Belgian court rules on application of tax general anti-abuse provision

By Moïse Gnakouri, Doctoral researcher, Catholic University of Louvain, Brussels

The Belgian High Court on November 25 released two decisions in tax matters concerning the general anti-abuse provision contained in article 344 of the Belgian Income Tax Code.

In both cases, the Belgian tax administration considered the application of the general anti-abuse provision to a set of legal acts. The first of such acts was performed before the general anti-abuse provision came into force, and at least one of the following acts was performed after its entry into force.

The Belgian tax administration considered it to be sufficient that one of the sets of legal acts fell within the temporal scope of the general anti-abuse provision to apply the provision to all the legal acts. However, this position of the tax administration was not shared by a large part of the doctrine and by the Belgian jurisdictions, which contended that the Belgian tax administration’s position would infringe the principle of non-retroactivity of the law enshrined in article 1 of the Civil Code.

Article 167 of the Loi-Programme from March 29, 2012, amended the old Belgian anti-abuse provision and established it in its current version. In accordance with article 169 of the same Loi-Programme, this new anti-abuse provision came into force from tax year 2013 and applied to acts or sets of legal acts performed during a taxable period ending at the earliest on April 6, 2012, and relating to the tax year 2012.

In the current decisions, the Belgian High Court dismissed the tax administration’s interpretation of the temporal application of the general anti-abuse provision. For the Belgian High Court, it is not sufficient that the last legal act of the set of legal acts be performed during the taxable period of the tax year 2013 or during the following tax years for the general anti-abuse rule to be applicable to all the set of legal acts.

The court further stated that the general Belgian anti-abuse provision must be applied and interpreted in accordance with the case law of the EU Court of Justice and in the light of Article 6 of the Anti Tax Avoidance Directive (ATAD).