By Nathalie Valluis, French Tax Lawyer, Paris
French financial institutions are potentially subject to new obligations towards Belgium following recent changes in Belgian tools to fight tax evasion. As of January 31, financial institutions in France were potentially required to pass on information to the Belgian Central Point of Contact for Accounts and Financial Contracts.
Since 2011, the Central Point of Contact, managed by the National Bank of Belgium, has centralized data on bank accounts and financial contracts of individuals as well as of companies. Over the following years its role has gradually expanded. While it was first created for tax purposes, it was deeply reformed in 2018 to also help detect money laundering and terrorism financing.
Financial institutions such as credit and payment institutions, stock exchange companies, and insurance companies must submit the mandatory information. In addition, Belgian taxpayers are required to personally declare accounts they hold abroad.
Before 2022, financial institutions did not have any specific obligations to fulfill if they were not established in Belgium.
By better defining the concept of distance contract, recent legal changes (the Programme Law of December 20, 2020 and the Royal Decree of June 6, 2021) have significantly changed the situation, however.
Any distance contract concluded with an individual domiciled—or a company having its registered office—in Belgium is now considered as concluded in Belgium. As such, it must be declared to the Belgian Central Point of Contact.
As a consequence, any French financial institution having activities in Belgium under the freedom to provide services without being established in the country must submit information on financial contracts falling within the scope of distance contract. Such would be the case, for example, for contracts concluded by electronic means.
The change is quite significant—and it conflicts with French bank secrecy rules—considering that financial contracts include securities accounts or life insurance contracts.
Furthermore, it is probably redundant with existing obligations, such as common reporting standards or French declaration of financial contracts (French bank and similar accounts file, French life insurance contracts file), which already address objectives regarding the fight against tax evasion.
Overcoming this impasse seems important to avoid legal uncertainty on both sides of the border as well as in other European Union member countries, as they are facing the same difficulties.
–Nathalie Valluis is a French tax lawyer in Paris.
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