent authorities. 356. STIR-Int is linked to another computer application, TaskManager, which is a tool designed to monitor all tasks of tax authorities staff. Therefore, each time there is a change of status for a file in STIR-Int (for instance, when a request is received, when a request is transferred to an agent or to the local tax office), a new task is automatically created in TaskManager and the agent in charge of the file receives this task in his/her task list. These two applications together will help monitor the EOI files as it indicates a deadline for each task and allows the manager to consult tasks that have not yet been executed and thus, to effectively manage emergencies and staff absences. The system also allows the performance of searches based on various criteria. 357. Overall, Belgium has dedicated appropriate financial, human and technical resources to the various areas of its exchange of information system considering the volume of requests it receives. All competent authority staff maintain high professional standards and have adequate expertise and training specific to exchange of information.

Absence of restrictive conditions on exchange of information (ToRC.5.3)


358. There is no provision in Belgian legislation or in its information exchange agreements that sets out clear conditions governing the exchange of information, other than those included in article26 of the OECD Model Convention or the OECD Model TIEA.
Determination and factors underlying recommendations
Phase1 Determination The assessment team is not in a position to evaluate whether this element is in place, as it involves issues of practice that are dealt with in the Phase2 review.

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Phase2 Rating To be finalised as soon as a representative subset of Phase2 reviews is completed. Factors underlying the recommendations Belgiums domestic procedures for handling EOI requests, in particular the long internal timelines allocated for responding to requests, appears to inhibit expedient responses to EOI requests. Recommendations Belgium should ensure that EOI services set appropriate internal deadlines to be able to respond to EOI requests in a timely manner by providing the information requested within 90 days of receipt of the request or if it has been unable to do so, to provide a status update.

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SUMMARY OF DETERMINATIONS AND FACTORS UNDERLYING RECOMMENDATIONS 93

Summary of Determinations and Factors UnderlyingRecommendations


Factors underlying the recommendations

Conclusions

Recommendations

Jurisdictions should ensure that ownership and identity information for all relevant entities and arrangements is available to their competent authorities. (ToR A.1.) Phase1 determination: The element is in place Phase2 rating: To be finalised as soon as a representative subset of Phase2 reviews is completed Jurisdictions should ensure that reliable accounting records are kept for all relevant entities and arrangements. (ToR A.2.) The element is in place. Phase2 rating: To be finalised as soon as a representative subset of Phase2 reviews is completed Banking information should be available for all account holders. (ToR A.3.) The element is in place. Phase2 rating: To be finalised as soon as a representative subset of Phase2 reviews is completed

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94 SUMMARY OF DETERMINATIONS AND FACTORS UNDERLYING RECOMMENDATIONS


Factors underlying the recommendations

Conclusions

Recommendations

Competent authorities should have the power to obtain and provide information that is the subject of a request under an exchange of information arrangement from any person within their territorial jurisdiction who is in possession or control of such information (irrespective of any legal obligation on such person to maintain the secrecy of the information). (Tor B.1.) The element is in place. Phase2 rating: To be finalised as soon as a representative subset of Phase2 reviews is completed The rights and safeguards (e.g.notification, appeal rights) that apply to persons in the requested jurisdiction should be compatible with effective exchange of information. (ToR B.2.) The element is in place. Phase2 rating: To be finalised as soon as a representative subset of Phase2 reviews is completed Information exchange mechanisms should provide for effective exchange of information. (ToR C.1.) The element is in place. 21 agreements concluded by Belgium should ensure the Belgium since march 2009 swift ratification of all the and providing for the exchange treaties signed. of information in accordance with the standard still have to be ratified.

Phase2 rating: To be finalised as soon as a representative subset of Phase2 reviews is completed

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SUMMARY OF DETERMINATIONS AND FACTORS UNDERLYING RECOMMENDATIONS 95

Conclusions

Factors underlying the recommendations

Recommendations

The jurisdictions network of information exchange mechanisms should cover all relevant partners. (ToR C.2.) The element is in place Belgium should continue to develop its EOI network to the standard with all relevant partners

Phase2 rating: To be finalised as soon as a representative subset of Phase2 reviews is completed The information exchange mechanisms of jurisdictions should have adequate provisions to ensure the confidentiality of information received. (ToR C.3.) The element is in place. Phase2 rating: To be finalised as soon as a representative subset of Phase2 reviews is completed Information exchange mechanisms should respect the rights and safeguards of taxpayers and third parties. (ToR C.4.) The element is in place. Phase2 rating: To be finalised as soon as a representative subset of Phase2 reviews is completed The jurisdiction should provide information under its network of agreements in a timely manner. (ToR C.5.) The assessment team is not in a position to evaluate whether this element is in place, as it involves issues of practice that are dealt with in the Phase2 review

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Factors underlying the recommendations Belgiums domestic procedures for handling EOI requests, in particular the long internal timelines allocated for responding to requests, appears to inhibit expedient responses to EOI requests.

Conclusions Phase2 rating: To be finalised as soon as a representative subset of Phase2 reviews is completed

Recommendations Belgium should ensure that EOI services set appropriate internal deadlines to be able to respond to EOI requests in a timely manner by providing the information requested within 90 days of receipt of the request or if it has been unable to do so, to provide a status update.

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ANNEXES 97

Annex 1: Jurisdictions Response totheSupplementaryReport25


Belgium would like to express its gratitude and appreciation for the hard work done by the assessment team and for the constructive way they guided Belgium during the 2nd phase of the peer review. The evaluation of the implementation of the standard in practice took place in a cordial atmosphere of mutual understanding and cooperation. Belgium is one of the first countries that have been subjected to a stand alone phase2 evaluation. In this context Belgium would like to stress that it is of crucial importance that in this procedure the rules with respect to an equal playground are respected. This means that all members of the Global Forum, and in particular the members of the PRG, have to take care that those countries which receive a stand alone evaluation, are treated in the same way as the countries which were already subjected to a combined evaluation. Belgium will give serious consideration to the recommendations included in the report with respect to the elements C1, C2 and C5. First of all, a new working procedure has been introduced in order to deal with the negotiation, conclusion and ratification of so-called mixed treaties (i.e.treaties which come within the jurisdiction of the federal state and of the federated entities). This new procedure, which has been in place since 2012, should ensure the swift ratification of the treaties signed. It is expected that this will result in the ratification of a substantial number of DTAs, protocols and TIEAs in the course of 2013. Although it is already able to exchange banking information with more than 80 treaty partners, Belgium will continue its efforts to improve and expand its network of DTAs and TIEAs with all relevant partners. Thirdly, in order to further improve the timeliness of responses to the incoming requests, the Belgian competent authority aims to treat as many
25. This Annex presents the Jurisdictions response to the review report and shall not be deemed to represent the Global Forums views.

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98 ANNEXES
incoming requests as possible within a term of 3 months. Great efforts made in the past have resulted in a clear improvement. While being in a position to answer only 23% of its incoming requests in 90 days in 2009, Belgium was able to do so in 35% of the cases in 2011 and, according to the most recent figures, in 42% of the cases in 2012. New measures have been taken to reduce the deadlines within the CLO (central liaison office) and between the CLO and the local services concerned. If, however, the term of 3 months cannot be respected, the agent handling the request is automatically informed of the necessity to send a notification to the partner state. Arie GEENS

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ANNEXES 99

Annex 2: List of All Exchange of Information Mechanisms inForce

Multilateral agreements
Belgium is a party to the: Council of Europe and OECD Convention on Mutual Administrative Assistance in Tax Matters, which is currently in force with respect to 17 jurisdictions: Azerbaijan, Belgium, Denmark, Finland, France, Iceland, Italy, Moldova, the Kingdom of the Netherlands, Norway, Poland, Slovenia, South Korea, Sweden, the Ukraine, the United Kingdom and the United States26. Council Directive 2011/16/EU of 15February 2011 on Administrative Cooperation in the Field of Taxation and repealing Directive 77/799/ EEC which entered in force on 1st January 2013. The current EU members, covered by this Council Directive, are: Austria, Belgium, Bulgaria, Cyprus27,28, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom.

26. 27.

Canada, Germany and Spain have signed the Convention and are awaiting ratification. Footnote by Turkey: The information in this document with reference to Cyprus relates to the southern part of the Island. There is no single authority representing both Turkish and Greek Cypriot people on the Island. Turkey recognises the Turkish Republic of Northern Cyprus (TRNC). Until a lasting and equitable solution is found within the context of United Nations, Turkey shall preserve its position concerning the Cyprus issue. 28. Footnote by all the European Union Member States of the OECD and the European Union: The Republic of Cyprus is recognised by all members of the United Nations with the exception of Turkey. The information in this document relates to the area under the effective control of the Government of the Republic of Cyprus.

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100 ANNEXES
EU Council Directive 2003/48/EC of 3June 2003 on taxation of savings income in the form of interest payments. This Directive aims to ensure that savings income in the form of interest payments generated in an EU member state in favour of individuals or residual entities being resident of another EU member state are effectively taxed in accordance with the fiscal laws of their state of residence. It also aims to ensure exchange of information between member states.

Bilateral agreements
Jurisdiction 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Albania Algeria Argentina Armenia Australia Austria Azerbaijan Bangladesh Belarus Bosnia-Herzegovina Brazil Bulgaria Canada Chile China Congo (Democratic Republic) Croatia Cyprus Czech Republic Denmark Egypt Ecuador Estonia Finland France Type of EoI arrangement DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC Date signed 14-11-2002 15-12-1991 12-06-1996 07-06-2001 13-10-1977 29-12-1971 18-05-2004 18-10-1990 07-03-1995 21-11-1980 23-06-1972 25-10-1988 23-05-2002 06-12-2007 18-04-1985 23-05-2007 31-10-2001 14-05-1996 16-12-1996 16-10-1969 03-01-1991 18-12-1996 05-11-1999 18-05-1976 10-03-1964 Date entered into force 01-09-2004 10-01-2003 22-07-1999 01-10-2004 01-11-1979 28-06-1973 12-08-2006 09-12-1997 13-10-1998 26-05-1983 13-07-1973 28-11-1991 06-10-2004 05-05-2010 11-09-1987 24-12-2011 01-04-2004 08-12-1999 24-07-2000 31-12-1970 03-03-1997 18-03-2004 15-04-2003 27-12-1978 17-06-1965

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Jurisdiction 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 FYROM Gabon Georgia Germany Ghana Greece Hong Kong, China Hungary Iceland India Indonesia Ireland Israel Italy Ivory Coast Japan Kazakhstan Kirghizstan Kosovo Kuwait Latvia Lithuania Luxemburg Malaysia Malta Mauritius Mexico Moldavia Mongolia Montenegro Morocco Nigeria The Netherlands New Zealand Norway

Type of EoI arrangement DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC

Date signed 21-11-1980 14-01-1993 14-12-2000 11-04-1967 22-06-2005 25-05-2004 10-12-2003 19-07-1982 23-05-2000 26-04-1993 16-09-1997 24-06-1970 13-07-1972 29-04-1983 25-11-1977 28-03-1968 16-04-1998 17-12-1987 21-11-1980 10-03-1990 21-04-1999 26-11-1998 17-09-1970 24-10-1973 28-06-1974 04-07-1995 24-11-1992 17-12-1987 26-09-1995 21-11-1980 04-05-1972 20-11-1989 05-06-2001 15-09-1981 14-04-1988

Date entered into force 26-05-1983 13-05-2005 04-05-2004 30-07-1969 17-10-2008 30-12-2005 07-10-2004 25-02-1984 19-06-2003 01-10-1997 07-11-2001 31-12-1973 04-11-1975 29-07-1989 30-12-1980 16-04-1970 13-04-2000 08-01-1991 20-05-1983 28-10-2000 07-05-2003 05-05-2003 30-12-1972 14-08-1975 03-01-1975 28-01-1999 01-02-1997 08-01-1991 30-03-2000 20-05-1983 05-03-1975 27-10-1994 31-12-2002 08-12-1983 04-10-1991

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102 ANNEXES
Type of EoI arrangement DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC Date entered into force 02-09-1983 09-07-1980 29-04-2004 19-02-1971 17-10-1998 26-06-2000 06-07-2010 25-06-2007 04-02-1993 26-05-1983 27-11-2008 13-06-2000 02-10-2002 12-06-1985 10-10-1998 19-09-1979 25-06-2003 24-02-1993 26-09-1980 14-12-2005 08-01-1991 28-12-1980 05-06-2009 08-10-1991 08-01-1991 25-02-1999 06-01-2004 21-10-1989 28-12-2007 08-07-1999 13-11-1998 25-06-1999

Jurisdiction 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 Pakistan Philippines Poland Portugal Romania Russia Rwanda San Marino Senegal Serbia Singapore Slovak Republic Slovenia Sri Lanka South Africa South Korea Spain Sweden Switzerland Taiwan Tajikistan Thailand Tunisia Turkey Turkmenistan Ukraine United Arab Emirates United Kingdom United States Uzbekistan Venezuela Viet Nam

Date signed 17-03-1980 02-10-1976 20-08-2001 16-07-1969 04-03-1996 16-06-1995 16-04-2007 21-12-2005 29-09-1987 21-11-1980 06-11-2006 15-01-1997 22-06-1998 03-02-1983 01-02-1995 29-08-1977 14-06-1995 05-02-1991 28-08-1978 13-10-2004 17-12-1987 16-10-1978 07-10-2004 02-06-1987 17-12-1987 20-05-1996 30-09-1996 01-06-1987 27-11-2006 14-11-1996 22-04-1993 28-02-1996

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Annex3: List of Agreements Signed by Belgium that Still Need to be Ratified to Allow for EOI to the Standard
DTA Jurisdiction Andorra Anguilla Antigua and Barbuda Austria Bahamas Bahrain Belize Dominica Gibraltar Grenada Isle of Man Liechtenstein Luxembourg Monaco Macao Montserrat Oman Qatar Saint Kitts and Nevis Saint Lucia Saint Vincent and the Grenadines Seychelles Singapore Tajikistan Uganda Vietnam New Protocol TIEA Signed 23-10-2009 24-09-2010 07-12-2009 10-09-2009 07-12-2009 23-11-2009 29-12-2009 26-02-2010 16-12-2009 18-03-2010 16-07-2009 10-11-2009 16-07-2009 15-07-2009 19-06-2006 16-02-2010 16-12-2008 06-11-2007 18-12-2009 07-12-2009 07-12-2009 14-07-2009 16-07-2009 10-02-2009 27-07-2007 12-03-2012

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Annex 4: List of All Laws, Regulations and Other Documents Received


Belgium Constitution International private law code Penal Code

Commercial legislation
Company Code

Tax legislation
1992 Income Tax Code Code des droits et taxes divers

Anti money laundering legislation


Law of 11January 1993 on preventing the use of the financial system for purposes of money laundering and the financing of terrorism. Law of 18January 2010 modifying the Law of 11January 1993 on prevention of the use of the financial system for the purpose of money laundering and terrorism financing and the Company Code Law of 26November 2011 modifying the Law of 11January 1993 on prevention of the use of the financial system for the purpose of money laundering and terrorism financing and the Company Code Law of 29March 2012 (Program Law) Law of 27November 2012 modifying the Law of 11January 1993 on prevention of the use of the financial system for the purpose of money laundering and terrorism financing and the Company Code

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Royal Decree of 6May 2010 on anti-money laundering and anti-terrorism regulations Royal Decree of 3March 2011 regarding the evolution of the supervisory architecture of the financial sector Royal Decree of 2June 2012 approving the Financial Services and Markets Authority

Financial legislation
Law of 9July 1975 on the supervision of insurance companies Law of 22March 1993 on the legal status and supervision of credit institutions Law of 27March 1995 concerning intermediation in insurance and reinsurance and the distribution of insurance Law of 6April 1995 on the legal status and supervision of investment companies Law of 15July 1998 concerning the certification of securities issued by business companies Law of 2August 2002 on the supervision of the financial sector and on financial services Law of 20July 2004 on certain forms of collective management of investment portfolios Law of 14December 2005 abolishing bearer securities Law of 22March 2006 on intermediation in banking and investment services and on the distribution of financial instruments Law of 27October 2006 on the supervision of institutions for occupational retirement provision Programme Law of 27December 2006 Law of 2May 2007 on disclosure of major holdings in issuers whose shares are admitted to trading on a regulated market and laying down miscellaneous provisions Law of 16February 2009 concerning reinsurance Law of 31July 2009 transposing Directive 2007/44/EC as regards procedural rules and evaluation criteria for the prudential assessment of acquisitions and increase of holdings in the financial sector

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Royal Decree of 4March 1991 on certain undertakings for collective investment Royal Decree of 23September 1992 concerning the annual accounts of credit institutions Royal Decree of 10April 1995 concerning real estate SICAFs Royal Decree of 5March 2006 on market abuse Royal Decree of 14February 2008 on disclosure of major shareholdings

Other legislation
Proposal for a Council Directive on administrative cooperation in the field of taxation Law of 14April 2011 providing for miscellaneous provisions Law of 25 Ventse, Year XI, containing organisation of the notarial profession. Royal Decree of 26June 2003 on the simplified accounting of some non-profit-making associations, international non-profit-making associations and foundations Law of 16January 2003 establishing a Banque-Carrefour des Entreprises, modernising the register of commerce, creating approved business registration centres and laying down miscellaneous provisions Organic Royal Decree of 3December 2009 concerning the operational departments of SPF Finances Organic Royal Decree of 3December 2009 concerning departments other than operational departments in SPF Finances Reply to the parliamentary question of Senator De Clippele, 10July 1991

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