Benefit in kind on immovable property: tax authority abides by the court ruling (for now)

The Federal Public Service Finance published Circular 2018/C/57 on 15 May 2018 on the flat-rate valuation of the benefit in kind for providing an immovable property or a part of an immovable property free of charge to employees or managers. The flat-rate estimate of these benefits is laid down by the Royal Decree implementing the Income Tax Code 1992 (RD/BITC 92). The Courts of Appeal of Ghent and Antwerp recently confirmed that the distinction to calculate the taxable benefit depending on whether that benefit is awarded by a natural person or a legal person, is unconstitutional. To correct this difference of treatment, Article 18, § 3, 2 RD/BITC 92 requires an amendment. How best to do this, is currently being considered.

Royal Decree unconstitutional, what now?
In anticipation of this legislative intervention, the tax authority has decided to abide by the above-mentioned ruling. In the event that a legal person makes a property available to an employee or manager, the taxable benefit will be estimated at 100/60 of the index-linked cadastral income of that property and, where appropriate, increased by 2/3 for a furnished property.

The tax authority further confirms that in regard to the treatment of statements of objection and legal procedures that may have arisen, it can be agreed that Article 18, § 3, 2, first paragraph, RD/BITC 92 can be applied when calculating a benefit in kind for making available an immovable property or a part thereof, irrespective of the person who makes the property available.

Remission?
What is less clear is that the same tax authority circular indicates that requests for remission will be rejected. A request for remission can be submitted within a period of five years from the first of January of the tax year, such as in the event of a new fact arising for which the late invocation for legitimate reasons is justified. According to the fiscal administration, a change in jurisprudence is not considered a new fact. It is therefore not possible to rely on the above-mentioned case-law to submit a request for remission, even after expiry of the regular objection period. This last point is somewhat open to challenge.

The law sets out that a “change in jurisprudence” cannot be considered a new fact. However, according to established case-law this does not apply to Constitutional Court judgements. Such judgements do qualify as a “new fact” on the basis of which a remission can be requested. It could be argued that the same logic applies to the above-mentioned judgements by the Courts of Appeal since the flat-rate valuation of the benefit in kind is not included in the Income Tax Code itself, but in Article 18 of the implementing decision. Since it is not possible to have the validity of a Royal Decree reviewed by the Constitutional Court (the Court is only authorised to review regulations with force of law), the courts themselves are obliged to review the legality of the provisions of the Royal Decree on the basis of Article 159 of the Judicial Code. In this particular context where the validity of a provision of a Royal Decree is reviewed against the Constitution, it could be argued that a judgement by a court of appeal, for example, in which it makes a ruling on the legality of a Royal Decree, can be equated with a judgement by the Constitutional Court.

Parliamentary question confirms “new fact”
In his response to a parliamentary question a while ago, the Minister of Finance stated that the jurisprudence to which Article 376, §2 BITC 92 refers, only consists of the interpretation and application of law provisions, the validity of which is not contested. Decisions about the validity of the law itself would for that reason form no part of the jurisprudence under Article 376, §2 BITC 92. Further to this parliamentary question, it can therefore be argued in our view that the relevant judgements represent a “new fact” because they are not excluded by Article 376, §2 BITC 92 as a “change in jurisprudence”.

Valuation of usufruct
Now also a witch hunt when usufruct is sold?
In previous editions, we have already written about the valuation of usufruct when purchasing property, but recently there have also been regular reports of checks on the valuation of usufruct when reselling. However, up until now, the case law has followed the viewpoint of the taxpayer. Brief description For several years, there has been a lot of controversy regarding the valuation of usufruc
Vlabel is using conciliatory language
Has the decrease in Flemish sales duty led to an increase in the costs for purchases of usufruct?
The decrease in sales duty: also for split purchase usufruct-bare ownership The recent drop in the rate (to 7.00%) for purchases of family homes comes with a number of conditions. For example, the purchaser must be a natural person. Following some uncertainty, it was subsequently confirmed that, in the event of a split purchase of such a property by a company for the usufruct and the bare owner f
The labour market of the future
Earn (on the side) flexibly and untaxed
There are three legal social statuses in Belgium, (i) employee, (ii) self-employed and (iii) civil servant. However, the question is often asked whether these classifications are still relevant to the rapidly evolving labour market in which flexibility is key and many people opt for a 'freelance status' or wish to combine several statuses. Voka has already called for a debate on the labour mark
Is there a notification requirement for your organisation?
Well begun is half done: Prepare your organisation for the go-live of the UBO register.
The register of ultimate beneficiaries (the "UBO register") will go live on 31 October 2018. In one of our previous newsletters we presented an overview of the general framework of the UBO register. The Royal Decree of 30 July 2018, published in the Belgian Official Journal of 14 September 2018, explains this register in detail. We’ve reviewed what your organisation needs to take into account.&n
One of the action points of the ATAD Directive
Impact of the implementation of the Belgian CFC legislation: the de facto tightening of transfer pricing rules?
From 1 January 2019 (fiscal year 2020), the newly introduced CFC rule will come into effect in Belgium, due to the implementation of the ATAD directive1. This new legislation must be interpreted within the broader framework of the Summer Agreement and the reforms within Belgian corporate taxation, which, like the CFC legislation, have resulted in part from the heavily discussed implementation of t
Brexit, e-commerce & VAT action plan are discussed
Pending changes in the area of international VAT
In the previous edition we discussed the expected changes in terms of VAT at a national level. In this article we will briefly consider the VAT changes that are expected internationally.                Brexit  In principle, on 30 March 2019, the ‘Brexit’ will finally be a reality. The United Kingdom will no lon
Limited number of legal entity types
Help, soon my legal entity type will no longer exist!
The WVV ("CAC") is on its way On 4 June 2018, the "draft legislation introducing the Companies and Associations Code" was filed in the Chamber, marking one of the most far-reaching corporate law reforms since the introduction of the coordinated laws on commercial companies on 30 November 1935. This extensive reform of corporate law corresponds with the introduction of the “Companies and Asso
A brief summary
What should be expected in relation to (national) VAT?
Despite the fact that many of us are still in summer (holiday) mode, this article is going to focus on the VAT changes that we could expect in the not-too-distant future. It will provide a brief summary. For a more in-depth examination, you can always contact our VAT team.  Vouchers (1 January 2019)  In June 2016, Europe set out the VAT process for vouchers (Directive (EU)2016/1065 o
The FAQ contains no fewer than thirty-one questions
FAQ published regarding the Innovation Income Deduction (IID)
On 26 July 2018, the FPS Finance used Fisconet - you can registrate for free to consult the list of FAQ - to publish the long-awaited list of Frequently Asked Questions (FAQ) regarding the Innovation Income Deduction. Since the law of 9 February 2017, introducing the Innovation Income Deduction, there now follows the first additional comments concerning the legal provisions of Art. 20
Depends on the nature and frequency of the violation
Fine levels set for non-compliance with transfer pricing documentation obligation
From tax year 2017 and, more specifically, the implementation of the mandatory transfer pricing documentation obligation, there was an immediate indication that, from a second violation of non-compliance with the transfer pricing obligations, a fine of between 1,250 EUR and 25,000 EUR (Article 445, §3 Income Tax Code 1992) could be imposed. The scales of the administrative fines and their appl

Subscribe to our newsletter