Adoption of Reporting Duty for Tax Specialists on Tax Structures from 2020

Which structures must be reported?

With this new European Directive, accountants, lawyers, tax consultants and other intermediaries will be required to report the planning structures that they devise, offer, make available or whose implementation they manage to the tax authorities. Only tax structures of a cross-border nature must be reported.

In addition, the European member states have also decided that cross-border structures must have specific characteristics to be covered by the reporting obligation. According to them, these characteristics, the so-called 'hallmarks', give a strong indication of tax avoidance or abuse.

Most of these hallmarks are subject to a main benefits test, which means that the structure is subject to the reporting obligation only if the main goal is to obtain a tax benefit. Some examples of hallmarks are structures with deductible cross-border payments between affiliated companies, structures where a loss-making company is acquired and structures using standardised documents.

However, some structures must always be reported and are therefore not subject to the main benefits test. This is the case, for example, with structures where several countries can claim a right to deduct or where the automatic exchange of bank information is bypassed.

Who must report?

The reporting obligation rests primarily on the intermediary. Only in three specific situations is the duty to report shifted to the taxpayer concerned. This is the case when the structure is set up by the taxpayer without any form of external assistance, when the intermediary is established outside the EU and when the intermediary can invoke a professional secret written in law. Belgian tax specialists, accountants and lawyers are subject to this. Consequently, the obligation to report will always shift to the taxpayer.

From when should structures be reported?

Member States are expected to apply the directive from 1 July 2020. However, the directive is expected to enter into force in mid-July 2018 in Belgium.

This means that tax structures rolled out from that moment on are subject to the reporting obligation, but that effective reporting must only take place in 2020.

How the Belgian legislator will specifically transpose this Directive remains to be seen. Does the legislator choose to have as many structures as possible subject to mandatory reporting or will they be selected in advance? Vandelanotte is closely following these developments for you.

If you already have questions about the specific impact of this new measure, don't hesitate to contact one of our specialists via contact@vdl.be.