Professional Documents
Culture Documents
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
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
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.
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).
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.
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
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.
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.
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
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.
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.
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.
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.
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.
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
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
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.
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.
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.
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.
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.
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
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.
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.
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.
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.
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
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)
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.
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
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.
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.
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
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;
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.
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
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.
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
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
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.
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.
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
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.
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.
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.
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.
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,
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.
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
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.
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).
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
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
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.
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.
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.
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.
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.
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
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.
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.
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.
C.3. Confidentiality
The jurisdictions mechanisms for exchange of information should have adequate provisions to ensure the confidentiality of information received.
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.
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
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
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
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.
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
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.
Conclusions
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
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.
ANNEXES 97
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
ANNEXES 99
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.
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
ANNEXES 101
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
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
ANNEXES 103
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
104 ANNEXES
Commercial legislation
Company Code
Tax legislation
1992 Income Tax Code Code des droits et taxes divers
ANNEXES 105
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
106 ANNEXES
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