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Global Forum on Transparency and Exchange of Information for Tax Purposes GLOBAL FORUM ON TRANSPARENCY
Global Forum on Transparency and Exchange of Information
for Tax Purposes
GLOBAL FORUM ON TRANSPARENCY AND EXCHANGE
OF INFORMATION FOR TAX PURPOSES
PEER REVIEWS, PHASE 2: BELGIUM
This report contains a “Phase 2: Implementation of the Standard in Practice” review, as well
as revised version of the “Phase 1: Legal and Regulatory Framework review” already released
for this jurisdiction.
The Global Forum on Transparency and Exchange of Information for Tax Purposes is the
multilateral framework within which work in the area of tax transparency and exchange of
information is carried out by 120 jurisdictions, which participate in the Global Forum on an
equal footing.
The Global Forum is charged with in-depth monitoring and peer review of the implementation
of the international standards of transparency and exchange of information for tax purposes.
These standards are primarily reflected in the 2002 OECD Model Agreement on Exchange
of Information on Tax Matters and its commentary, and in Article 26 of the OECD Model
Tax Convention on Income and on Capital and its commentary as updated in 2004. The
standards have also been incorporated into the UN Model Tax Convention.
Peer Review Report
Phase 2
Implementation of the Standard
in Practice
BELGIUM
The standards provide for international exchange on request of foreseeably relevant
information for the administration or enforcement of the domestic tax laws of a requesting
party. Fishing expeditions are not authorised but all foreseeably relevant information must be
provided, including bank information and information held by fiduciaries, regardless of the
existence of a domestic tax interest or the application of a dual criminality standard.
All members of the Global Forum, as well as jurisdictions identified by the Global Forum as
relevant to its work, are being reviewed. This process is undertaken in two phases. Phase 1
reviews assess the quality of a jurisdiction’s legal and regulatory framework for the exchange
of information, while Phase 2 reviews look at the practical implementation of that framework.
Some Global Forum members are undergoing combined – Phase 1 and Phase 2 – reviews.
The Global Forum has also put in place a process for supplementary reports to follow-up
on recommendations, as well as for the ongoing monitoring of jurisdictions following the
conclusion of a review. The ultimate goal is to help jurisdictions to effectively implement the
international standards of transparency and exchange of information for tax purposes.
All review reports are published once approved by the Global Forum and they thus represent
agreed Global Forum reports.
For more information on the work of the Global Forum on Transparency and Exchange of
Information for Tax Purposes, and for copies of the published review reports, please refer to
www.oecd.org/tax/transparency and www.eoi-tax.org.
Consult this publication on line at http://dx.doi.org/10.1787/xxx.
This work is published on the OECD iLibrary, which gathers all OECD books, periodicals and
statistical databases.
Visit www.oecd-ilibrary.org for more information.
ISBN 978-92-64-19205-8
23 2013 11 1 P
-:HSTCQE=V^WUZ]:
Peer Review Report Phase 2 Implementation of the Standard in Practice BELGIUM
232013111cov.indd
1
18-Mar-2013
9:05:50 AM

TABLE OF CONTENTS – 3

Table of Contents

About

the Global Forum

5

Executive Summary

7

Introduction

11

Overview of the financial sector and the relevant professions

Overview

of

Belgium

12

15

Compliance with the Standards 17

A.

Availability of Information

 

17

Overview

17

A1 Ownership and identity information

19

A2 Accounting records

45

A3 Banking information

49

B.

Access

to

Information

55

Overview

55

B1 Competent Authority’s ability to obtain and provide information 56

 

B2 Notification requirements and rights and safeguards

70

C.

Exchanging Information

 

71

Overview

71

C1 Information exchange mechanisms

72

C2 Exchange-of-information mechanisms with all relevant partners 79

C4 Rights and safeguards of taxpayers and third parties

C3 Confidentiality

82

84

C5 Timeliness of responses to requests for information

84

Summary of Determinations and Factors Underlying Recommendations 93

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4 – TABLE OF CONTENTS

Annex 1: Jurisdiction’s Response to the Supplementary Report 97

Annex 2: List of All Exchange of Information Mechanisms in Force 99

Annex 3: List of Agreements Signed by Belgium that Still Need to be Ratified to Allow for EOI to the Standard 103

Annex 4: List of All Laws, Regulations and Other Documents Received 104

PEER REVIEW REPORT – PHASE 2 – BELGIUM © OECD 2013

ABOUT THE GLOBAL FORUM – 5

About the Global Forum

The Global Forum on Transparency and Exchange of Information for Tax Purposes is the multilateral framework within which work in the area of tax transparency and exchange of information is carried out by over 100 jurisdic- tions, which participate in the Global Forum on an equal footing

The Global Forum is charged with in-depth monitoring and peer review of the implementation of the international standards of transparency and exchange of information for tax purposes These standards are primarily reflected in the 2002 OECD Model Agreement on Exchange of Information on Tax Matters and its commentary, and in Article 26 of the OECD Model Tax Convention on Income and on Capital and its commentary as updated in 2004 The standards have also been incorporated into the UN Model Tax Convention

The standards provide for international exchange on request of foreseeably relevant information for the administration or enforcement of the domestic tax laws of a requesting party Fishing expeditions are not authorised but all fore- seeably relevant information must be provided, including bank information and information held by fiduciaries, regardless of the existence of a domestic tax interest or the application of a dual criminality standard

All members of the Global Forum, as well as jurisdictions identified by the Global Forum as relevant to its work, are being reviewed This process is under- taken in two phases Phase 1 reviews assess the quality of a jurisdiction’s legal and regulatory framework for the exchange of information, while Phase 2 reviews look at the practical implementation of that framework Some Global Forum members are undergoing combined – Phase 1 and Phase 2 – reviews The Global Forum has also put in place a process for supplementary reports to follow-up on recommendations, as well as for the ongoing monitoring of jurisdictions following the conclusion of a review The ultimate goal is to help jurisdictions to effectively implement the international standards of transparency and exchange of informa- tion for tax purposes

All review reports are published once approved by the Global Forum and they thus represent agreed Global Forum reports

For more information on the work of the Global Forum on Transparency and Exchange of Information for Tax Purposes, and for copies of the published review reports, please refer to www.oecd.org/tax/transparency and www.eoi-tax.org

PEER REVIEW REPORT – PHASE 2 – BELGIUM © OECD 2013

EXECUTIVE SUMMARY – 7

Executive Summary

The present report summarises Belgium’s legal and regulatory frame-

work as well as Belgium’s practice in relation to transparency and exchange of information for tax purposes

2 The international standard which is set out in the Global Forum’s 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 14 information 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 4 April 2011

4 The Belgian Parliament adopted, on 14 April 2011 (Moniteur Belge, 6 May 2011, 1st edition, p 26576) a law, extending to third parties, the obli- gation 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 Belgium’s treaty partners covered by an agreement provid- ing for exchange of information, under reciprocity This ensures access to information held by Belgian financial institutions to 83 of Belgium’s 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

1

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8 – EXECUTIVE SUMMARY

6 Given the registration requirements for companies as well as tax requirements, the availability of information regarding ownership of com- panies 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 14 December 2005 law eliminated bearer shares and established mechanisms which aim, on the one hand, to remove the pos- sibility 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 1 January 2008 For other companies, this conversion will be completed by 31 December 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, 150 million bearer shares were converted to registered shares Belgian authorities have mentioned that as of 31 December 2012, approximately three to four percent of bearer shares have not yet been converted

The Belgian legislation ensures the availability of accounting infor-

7

mation In effect, the legal obligations apply to entities subject to corporate income tax or legal entities income tax 1 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, infor- mation 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 Belgium’s EOI partners

8 Belgium’s 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 Belgium’s treaty partners requesting informa- tion To access information for EOI purposes, Belgium’s 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 auto- matically with an increasing number of partners

9

the EOI division to improve the quality and timeliness of responses provided

Since 2009, Belgium has reorganised the structures and processes in

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)

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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 incom- ing 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 informa- tion 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 informa- tion, Belgium interprets this legislation as allowing it to access information during the seven-year period if the requesting party provides reasons to jus- tify 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 Belgium’s 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 Belgium’s 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

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

13

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INTRODUCTION – 11

Introduction

14 The assessment of Belgium’s 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 Forum’s Terms of Reference and were prepared using the Global Forum’s 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 infor- mation 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 Fédéral Finances (SPF Finances), registration and anti-money laundering authorities as well as rep- resentatives 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 three- year 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 enumer- ated aspects under three broad categories: (A) availability of information; (B) access to information; and (C) exchanging information This report sum- marises 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 recommen- dations as to how some aspects of the Belgian system might be strengthened As outlined in the Note on Assessment Criteria, following a jurisdiction’s Phase 2 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 Phase 2 review is

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12 – INTRODUCTION

completed” This report therefore includes recommendations in respect of Belgium’s 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 Phase 1 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 General’s Office in Mauritius; Rémi Verneau for the Global Forum Secretariat The team evaluated Belgium’s legal and regulatory framework for transpar- ency and exchange of information and its relevant information exchange mechanisms

18 The Phase 2 assessment was conducted by a team consisting of two assessors and two representatives of the Global Forum Secretariat: Manon Hélie, Manager, Exchange of Information Services Section of the Canadian Revenue Agency; Rajesh Sharma Ramloll, Assistant Solicitor General at the Attorney General’s Office in Mauritius; Mélanie Robert and Rémi Verneau for the Global Forum Secretariat The team evaluated the implementation and effectiveness of Belgium’s legal and regulatory framework for transpar- ency 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 (30 000 km²), Belgium has a total population of 11 million, making it one of the most densely populated European states with 360 inhabitants/km² 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 EUR 355 billion and a per capita GDP of EUR 32 000 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 Belgium’s main economic partners are Germany, France, the Netherlands, the United Kingdom and the United States

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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 adminis- trative 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

General information on the legal and tax system Legal system

22 Belgium (or the Kingdom of Belgium) is a constitutional parliamen- tary monarchy Since 1994, it has been a federal state consisting of three regions (the Brussels Capital Region, the Flemish Region and the Walloon Region) and three communities (Flemish, French and German-speaking) The regions are divided into 10 provinces and 589 municipalities The official languages are Dutch, French and German

23 At the federal level, the legislature consists of the Chamber of Representatives and the Senate, both elected for four years The executive consists of the King as Head of State and the government led by the prime minister The executive runs those aspects of the country which are the responsibility of the federal government under the Constitution This applies to matters in the financial sphere

24 The Belgian legal system is rooted in Roman and Germanic law known as civil law At the federal level, the 1994 Constitution constitutes the pinnacle of the hierarchy of norms While the Belgian Constitution does not refer to the position of international treaties in this hierarchy, the primacy of international law over domestic law has been confirmed by the case law of the Belgian Supreme Court of Appeal in so far as the international standard is likely to have a direct impact, or in other words to be sufficiently clear, comprehensive and precise, to generate rights and obligations for private individuals of its own accord This is the case in so far as the value of a tax treaty in relation to Belgian domestic legislation is concerned

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-à- vis taxation The tax system is administered by the SPF Finances which is divided into six administrations: l’Administration Générale de la Fiscalité (“AGFisc” – the General Administration of Taxes), l’Administration de la Lutte contre la Fraude (Inspection Spéciale des Impôts, Administration for

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14 – INTRODUCTION

fight against tax fraud – hereinafter “ISI”), l’Administration Générale de la Perception et du Recouvrement (the General Administration for the Recovery of Taxes), l’Administration de la Trésorerie (the Administration of Treasury), l’Administration de la Documentation Patrimoniale (The Administration of Real Estate Documentation), and l’Administration des Douanes et Accises (Administration of Customs and Excise) In addition, supporting central ser- vices 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 Registry 2 are residents All companies with their registered office in Belgium, their principal establishment in Belgium, or who’s 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 EUR 8 350, and 50% applicable to the taxable income bracket above EUR 36 300 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 3399%, or, in cases in which taxable income does not exceed EUR 322 500, on progressive rates ranging between 2425% and 345%

28 In 2010, the total tax revenue in Belgium (including social security contributions) stood at 4394% of GDP, with VAT representing 162% of tax revenue, personal income tax 281% and corporate income tax 62%

29 Belgium’s tax relations with its neighbours date back a very long time, since the country is party to the world’s oldest tax agreement still in force, namely the 1843 Franco-Belgian convention governing relations between the stamp tax authorities in France and Belgium Today, Belgium’s 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 regis- tration, storage and communication of information relating to the identification of natural persons The number in the national registry is also called “tax identi- fication number”

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INTRODUCTION – 15

complying with the standard, in particular as regards the exchange of bank- ing 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 1 January 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 1 July 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 1 July 2011 to 30 June

2012)

32 The Minister of Finance has delegated the role of competent authority for direct taxes to SPF Finances which also represents Belgium in interna- tional organisations where issues concerning the exchange of information on tax matters are discussed, whether at EU, OECD or Global Forum levels

Overview of the financial sector and the relevant professions

33 The Banque Nationale de Belgique (BNB) and the Autorité des Services et Marchés Financiers (Financial Services and Markets Authority- FSMA) are the two Belgian authorities responsible for the supervision of most financial institutions and financial services for the public 3 Through their activities, they seek to protect savers and insured parties and to ensure the proper operation of markets in financial instruments

34 Intermediary activities in financial services are the sole preserve of persons or entities registered with the BNB, the FSMA or the similar author- ity of the home country in the case of those that are established in another state of the European Economic Area

35 According to the most recent statistics available, there are 53 credit institutions governed by the Belgian law (including 9 branches of credit insti- tutions having their headquarters in foreign countries that are not members

3

Replacing the Commission bancaire, financière et des assurances (CBFA, or the Banking, Finance and Insurance Commission) which was the sole Belgian authority responsible for the supervision of most financial institutions

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16 – INTRODUCTION

of the European Economic Area) and 54 branches of credit institutions sub- ject 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 adminis- tered in Belgium

36 In Belgium, the above mentioned financial professions as well as the following non-financial professions:casinos (9), dealers in diamonds (over 1 800), security companies that provide services of surveillance and protec- tion for transporting valuables (7), real estate agents (over 8 800), notaries (over 1 400), bailiffs (over 550), barristers (15 000), accountants and tax advisers (6 500), certified public accountants and tax consultants (almost 10 000) are all regarded as constituting non-financial professions and enter- prises under anti-money laundering legislation and are required, pursuant to this legislation, to conduct a customer due diligence

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COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION – 17

Compliance with the Standards

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 rea- sons If such information is not kept or the information is not maintained for a reasonable period of time, a jurisdiction’s competent authority may not be able to obtain and provide it when requested This section of the report assesses the adequacy of Belgium’s legal and regulatory framework on avail- ability 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 docu- ment is published in the Moniteur belge (Belgium’s “official journal”) and the company concerned is then registered in the Banque Carrefour des Entreprises (“BCE”) constituting the Belgian register of legal entities Information concern- ing the identity of shareholders that has to be disclosed at this point is limited to those jointly and severally liable for the company’s debts

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18 – COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION

39 Thanks to other mechanisms, such as the share registers for instance, all information concerning shareholders in companies not listed on a stock exchange, namely sociétés privées à responsabilité limitée (SPRLs, or limited liability companies), sociétés coopérative à responsabilité illimitée (SCRIs, or cooperative companies with unlimited liability) and sociétés coopératives à responsabilité limitée (SCRLs, or cooperative companies with limited liabil- ity) is available to the Belgian tax authorities

40 Information concerning shareholders in sociétés anonymes (SAs, or public limited companies) and sociétés en commandite par actions (SCAs, or partnerships limited by shares) is available in most situations The law of 14 December 2005 abolished bearer shares and requires them to be converted into registered or electronic securities 4 As of 1 January 2008, bearer shares can no longer be issued, and bearer shares in listed companies are abolished The conversion process for bearer shares in unlisted companies will be completed by 31 December 2013, at the latest In the meantime, the Belgian authorities have put mechanisms in place to facilitate this conversion and, in particular, introduced in 2011 a tax on conversion of bearer shares, the rate of which is increased in line with the delay in conversion This tax has had the effect of encouraging conversions

41 Information concerning partnerships and persons involved with foun- dations is available Where trusts are concerned and even though the Belgian legislation does not provide for the institution of trusts of Belgian law, trusts may be administered from Belgium or assets located in Belgium may be owned by a trust As a professional, a trustee is required to keep all informa- tion needed to determine his/her income, which would include information on the property in the trust, the settlor and the beneficiaries In addition, the anti-money laundering legislation adopted by Belgium states that service providers must keep records regarding settlors and beneficiaries of trusts

42 Any entity subject to corporate income tax or legal entities income tax is required to keep a record of accounting data and supporting documents for a seven-year period This ensures the availability of this information

43 Banks and financial institutions are required to perform a customer due diligence and to hold records of transactions conducted by their cus- tomers for a period of at least five years pursuant to anti-money laundering legislation, and for a period of seven years pursuant to accounting legislation

Information received from jurisdictions with an EOI relationship with

Belgium, as well as information received from Belgium, shows that Belgium

44

4 An electronic security is a security registered on an account with a clearing organisation (Euroclear Belgium or the National Bank of Belgium) or a recog- nised account holder (eg credit institutions)

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COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION – 19

now actively exchanges bank, ownership and identity information and accounting records Based on peer inputs, it is clear that Belgium’s 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

A.1. Ownership and identity information

Jurisdictions should ensure that ownership and identity information for all relevant entities and arrangements is available to their competent authorities.

Companies (ToR A.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 EUR 61 500 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 121 900 companies in Belgium are public limited companies 5

The SE (European Company) – European companies are regulated by Council Regulation (EC) No 2157/2001 of 8 October 2001 on the Statute for a European company (SE), which was transposed into Belgian law by Royal Decree of 1 September 2004, allowing for the creation and manage- ment 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 article 10 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 EUR 61 500, the SCA must be formed by notarial deed This type

5

Statistics from 2011, source: Federal Public Service Economy

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20 – COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION

of company is rarely used 2 574 partnerships have been created in the form of a partnership limited by shares (SCA)

The SPRL (limited liability company) – Company Code – Book IV and Book VI – is formed by one or several persons whose responsibility is limited to the level of their contributions The SPRL is the only Belgian law company that can be established by one person alone The shares issued by the company are mandatorily registered shares that are only transferable under certain cir- cumstances Its share capital must be fully subscribed when the company is formed and amount to at least EUR 18 550 The articles of incorporation have to be drafted by notarial deed There are 320 200 SPRLs in Belgium

The SCRI (cooperative company with unlimited liability) – Company Code – Book IV and Book VII – consists of at least three partners No mini- mum capital is required to create it It may be incorporated by notarial deed but incorporation by private deed is also accepted 6 200 Belgian companies take the form of SCRI

The SCRL (cooperative company with limited liability) – Company Code – Book IV and Book VII – consists of partners, whose number and contributions may vary The SCRL must be formed by at least three persons It must be incor- porated by notarial deed Over 10 400 Belgian companies take this form

Publicity and registration formalities

46 In Belgium, SAs, SCAs, SCRLs and SPRLs have to be incorporated by notarial deed (i.e. one drafted by a notary) SCRIs, on the other hand, may be set up by private deed However, irrespective of the deed and in compliance with article 67 of the Company Code, a copy of the deed of incorporation, together with an extract of the deed, have to be deposited at the registry of the local com- mercial court competent for the place where the company has its registered office within 15 days following its incorporation (article 68 of the Company Code)

Article 69 of the Company Code stipulates that the extract of the deed

of incorporation should include the following information:

47

the form of the company and its corporate name;

the precise address of its registered office;

the length of time the company will be in existence where this is not unlimited;

the precise identity of its jointly and severally liable partners, its founders and partners who have yet to pay up their contribution; in the latter case, the extract specifies the amount due from each partner;

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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 single- handedly, jointly or in groups;

the detailed description of each contribution, the name of the con- tributor, 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 condi- tions 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 (articles 7 and 8 of the law of 11 January 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 (article 68 of the Company Code)

49 La Chambre nationale des notaires (the National Chamber of nota- ries), the regulatory authority for the notaries (together with the 11 Chambres provinciales des notaires, the Provincial Chambers of notaries), has con- firmed 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 time- lines 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

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

50

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

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registry within 15 days following submission of the documents The Belgian authorities confirmed that all documents submitted to the registry are kept for an unlimited period in individual paper files (one for each entity registered with the registry of the local commercial court) These documents can there- after be easily accessed, if needed for EOI purposes

52 The commercial court registry also places the information with the BCE, the registry of legal entities registered in Belgium

53 Established under the law of 16 January 2003, the BCE is a registry kept by the Service Public Federal Economy, the purpose of which is to register, safeguard, manage and make available information regarding the identification of enterprises (article 3 of the law) Any Belgian legal entity, any foreign legal entity with a seat in Belgium and any establishment must be registered in the BCE

54 Pursuant to article 6 of the law of 16 January 2003, the BCE con- tains, among others and for a period of 30 years from the day legal entities lose their legal personality or permanently cease their activity, the following information:

the name, corporate name or business name of the legal entity;

the precise various addresses;

the legal form and legal status;

the date of incorporation and termination of the enterprise;

the data identifying the founders, nominees and authorised representa- tives

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 effec- tively 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 018% of head office addresses and 014% of other types of address were withdrawn because they were not accurate

55

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57 Pursuant to article 373 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 con- sult 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 (“associés”) 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

Register of registered shares

59 SPRL shares, like those of SCRIs and SCRLs, have to be registered 6 (articles 232 and 356 of the Company Code) The Code also states that each of these companies should hold at its registered office a register of these reg- istered shares including the identity of shareholders of SPRLs and partners of SCRIs and SCRLs, as well as all share transfers within such companies (see articles 233 and 357 of the Company Code) SPRLs, SCRIs and SCRLs cannot issue other types of shares

60 SAs and SCAs are subject to the same requirement When registered shares have been issued by these companies, they must know who their shareholders are and, for this purpose, have to keep a register of the shares including an exact description of each shareholder, the number of shares held, as well as the transfer, forwarding or conversion of the securities in question (article 463 of the Company Code) These companies are also allowed to issue electronic shares that are further described in the section on bearer shares

61 Any interested third party, including the tax authorities, may consult the register of registered shares and thus get information on the identity of the share- holders in an SPRL, or the partners in an SCRL or SCRI In practice, the Belgian tax authorities report that they are always in a position to access this information The information can be gathered by asking the person concerned or by perform- ing an on-site visit In any event, the Belgian authorities have confirmed that ownership information is provided by the companies when requested

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

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Tax requirements

62 When a company is created, a copy of the extract of the deed of incor- poration must be submitted to the enregistrement office 7 of SPF Finances Furthermore, before starting business, a company is obliged to apply for reg- istration 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 addi- tion, 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 pub- lished 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 admin- istrative 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 (articles 2 and 179 of the Belgian Income Tax Code (CIR 92) Accordingly, they are required to submit an annual tax return to the administrative authorities for direct taxation (article 305 of CIR 92) 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 con- tracts subject to a stamp tax must be submitted

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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 pos- sible 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

Obligation to publicise major holdings in a company

68 Pursuant to EU regulations (Directive 2004/109/EC), on 2 May 2007, Belgium adopted a law on the publication of major shareholdings in issuing bodies whose shares are eligible for trading on a regulated stock exchange

69 Pursuant to article 6 of this law, any natural person or legal entity that directly or indirectly acquires securities conferring on it a voting rights quota of 5% or more of all voting rights must inform the company as well as the Autorité des Services et des Marchés Financiers (FSMA) This notification is also required when the number of voting rights reaches or exceeds a quota of 10%, 15% or 20% and in the event of any further increases of 5%

70 The issuing company that receives this notification must ensure that it is published on its website no later than three trading days following its receipt (article 14 of the law of 2 May 2007) In addition and pursuant to the same article, Belgian issuing bodies have to specify in the capital statement attached to their annual accounts the structure of their shareholding on the date the accounts were closed, as shown in the statements they have received about major holdings

The effect of this obligation is that all shareholdings in listed Belgian

companies in excess of 5% are public

71

72 Further requirements directly derive from the legislation on bearer shares adopted by Belgium on 14 December 2005 (see section A12 on bearer shares below)

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Foreign companies Main establishment of a foreign company established in Belgium

73 Pursuant to article 110 of the private international law code, which states that a “legal entity is governed by the law of the state in the territory in which its main establishment is situated from the time at which it is formed”, a foreign company may be governed by Belgian company law if it has its main establishment in Belgium

74 In this situation, publication, registration and record-keeping formali- ties are similar to those applicable to companies directly established under Belgian law The availability of information concerning the ownership of those companies described above is guaranteed under the same terms

Belgian branch of a foreign company

75

applicable to foreign companies branches with an establishment or branch in Belgium Pursuant to articles 81 and 82 of the Company Code, before estab- lishing a branch in Belgium, companies governed by the law of another state must make the following documents and details public:

Articles 81-87 of the Company Code set out the rules for publication

the articles of incorporation (memorandum of association) and/or articles of association;

the corporate name and legal form;

the registry with which a file has been opened in the company name and the registration number of the company in that registry;

the address and description of activities of the branch, as well as its corporate name if this is not the same as that of the company;

the name and identity of the persons empowered to commit the com- pany vis-à-vis third parties and to represent it in court;

the annual and consolidated accounts of the company for the most recently closed financial year

76

ing 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 (articles 83 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

These documents are made public in the 30 days immediately follow-

77 The rules for the registration of foreign companies with the tax authorities are the same as those applicable to Belgian companies: they involve

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registration with the appropriate VAT office, while the office for direct taxation is informed of the company’s existence by means of the information available from the BCE, the “enregistrement office” 8 of SPF Finances and the depart- ment 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 11 January 1993 as recently amended by the Laws of 18 January 2010 and 26 November 2011, by the Programme Law (I) of 29 March 2012, of 27 November 2012 and by the Royal Decrees of 6 May 2010, 3 March 2011 and 2 June 2012 9 For the bodies and persons to whom the law applies, these rules include obligations regarding the identification of customers and verification of their identities

Pursuant to articles 2 and 3 of the law, the persons and entities subject

to the obligation concerning client identification are:

80

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 com- pany service providers or where they are involved on behalf of their clients in any financial or real-estate transaction

8

“Enregistrement” office: local tax office where all deeds and some private con-

9

tracts 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 26 October 2005 on the Prevention of the use of the Financial System for the Purpose of Money Laundering and Terrorist Financing

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81 Pursuant to article 7 of the Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) law, these entities and professionals are required to perform a customer due diligence (CDD) and therefore identify their customers and clients when:

a customer wishes to enter into business relationships which will make that person a regular customer;

a customer wishes to a transaction outside the scope of the business relations referred to immediately above,

- of which the amount reaches or exceeds EUR 10 000, whether the transaction is carried out in one or several operations that appear to be related; or

- which involves a transfer of funds in the sense of Regulation (EC) No 1781/2006 of the European Parliament and of the Council of November 15, 2006 on information on the payer accompanying transfers of funds;

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 identifica- tion data concerning an already identified customer

82 Pursuant to articles 7 and 8 of the law, when the customer is a com- pany 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 company’s 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, benefi- cial 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 company’s or partner- ship’s shares or voting rights;

the one or more natural persons who in some other way exert exercise(s) control over the company’s management

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84 Identification of the beneficial owner is concerned with the person’s 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 person’s address In addition, appropriate measures commensurate with the AML/CFT risk profile of the client 10 have to be taken to verify this information

85

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 depend- ent on the AML/CFT risk profile of the client

86 Notaries are officiers ministériels in Belgium 11 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 18 January 2010 amending the law of 11 January 1993, 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 11 January 1993 can be sanctioned by the supervisory authority with an administrative fine which could amount between 250 EUR and 1 250 000 EUR (article 40 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 suspen- sion 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 Belgium’s 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 main- tain In addition, every three years, other controls are performed to verify

The bodies and persons within the scope of the law must update the

10

Further information on the way this AML/CFT profile risk must be considered

11

is described in a regulation of the CBFA dated 23 February 2010 Notaries, as officiers ministériels, 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

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the quality of work, such as conservation of files Since the adoption of the new AML law in 2010, audit of compliance with AML requirements is now part of the supervision performed by the Chambre nationale des notaires (together with the 11 Chambres provinciales des notaires) Considering that the law introducing these new obligations is recent (2010) the new measures to monitor and control the compliance of notaries were implemented in 2012 Three years will be necessary to complete a first round of audits and to get an overall picture of the results

The Institut des experts-comptables et des conseils fiscaux (account-

ants, certified public accountants and tax advisers supervisory authority – the Institute) has also adopted measures and sanctions to monitor the implemen- tation of AML/CFT obligations applicable to its 4 300 independent members performing activities subject to these requirements

89 Each firm having more than ten accountants, tax advisers or certified public accountants needs to designate one compliance officer who is respon- sible for implementing and monitoring AML/CFT obligations for the firm For smaller firms, although there is no requirement to specifically designate one person, each professional must ensure that its practices comply with AML/CFT obligations

90 In addition, each member of the Institute needs to complete and file a triennial questionnaire The purpose of this questionnaire is to verify the quality of work and practices and ensure the respect of the legal obligations by accountants and tax advisers (including questions on the identification of the clients, training of staff, unusual transactions) Since the introduction of the law providing for AML/CFT supervision and control obligations in respect of accountants and tax advisers, the scope of this questionnaire has been developed to better monitor compliance of members with AML/CFT obligations The results of the questionnaire will be used to identify potential problems and determine needs for additional controls

91 In addition to the questionnaire, the Institute has supplementary sources and powers to verify the compliance of its members, such as informa- tion from other administrative reports that need to be filed to the institute and on-site visits

88

92 The Institute can impose administrative fines and disciplinary sanc- tions on its members although this has not been tested in practice as the current AML/CFT law and its subsequent implementation measures were only adopted in 2010 and 2011(failure to comply with the AML/CFT law of 11 January 1993 can be sanctioned by the supervisory authority with an administrative fine which could amount between 250 EUR and 1 250 000 EUR pursuant to article 40 of the AML/CFT law) According to representa- tives of the Institute, the new procedures to monitor and control the respect

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of AML/CFT obligations by accountants and tax advisers will be fully opera- tional 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 (l’Ordre des Barreaux francophone et germanophone) or the Dutch speak-

ing Bar (l’Ordre du Barreau néerlandophone) – the Bars The two Bars have

a total of 16 000 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 1 000 lawyers are con- cerned 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 11 January 1993 can also be sanctioned by the supervisory authority with an administrative fine which could amount between 250 EUR and 1 250 000 EUR (article 40 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 with- out supervision, and will be strengthened with the recent adoption of legal obligations in this area In practice, the professional’s 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

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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 nomi- nees acting on behalf of their clients The identification of the nominee is ensured in the same way as described above (see article 7 para 2 and 3 of the law)

98 In addition, under the general obligations arising from CIR 92 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 owner- ship 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 informa- tion Belgium’s 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 Belgium’s 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 (ToR A.1.2) Obligations stemming from the abolition of bearer shares

101 On 14 December 2005, Belgium adopted a law to abolish bearer shares Pursuant to this law and since 1 January 2008, it has only been pos- sible to issue electronic 12 or registered securities in Belgium Furthermore, on 1 January 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

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market, and which were listed on a securities trading account, were automati- cally converted into electronic securities

102 Unlisted companies will have to convert bearer shares issued between the publication of the law and 1 January 2008 by 31 December 2012, and securities issued prior to the publication of the law by 31 December 2013 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 con- verted 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 31 December 2013, shareholders will lose the right to convert them and the issuing company must, from 1 January 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 31 December 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 1 January 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 (Belgium’s 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 Article 12(1) of the law of 14 December 2005 provides for the Caisse des depots et con- signations to keep a record of the identity of the person making the claim Restitution claimed after 1 January 2016 will trigger a 10% administrative

organisation (Euroclear Belgium or the National Bank of Belgium) or a recog- nised account holder (e.g. credit institutions)

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fine per year (calculated from 31 December 2015) on the value of the amount deposited to the Caisse des depots et consignations.

As a consequence, when the 14 December 2005 law has produced

105

all of its effects, the identity of shareholders in Belgian companies will be known, following two systems:

the system of registered shares described above which enables the company to know its shareholding, since it must keep a registry of such shares;

the system of electronic securities, in which the identity of the share- holder will be known to the account holder

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 (articles 168 to 173 of the Code des droits et taxes divers, Titre IV) These new provisions, applicable from 1 January 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 finan- cial 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, 150 million bearer shares were converted to registered shares The Belgian authorities have mentioned that as of 31 December 2012, approxi- mately 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 con- verted 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 informa- tion received, it appears that this new framework has produced the expected effect

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Partnerships (ToR A.1.3)

110 Belgian law provides for the establishment of two kinds of partnerships:

The Société en Nom Collectif (SNC, or general partnership) – Company Code – Book IV and Book V – 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 Société 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 mini- mum 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 par- ticularly, Book IV, 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 A11 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 15 days with the registry of the commercial court which keeps the documents on record The publication in the Moniteur belge is the respon- sibility 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 (article 74 1° 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

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A11 above also apply to partnerships These authorities also reported that information on partnerships that needs to be provided to registration authori- ties is provided

115 The SNCs and SCSs are not required to maintain a registry of part- ners and the number of shares held by each However, as the transfer of shares is subject to approval of the partners under Belgian law (articles 38 and 209 of the Company Code), SNCs and SCSs always know the identities of all of the holders of shares, whatever their function in the partnership (either unlim- ited or limited partner), and this information can be obtained by the Belgian authorities upon simple request (section B, Access to Information)

116 The formalities for registration with the tax authorities are similar to those described above for companies The extract of the deed of incorpo- ration of the partnership must be filed with the “enregistrement” office of the Belgian tax authorities (SPF Finances) In addition, before beginning its activity, a partnership is required to apply for registration with the VAT audit- ing office for the area in which it intends to do business The application for registration is mandatory for anyone wishing to start an economic activity as a main or secondary line of business (article 50 of the VAT Code)

117 Partnerships are under no obligation to register with the authori- ties for direct taxation The information published in the Moniteur belge (e.g. when the partnership is formed) and contained in the registry of legal entities of the BCE, as well as the details sent to the VAT auditing office and included in the deed of incorporation registered with the SPF Finances enregistrement office, are forwarded or made available to the authorities for direct taxation As described above for companies, local offices for direct taxation will rely on information received through the BCE, VAT and “enreg- istrement” offices and the partnership itself to register this partnership In practice, the Belgian authorities did not raise any specific difficulty to get information on partnerships and to register these entities for tax purposes

Under Belgian law partnerships have legal personality and are subject

to corporate income tax (articles 2 and 179 of CIR 92) They are required to submit an annual tax return to the authorities for direct taxation (article 305 of CIR 92)

The documents, statements and information which must be provided

according to the declaration form are an integral part of the declaration and have to be appended to it They include the following:

the annual accounts (balance sheet, profit-and-loss account and pos- sible appendices);

the reports to the general assembly and its discussions (including the list of those present)

118

119

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The information available at SPF Finances is thus identical to the informa- tion that can be obtained from the registry of legal entities or the commercial court registry

This set of laws and regulations ensures that the identity of SNC and

SCS partners is available and updated

120

Conclusion

121 Information provided upon creation or modification is first veri- fied 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 avail- able 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 Belgium’s treaty partners, Belgium ensures the availability of ownership of information pertaining to partnerships

Trusts (ToR A.1.4)

122 It is impossible to establish trusts under Belgian law Moreover, Belgium is not a signatory to the Hague Convention of 1 July 1985 on the Law Applicable to Trusts and on their Recognition

123 That said, chapter XII of the private international law code recog- nises and regulates certain aspects of trusts established under foreign law Article 122 of this code includes a definition of a trust, while article 123 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 admin- istered 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

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126 Furthermore, Belgian tax law does not contain provisions regard- ing the information that has to be held by trustees resident in Belgium and involved in trusts established pursuant to foreign legislation

127 According to the analysis developed by the Belgian administration in two administrative decisions, the income received through a discretion- ary trust is considered to be earned by the trustee and is subject to personal or corporate income tax, depending on the nature of the trustee In the case of a “fixed interest” trust, the income of the trust is however considered to be earned by the beneficiaries and is taxable in their hands In this case, the Belgian administration may ask the taxpayers or the trustee for all informa- tion which will allow it to determine the amount of income

128 From a general perspective, if information is considered necessary for Belgian tax assessment purposes, the taxpayer has an obligation to disclose such information to the tax authorities This may include information about settlors, trustees and beneficiaries Furthermore, trustees resident in Belgium, as professionals, are subject to record-keeping requirements for the determi- nation of their own income Thus in the case of a trust, all records that are necessary for determining whether the trust income is taxable in the hands of the trustee or not must be kept This includes the names of the settlors and named beneficiaries of the trust or the nature of the assets in the trust that have generated the income

129 With regard, therefore, to general tax requirements in Belgium pur- suant to which all taxpayers must be capable of providing information to the Belgian tax authorities whenever taxable income has to be determined, a trus- tee resident in Belgium must be in a position to provide SPF Finances with information on the settlors and beneficiaries of trusts that (s)he administers from Belgium

130 There is nothing in Belgium’s laws that prevents a professional from acting as a trustee in Belgium Assets might also be owned in Belgium through a trust created under a foreign law Nevertheless, whilst men- tioning the possible existence of Belgian professional trustees, legal and notarial practitioners as well as accountants, tax advisers and certified public accountants report that they are not aware of cases of assets owned through a trust in Belgium They also emphasised the difficulty of reconciling the holding of real estate or assets through a trust created under common law principles with civil law principles that apply in Belgium They consider that these situations, if they exist, should be extremely rare and with unpredictable and untested legal consequences

131 The Belgian tax authorities do not have knowledge of any cases where trust ownership might have been disclosed for tax purposes They con- sider this to be the result of the absence of recognition of trusts by Belgium

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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

Anti-money laundering Legislation

132 Lawyers, tax advisors as well as all professionals who act as trust service providers come specifically within the scope of the anti-money laundering legislation when they help their clients to prepare or conduct transactions concerning the formation, administration or management of trusts (article 3 of the law of 11 January 1993 as amended) Pursuant to arti- cle 7 and article 8, paragraph 1 of the foregoing law, these service providers must keep information on the identity of their clients and the beneficiaries of trusts As result, professionals acting as trustees in Belgium are obliged to identify their clients (settlors and beneficiaries) and when the beneficiary is a legal person must identify those who have an interest of 25% or more in the entity

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 (ToR A.1.5)

134 In Belgium, foundations are non-profit entities usually set up for purely charitable purposes However, since 1998, foundations may be estab- lished 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 article 27 of the law on foundations of 27 June 1921 as amended by the law of 2 May 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

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unless, in this last instance, such gain is part and parcel of the foregoing dis- interested goal The foundation includes neither members nor partners To be valid, it must be constituted by notarial deed A Belgian foundation does not have beneficiaries

Article 28 of the law on foundations states that a foundation’s articles

of association should state the following, at a minimum:

136

the surnames, first names, place of residence, and date and place of birth of each founder or, in the case of a legal entity, the corporate name, the legal form and the address of the registered office;

the official name of the foundation;

the precise description of the aim or aims underlying the estab- lishment of the foundation, as well as the activities it intends to implement to achieve these goals;

the address of the seat of the foundation, which must be located in Belgium

137 Article 31 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

In compliance with the same article, the information which is

required to be placed in the file includes:

138

 

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;

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the legal documents regarding the appointment, the rescission and the termination of the responsibilities of the directors and, where appli- cable, 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 article 44;

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 clerk’s 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 mat- ters have been received from Belgium’s treaty partners

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Establishment of provisions to ensure the availability of information (ToR A.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 EUR 50-10 000 (articles 90 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 commer- cial court registry, a fine of EUR 25-250 is incurred for every month’s delay (article 256 (1) of the Code of stamp duties, mortgage duties and court fees)

146 In addition, the law of 16 January 2003 setting up the BCE provides for administrative and criminal sanctions for failure to comply with its provi- sions, and in particular as regards the registration requirements (articles 62 para 2 and 5 and article 63)

147 As regards private foundations, the law of 27 June 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 direc- tors 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 infringe-

ment of the company’s statutes, or management errors (see articles 263, 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 articles 348,

388 and 649) Failure to comply with these requirements is punishable by

imprisonment from one month to three years and a fine of EUR 26 to 3 000 (see article 496 of the Penal Code) Finally, Belgian case law (decision of the Court of Appeal of Brussels, 24 June 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

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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, owner- ship in the entity toward third parties and to start a business activity

Belgium’s 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

150

Disclosure of major interests

151

or criminal consequences and, in particular, can result in the following:

Non-compliance with the obligations may have civil, administrative

no person can take part in voting at the general assembly of a com- pany by casting a number of votes greater than that linked to the securities (s)he has declared to be in his or her possession, in compli- ance with articles 514, 515, paragraph 1, or 515(a), paragraph 1, at least 20 days before the date of the general assembly (article 545 of the Company Code) However, if the shareholder concerned know- ingly takes part in voting, (s)he may be criminally liable to a fine of EUR 275-55 000;

if the required declarations have not been made in accordance with the prescribed procedures and schedule, the president of the commer- cial court for the jurisdiction in which the company has its registered office may:

- order the suspension of all or some of the rights linked to the securities concerned for a period of up to a year;

- suspend the holding of a general assembly already convened for a fixed period, as (s)he determines;

- order the sale, under his or her supervision, of the securities con- cerned to a third party unconnected to the current shareholder, within a period which (s)he determines and is renewable

Legislation on the abolition of bearer shares

152 The law of 14 December 2005 states that companies that have not complied with their obligations to identify holders of bearer securities must sell those securities on January 1, 2015, failing which they will be subject to a fine equal to 10% of the value of the securities for every year that the obliga- tion to identify is delayed In relation to the tax on conversion of bearer shares, administrative penalties are applicable when the payment is late or if the spe- cial declaration is incomplete or inaccurate In practice, these sanctions have not been applied yet, since the law entered into force only in 2011

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Anti-money laundering legislation

153 When the Cellule de Traitement des Informations Financières (CTIF, the Financial Intelligence Processing Unit) detects an infringement of the 11 January 1993 law against money laundering and terrorism financing, it may inform the auditing or supervisory authorities, or the disciplinary authorities, so that these authorities can take the appropriate measures and hand down administrative penalties

In the event of failure to comply with the law, these authorities may,

pursuant to article 40, impose an administrative fine in the amount of at least EUR 250 but no greater than EUR 1 250 000

155 The existence of these penalties specifically provided for in the leg- islation to prevent money laundering and the funding of terrorism does not compromise the use of other administrative or disciplinary penalties imposed in accordance with the governing legislation

156 As regards the application of sanctions by supervisory authorities, The Chambre nationale des notaires (together with the 11 Chambres provin- ciales des notaires) has for instance a set of administrative and disciplinary sanctions for failure to comply with AML/CFT obligations Sanctions can take the form of a simple reminder for a first default considered not serious, they can impose an accounting supervision for financial default, a guardian can be appointed for a more serious or repetitive default For serious default, each of the 11 Chambres provinciales des notaires can refer the case to the judicial process, where a suspension can be pronounced In any events, the Chambre nationale des notaires can notify the CTIF if the AML/CFT obliga- tions were not respected by a notary

157 There is a variety of sanctions under Belgium’s laws to ensure that information required to be maintained is, in fact, maintained Most of Belgium’s laws provide a range of penalties, including monetary fines depending on the level of infraction and imprisonment in the more serious cases In addition, the tax authority is able to respond to requests for owner- ship and identity information for all types of legal entities and arrangements Information received from jurisdictions with an exchange of information relationship with Belgium indicates this

154

Determination and factors underlying recommendations

Phase 1 Determination

The element is in place

Factors underlying the recommendations

Recommendations

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Phase 2 Rating

To be finalised as soon as a representative subset of Phase 2 reviews is completed.

A.2. Accounting records

Jurisdictions should ensure that reliable accounting records are kept for all relevant entities and arrangements.

General requirements (ToR A.2.1)

158 The Terms of Reference sets out the standards for the maintenance of reliable accounting records and the necessary accounting record retention period It provides that reliable accounting records should be kept for all rel- evant entities and arrangements To be reliable, accounting records should:

(i) correctly explain all transactions; (ii) enable the financial position of the entity or arrangement to be determined with reasonable accuracy at any time; and (iii) allow financial statements to be prepared Accounting records should further include underlying documentation, such as invoices, contracts, etc Accounting records need to be kept for a minimum of five years

159 The obligation for businesses established in Belgium to keep account- ing records is found in the law of 17 July 1975 concerning accounting for enterprises, and more particularly in articles 3, 4, 6, 7, 9 and 10 Regulations relating to annual accounts, consolidated accounts and publicity formalities are incorporated in the Royal Decree on the implementation of the Company Code

160 The general accounting requirements in the law of 4 September 1975 cover the following:

natural persons acting as business persons;

business companies or companies with a commercial status, the busi- ness goals of a company being set out in the articles of association;

public bodies that carry on business, financial or industrial activities;

any other body with or without its own legal status, pursuing busi- ness, financial or industrial activities Professional trustees are covered by these obligations

161 The accounting practice of legal entities (article 3 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

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balanced with data in the inventory, the accounts are descriptively summa- rised to form the annual accounts

162 Medium and large enterprises have to carry out double-entry bookkeeping in accordance with the legal framework, establish an annual inventory and draw up annual accounts These accounts are submitted for the examination and approval of the general assembly convened for this pur- pose In the 30 days following their approval, they have to be submitted to the National Bank of Belgium (BNB) which checks their content The annual accounts may be consulted on the BNB website This website includes infor- mation on legal entities which since 1992 have directly deposited annual or consolidated accounts with the BNB, or which are supposed to submit annual accounts to it in light of their legal form and circumstances

163 General or limited partnerships, whose turnover in the most recent financial year, excluding value added tax, is no more than EUR 500 000 may keep “simplified” accounting records as long as all their transactions are entered promptly, reliably and fully in chronological order in at least three books, namely a cash book, a purchase book and a sales ledger At least once a year, these enterprises are also required to establish an inventory of all assets, receivables, debts and obligations, as well as all resources earmarked for operational purposes (article 5 of the law) These accounts are also availa- ble on the BNB website Finally, even though these two types of partnerships may keep simplified accounting records, they must nevertheless submit an annual tax return to the tax authorities (see below)

In order to guarantee the continuity of these accounting documents,

their pages are numbered and they form a continuous series, each in accord- ance with its own particular purpose

165 Books and documents from which one can determine the amount of taxable income have to be kept for possible consultation by the authorities, in the office, agency, branch or any other professional or private premises of the taxpayer in which they have been held, drawn up or addressed (article 315 of CIR 92) These premises correspond to the seat which is the focal point for management activity, as well as the administration of interests and company business

166 Each entity liable to corporate income tax or legal entities income tax is required, pursuant to article 305 of CIR 92, to submit a declaration of income on an annual basis The company or legal entity must attach its annual accounts (balance sheet, profit-and-loss account and possible appen- dices) to the declaration as well as all reports to the general assembly and the minutes of its meetings These declarations can be audited by SPF Finances

164

167

submit their accounts to the BNB largely comply with this obligation, as

In practice, companies and partnership that are required by law to

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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 investiga- tion 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 EUR 120 to 400 during the ninth month following the end of the financial year, between EUR 180 to 600 from the tenth to the twelfth month following the end of the year and between EUR 360 and 1 200 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, 48 018 entities had to pay extra charges for delay in submitting the annual accounts; 48 821 in 2010 and 52 257 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 com- ments received from foreign counterparts, Belgium ensures the availability of accounting data from which it is possible to accurately review all transac- tions, to assess the financial position of all entities, and to prepare financial statements

Underlying documentation (ToR A.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 (article 6 of the law of 4 September 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-com- munity 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 4 100 incoming VAT requests over the last three years and in these requests, Belgium’s VAT partners mainly ask for underlying

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documents justifying delivery of goods or provision of services, such as invoices, contracts and other supporting documents The large number of requests received as well as the capacity of Belgium’s authorities to provide answers gives broad assurance that underlying documentation is kept in com- pliance with the standard in Belgium

173 Comments received from peers also confirm that Belgium is able to provide underlying documentation on request It is consequently concluded that the underlying documentation is kept by all relevant Belgium entities in compliance with the standard

Document retention (ToR A.2.3)

174 Pursuant to accounting legislation, all businesses are required to keep a record of their accounts for seven years from 1 January of the year following the closing date of accounts (article 8, paragraph 2 of the law) Supporting documents have to be kept for seven years as originals or copies and methodically classified This period is reduced to three years in the case of documents not required to provide proof vis-à-vis third parties (article 6 of the law)

175 Tax legislation (direct taxation) states that all books and documents which can be used to determine the amount of taxable income have to be kept for possible consultation by the authorities until the end of the seventh year or seventh financial year subsequent to the assessment period (article 315 of CIR 92)

176 With regard to VAT, article 60 of the VAT Code specifies a record- keeping period of seven years (a special period of 15 years applies to transactions the purpose of which is the construction or purchase of a build- ing with payment of VAT)

177 Given the tax and accounting requirements set out in the various laws in force in Belgium, the safekeeping of accounting information for a period of at least five years is guaranteed

178 Tax auditors met have confirmed that in practice, they never had any difficulty in accessing for five years accounting information requested by partner jurisdictions The CIR 92 grants Belgian tax authorities an access to information for a period of three or even seven years Entities subject to this obligation are aware of these rules and keep necessary accounting data for the time period provided by the tax legislation They also confirmed that when requested, the information is always available and provided by the person concerned

179 For both commercial and tax requirements, the time period during which accounting records must be kept by Belgian entities is fully consistent

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with the Terms of Reference For the period under review, there have not been any instances where Belgium’s peers had difficulty in obtaining accounting records due to an inadequate documentation retention period

Determination and factors underlying recommendations

Phase 1 Determination

The element is in place.

Phase 2 Rating

To be finalised as soon as a representative subset of Phase 2 reviews is completed.

A.3. Banking information

Banking information should be available for all account-holders.

Record-keeping requirements (ToR A.3.1)

180 Article 47, paragraph 1 of the law of 11 January 1993 imposes an obligation upon organisations to identify and verify, by means of a conclusive document, the identity of customers who enter into business relationships with the organisation pursuant to which they will become regular customers Article 5 of the CBFA (the Banking, Finance and Insurance Commission) regulation of 23 February 2010 (replacing the regulation of 27 July 2004) states that in fulfilling their legal obligations to identify their customers, organisations must take any appropriate measure to prohibit customers from opening anonymous accounts or ones under false or assumed names, and to verify compliance with this ban

181 Customers are only allowed to open numbered accounts in compli- ance with special regulations determined by the organisation that fix the conditions under which such accounts may be opened and how they should function In addition, these conditions and procedures cannot compromise the application of the provisions of the AML/CTF legislation concerning the identification of the customer and of economic beneficiaries, special measures regarding distance relations, the keeping of data on record, and the customer due diligence obligation (article 8)

182 The use of numbered accounts is restricted by financial organisations to persons who can justify a real need for discretion (this system allows the identity of the account holder to be hidden from the front line employee) The opening of these accounts is, in practice and as required by the BNB, subject to increased identification measures (verification of the reasons justifying

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the need for a numbered account and hierarchical authorisation) Complete information on the account holder must be available

183 In practice, Belgium’s authorities have reported that banks are required to perform customer due diligence before entering into relation- ships with their clients when these clients open a numbered account (see below for details of these customer due diligence requirements) In addition, financial institutions have internal regulations providing specific conditions that must be met when numbered accounts are opened A strict monitoring is also applied to these accounts by financial institutions Belgium’s authori- ties confirmed that the identity of holders of such accounts is known in all instances, although in practice front line employees do not have access to this information to ensure confidentiality In all cases, information on holders of numbered accounts is known by the management of the financial institution and provided to Belgium’s authorities when requested Therefore, this system of numbered account does not hinder the availability of ownership informa- tion pertaining to holders of such accounts

184

The situations in which bodies and persons subject to the law are

required to identify their customers are as follows:

when they enter into business relationships which will make them regular customers;

when the customer wishes to carry out:

- a transaction of which the amount reaches or exceeds EUR 10 000, whether the transaction is carried out in one or several operations that appear to be related; or

- a transaction – even where the amount is less than EUR 10 000 – whenever there is a suspicion of money laundering or terrorism financing; or

- consisting in a transfer of funds within the meaning of Regulation (EC) No 1781/2006 of the European Parliament and of the Council of 15 November 2006 on information on the payer accompanying transfers of funds;

where there are doubts about the truthfulness or accuracy of the iden- tification 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 recon- stitute transactions In particular, article 15 of the law of 11 January 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

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186 Finally, article 3 of the EU Council Directive 2003/48/EC of 3 June 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 mem- bers but involved in the automatic exchange of information organised by this directive

187 The BNB is the supervisory authority for banks, insurance under- taking 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 infor- mation 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 (Belgium’s 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 verifi- cation 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 com- pliance 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 meas- ures are necessary and the nature of these measures The financial institution

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then has a pre-determined timeframe to implement these corrective measures and their implementation is checked at the end of the period The purpose of this collaborative process is to improve the level of compliance of the institu- tion concerned

190 In the most serious instances, the BNB also has necessary powers to take additional measures, such as to revoke the right of the institution to open new bank accounts until the default has been settled A special commissioner can also be designated by the BNB to work directly within the institution’s premises until the situation has improved Because these are administrative measures, these decisions are not made public and are not described as sanc- tions However, the BNB’s representatives have reported that these measures have a very positive impact on financial institutions’ willingness to take necessary steps to remedy their deficiencies This system largely explains the very high collaboration of financial institutions with the BNB in dealing with any default and the high level of compliance of Belgian financial institutions

191 Where these measures have not created the expected effect, formal sanctions are possible Financial sanctions up to EUR 1 250 000 can be applied to a financial institution for non compliance with its AML/CFT obligations To this end, the case must be deferred to a sanction commis- sion 13 which will decide the nature and level of sanctions This sanction will be made public and a right of appeal exists for the institution to contest the legality of the sanction The BNB has reported that the number of sanctions applied in recent years by the sanction commission has been very lim- ited This is the result of the on-going collaboration between the BNB and financial institutions as well as the system of incentive corrective measures implemented by the BNB

13 The sanction commission of the FSMA is composed of ten members They are appointed by Royal Decree (and therefore are independent of the management committee of the FSMA) Six of these members have to be judges, be it in office or retired By law, two of them have to be judges of the Council of State (i.e. the highest administrative court in Belgium), two of them have to be judges of the Cassation Court (i.e. the highest civil court in Belgium) and two of them have to be other judges The remaining four members do not have to belong to a specific profession (currently two law professors, one notary public and one lawyer) Members of the sanction commission have to be independent in the sense that they may neither have worked for the FSMA in another day-to-day function during a five-year period preceding their appointment nor may they work for (or provided services for) companies that are subject to the permanent supervision of the FSMA (or for professional organisations representing such companies) The current composition of the sanction committee can be consulted at www.fsma.be/

en/News/Article/press/div/2011-10-03_sanctions.aspx

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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 obli- gations 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 gen- erally 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 Belgium’s AML/CFT law as well as its implementation in practice by financial institutions and the supervision performed by both the BNB and the FSMA, Belgium’s legal and regulatory framework ensures banking information pertaining to any account holders is maintained by financial institutions

194 In addition, many of Belgium’s treaty partners have reported that since the entry into force of the new legislation giving access to banking information on 1 July 2011, they have been able to obtain relevant and accu- rate banking information

Determination and factors underlying recommendations

Phase 1 Determination

The element is in place.

Phase 2 Rating

To be finalised as soon as a representative subset of Phase 2 reviews is completed.

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B. Access to Information

Overview

195 A variety of information may be needed in respect of the administra- tion 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 Belgium’s 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 (CIR 92), 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 14 April 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 Belgium’s 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 indica- tions, 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 institu- tions to provide information

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198 For its own purposes, the Belgian administration has access to infor- mation during a period of three years, or a period of seven years if it informs the Belgian taxpayer required to furnish the information of the reasons for which the extension to seven years is requested In the case of a request for information from a treaty partner, the Belgian administration interprets its legislation as allowing it to access the information during the seven year period, as long as the requesting party justifies the extension This interpre- tation is reflected in the practices of Belgian officials in charge of gathering information for exchange of information (EOI) purposes

199 The requests for exchange of information both to and from Belgium’s EOI partners vary in complexity and cover a wide range of material To answer these requests, Belgium’s authorities use their broad access powers to collect this information either by letter or directly on the premises of busi- nesses Based on the comments received from Belgium’s treaty partners, over the last three years Belgium has been in a position to provide information on request in most cases Since 2011 this has included bank information Belgium’s CIR 92 was amended to give the tax authorities access to bank information for EOI purposes from that date A number of treaty partners indicated that they were unable to obtain bank information prior to this However, the law giving access to banking information has now been tested in practice in several instances and feedback received from Belgium’s peers is very positive

Further, application of rights and safeguards in Belgium do not unduly

prevent or delay effective exchange of information in practice

200

B.1. Competent Authority’s ability to obtain and provide information

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).

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 CIR 92 Pursuant to these powers, the Belgian authorities may compel taxpayers, third parties or other public authorities to provide them with all kinds of information

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The Belgian competent authority

202 In Belgium, the Service Public Federal Finances (SPF Finances) 14 is the competent authority for exchange of tax information The AGFisc is the point of contact for EOI requests in the field of direct taxes (as well as VAT), whether made under a bilateral agreement, the EU Directive 2011/16/ UE of 15 February 2011, or the joint OECD/Council of Europe Multilateral Convention on Mutual Administrative Assistance in Tax Matters The Administration des Douanes et Accises, the Administration de la Perception et du Recouvrement and the Administration de la Documentation Patrimoniale are each in charge of EOI requests in relation to their specific field of expertise (recovery of taxes or excise duties for instance)

203 More specifically, Section III/1A of the AGFisc (the central liaison office for direct taxes – “DLO”) acts as competent authority for direct taxes, and processes incoming requests received from other jurisdictions This Section was created in September 2009, and comprises 11 employees (five Dutch speakers and six French speakers) Besides exchange of information on request, the DLO is also in charge of automatic and spontaneous exchanges and the implementation of the EU Savings Directive

The DLO is identified on the SPF Finances website as the competent

authority for EOI requests Moreover, the list of all competent authorities in Belgium is transmitted to the OECD, to the EU as well as to the treaty part- ners of Belgium

205 The AGFisc is divided into regional divisions, which are also divided into local tax offices for direct taxes (449) and local tax offices for VAT (127) In addition, control offices are competent for audits of all taxes, direct and indirect When the DLO receives a request from a partner jurisdiction, the request will first be verified at the DLO level to make sure it is valid in law and complete If the requested information is not in possession of the DLO, the request will then be transferred either to another administration or to the competent local tax office (based on where the information is available), within one month of the reception The processing of incoming request will be further described under section C5 of this report

204

14 The SPF Finances is divided into six administrations: l’Administration Générale de la Fiscalité (AGFisc – the General Administration of Taxes), l’Administration de la Lutte contre la Fraude (Inspection Spéciale des Impôts) (the Administration for fight against tax fraud – hereinafter “ISI”), l’Administration Générale de la Perception et du Recouvrement (the General Administration for the Recovery of Taxes), l’Administration de la Trésorerie (the Administration of Treasury), l’Administration de la Documentation Patrimoniale (The Administration of Real Estate Documentation) and l’Administration des Douanes et Accises (Administration of Customs and Excise)

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Obligation of taxpayers

206 Articles 315 and 315 (a) of CIR 92 state that the Belgian tax authori- ties may require taxpayers to provide accounts, documents, computerised data and information Furthermore, pursuant to article 316 of the same code, every taxpayer is required to provide to the tax administration “all information that may be requested, for the purposes of verifying the taxpayer’s tax situation”

The checks and requests for information can relate to all transactions

to which the taxpayer has been party, and the information gathered as a result may also be used for the purposes of the taxation of third parties (article 317 of CIR 92)

208 Finally, article 319 of CIR 92 states that taxpayers are required to grant tax officials, free access during all business hours to their professional or other premises in which activity is carried out, or presumed to be carried out This is to enable the officials to determine the nature and scale of the activity concerned and to verify the existence, nature and quantity of goods and items of all kinds that these persons possess or keep on the premises as well as to examine all accounts and documents kept there

207

Obligations of third parties

209 Pursuant to article 322 of CIR 92, the administration may, with regard to a given taxpayer, hear third parties, undertake audits, and require natural persons or legal entities, as well as associations with no legal per- sonality, to produce all information that the authorities deem necessary When witnesses are heard, their testimony is given under oath pursuant to article 934 of the judicial code The taxpayer is summoned to the hearing of witnesses (article 325 of CIR 92)

210 The production of this information may also be required in relation to “any person or group of persons, even when they are not identified by name” with whom the persons or entities questioned have dealt “directly or indi- rectly as a result of (their) transactions or activities” (article 323 of CIR 92)

211 State administrations (including the prosecuting authorities and the court registries which in Belgium are responsible for the registration of legal entities), the administrative authorities of political subdivisions and local authorities and other public bodies are obliged to provide all information in their possession when requested to do so by the tax authorities, and to let the authorities consult any item or document that may be needed for taxes to be levied correctly In this situation, the examination of documents relating to judi- cial procedures is subject to the express authorisation of the federal prosecutor, the public prosecutor or the auditor-general (article 327, paragraphs 1 and 2 of CIR 92)

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Powers of investigation and access to information

When the information requested by a treaty partner is already in the

Belgian tax administration’s possession, it can be exchanged without regard to any prescription period

213 The authorities may undertake inspections, audits and the assessment of taxes or additional taxes, even where the taxpayer’s declaration has already been accepted and the taxes arising from it paid Such inspections and audits may, pursuant to article 333, paragraphs 1 and 2 of CIR 92, be conducted during the taxable period (year in which income is earned) as well as during the three years following 1 January of the assessment year (year that follows the taxable period)

214 However, in cases in which tax avoidance is suspected, these inspec- tions and audits may also be conducted during the seven-year period beginning on 1 January of the assessment year In this case, the authorities have to inform the taxpayer beforehand about the reasons justifying the extension of the audit or inspection period (article 353 and 354 of CIR 92) If this notification is not forthcoming, taxation will be rendered null and void (article 333, paragraph 3 of CIR 92) This notification process does not grant any right to the person concerned to appeal the provision of information and therefore, cannot unduly prevent or delay effective exchange of information

212

215 In matters of international exchange of information, the Belgian administration interprets the provisions of its domestic law as allowing it to access information in case of tax avoidance during a seven year period on the simple provision, by the requesting partner, of the reasons for which access to information during a period greater than three years is necessary The scope of this provision has been further investigated during the Phase 2 review The position is as follows:

Where information is held by third parties, the Belgian tax authorities can collect information going back seven years prior to the request without notifying the taxpayer concerned This has been confirmed by two court decisions 15 ; in the few instances where Belgium’s authorities would have to notify the person subject of the request in Belgium 16 , the foreseeable relevance of the request will be a sufficient reason to meet the “tax avoidance” condition and to obtain information for a seven- year period Tax auditors in the course of the review have not reported any specific difficulty to access information for seven years because of specific or restrictive conditions provided by Belgium’s laws

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

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216 In addition to having the power to ask taxpayers and third parties to provide information upon request, any SPF Finances official, regularly responsible for carrying out an examination or an audit is lawfully authorised to take, seek or gather relevant and non-excessive appropriate information, which contributes to ensuring the assessment or collection of any other tax introduced by the state (article 335, paragraph 2 of CIR 92)

Ownership, identity and banking information (ToR B.1.1)/ Accounting records (ToR B.1.2)

Ownership and identity information/accounting records

217

or the Belgian administrative authority which it calls upon to gather the infor- mation, 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 admin- istered from Belgium, the Belgian tax authorities may invoke the measures in articles 315 and 322 of CIR 92 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

In order to obtain this information, the Belgian competent authority,

Banking information

220 Belgium adopted, on 14 April 2011, a law amending the rules on access to information held by third parties (article 322 of CIR 92) which pro- vides the following:

Paragraph 2 provides that, for domestic purposes, where the admin- istration 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 paragraph 1 This means that this financial institu- tion must provide to the tax authorities all information requested However, to this end, the administration must first use the procedure provided for in article 316 of CIR 92 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,

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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 paragraphs 2 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 1 January 2013;

or under an exchange of information mechanism contained in a double taxation agreement which is applicable or another interna- tional 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 paragraph 2, the access to the information on the basis of the requesting state’s incoming request

Analysis of the law of 14 April 2011

221 Belgian legislation distinguishes two separate situations, bank as a taxpayer and bank as information holder:

Bank as a taxpayer: when the Belgian revenue authorities audit the fiscal position of a financial institution, article 318 of CIR 92 still states banking “confidentiality” as a principle This principle remains applicable for the assessment of the income tax 17 This means that during the tax audit of a bank, the Belgian administration is not allowed (with exceptions) to collect information for the tax assess- ment of the bank clients

Bank as third party: when the Belgian revenue authorities audit the tax position of a specific taxpayer, they can require a bank to pro- vide information in order to complete the audit of this taxpayer’s tax position

222 The rules of article 322 of CIR 92 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

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and comparable to tax avoidance 18 This possibility is also open to all juris- dictions having concluded with Belgium a treaty including an exchange of information provision, under reciprocity, the incoming exchange of informa- tion request being considered as a sufficient condition to allow access to bank information Similarly, it is possible, for international exchange of informa- tion, to access the information contained in the national register kept by the BNB on the basis of the information contained in the request for information

223 The Belgian authorities have confirmed that this possibility is open under all treaties including an exchange of information mechanism provid- ing for the exchange of information “necessary” or “foreseeably relevant” for the application and enforcement of the domestic laws concerning taxes of all types and names, whether the information exchange provision contains provi- sions comparable to paragraph 5 of article 26 of the OECD Model Convention or not

In practice, and for domestic purposes, the procedure in Belgian law

224

provides for two distinct steps before accessing information held by financial institutions:

The person concerned by the request must first be asked by notice to provide the information requested on the basis of article 316 of CIR 92 in the month following the notice;

If the person concerned by the request has not provided the requested information, the Belgian tax authorities ask the financial institution to provide this information In this situation, the taxpayer must first be informed of fraud indications leading the administration to require the provision of this information from the financial institutions (arti- cle 333/1 of CIR 92)

225 These two prerequisites are not applicable in the case of an informa- tion request received from one of Belgium’s 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 adminis- tration 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 qualifica- tion of the facts

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Information gathering in practice Information directly available to tax authorities

227 Upon receipt of an incoming request, the DLO will try to provide an answer to the requesting jurisdiction based on information available at the central level

228 In Belgium, a lot of information is automatically provided to the tax authorities by other government administrations or by third parties such as employers, social security institutions or financial institutions Information on wages; pensions; unemployment compensation payments; insurance income; gains on real estate; professional lease payments; social security payments and reimbursements; gifts to charities and contributions to pension plans are for instance automatically and periodically reported to tax authorities

229 Once received, the information is processed and made available to tax officials through various databases, like Belcotax-on-Web (BOW), the tax information system where information received from third parties can be found More than 30 million data are available in this database

230

information on taxpayers such as names, addresses and their local tax offices This system is used to do research on individual taxpayers and legal entities when some details in relation to the person subject to an incoming request are missing

231 For tax purposes, the AGFisc has access to the register of natural persons where addresses, dates of birth and family situations of Belgian nationals as well as residents of Belgium can be found This database is linked to a computer application that provides tax information on individual taxpayers, such as their tax category (employee, administrator, independ- ent), the competent tax office, the date the Belgian tax return was received, the existence of a notice of assessment The register of non-resident natural persons lists non-resident individuals with a tax file in Belgium It contains name, information on spouse, foreign address, profession, the existence of a return if any, competent tax office and the existence of a notice of assess- ment, if any

232 Other information systems are accessible to tax authorities, in particular:

The DLO also used SITRAN, the tax database that contains general

The Matrice cadastrale (CADMAP), the register of all real estate properties

The Banque Nationale de Belgique database (Belgium National Bank – BNB) where companies and partnerships financial statements are made available;

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Banque Carrefour des Entreprises (BCE) which comprises informa- tion on resident and non-resident legal entities

Legal entity documents such as articles of incorporation, head office, directors, partners, etc maintained by the SPF Justice

Collection of ownership information and accounting records

233 While much information is already available to the DLO, in the vast majority of cases, the request is transferred to the local tax office in charge of the person concerned The DLO reported that 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

234 When the request is transferred to the local tax office, it is addressed to the chief auditor of the service concerned The chief auditor allocates the case to one of its agents, based on the content of the request and availability The official concerned usually has three months to collect this information and provide his/her answer to the DLO

235 Once received, the official in charge of handling the incoming request will check whether this information is available in one of the data- bases it has access to This will typically be the case when tax returns or elements of income are requested In such situations, an answer will be provided by the DLO within one month (timeframe granted by the DLO in event when no further investigation is needed to collect the information) If the requesting information is not directly accessible, it will be collected from the person concerned or from a third party in possession of this information

236 The collection of information from the person concerned or from

a third party can be done by written means, directly on the premises of the

person in possession of the information or during a tax audit In practice,

it is usually done by written means To answer incoming EOI requests, the

CIR 92 does not in most cases provide any specific timeframe for the person concerned to answer As a matter of practice, tax authorities usually grant 30 days to answer a request (this timeframe can be extended if the request is complex)

237 If the person concerned fails to provide the information in the deter- mined timeframe, a reminder will be sent at the expiration of the 30-day period, or an on-site visit will be undertaken An additional deadline can be granted if specifically requested and justified by the person concerned After this second notice, if the information is not provided, sanctions might be applied (see section B14 below) or the Belgian’s authorities will use other means to collect the requested information (on-site visit or tax audit)

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238 In the most complex cases or when it seems that this means will be more appropriate, Belgium’s tax authorities are allowed to do on-site visits of business premises without further justification Article 319 of the CIR 92 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, Belgium’s 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, Belgium’s 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 Belgium’s partners who are satisfied with the infor- mation provided by Belgium although sometime its provision is delayed (see section C5 below on the answer timeframe)

Collection of banking information

241 Unlike the gathering of ownership information and accounting records, the collection of banking information is only done at the DLO level Before the new law on access to bank information was enacted in 2011, only the DTC between USA and Belgium provided for exchange of bank informa- tion These requests were already handled at the DLO level After Belgium adopted its new law on access to bank information, the management of requests for banking information was maintained at this level to ensure better monitoring and also to give some support to financial institutions in comply- ing with their new obligations

242 All requests relating to bank information are directed to the relevant institution by the DLO within one month of receipt of the request The finan- cial institution has one month to answer Any extension of this timeframe must be duly justified by the financial institution concerned Requests for extension are accepted when financial institutions claim that an additional period is necessary to compile and provide the requested information Banking information can be requested even when the incoming request relates to a period prior to the entry into force of the new law Belgium authorities reported that information was successfully received from financial institution when the information requested pertained to a period prior to July

2011

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66 – COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION

243 Since the adoption of the new law amending the rules on access to bank information, Belgium has received 22 EOI requests from various part- ners in relation to banking information (for the period from 1 July 2011 to 30 June 2012) and obtained the information in 20 cases The average answer- ing timeframe in 2011 (1 July to 31 December) was 115 days and 84 days for requests received in 2012 For the two remaining cases, Belgium has reported that financial institutions refused to provide banking information because they were not fully aware of the new provisions regulating access to bank information In one case, after further explanation of the new legal frame- work, the requested information was obtained from the financial institution For the other case, a request received in 2011, the Belgian authorities have clarified that they contacted the financial institution concerned and from the information received, determined that three other financial institutions had to be contacted to satisfy the request Two of these financial institutions have already replied and a partial answer has been sent to the treaty partner Information from the third institution is still pending This case is being closely monitored by the Belgian tax authorities who indicated that the infor- mation should be obtained soon

244 With the adoption in 2011, of the new law providing rules on access to bank information, Belgium is in a position to access bank information in accordance with the standard One of Belgium’s treaty partners has neverthe- less mentioned that, to the best of its knowledge, one provision of the new law has not been implemented yet The Belgian authorities have clarified that this provision deals with the creation of a central point of contact at the BNB level With the creation of this central point of contact, which will be in place from 1 January 2014, all holders of bank accounts in Belgium will be recorded in a specific database This will facilitate the handling of incoming requests It is however clear that even without this central point of contact, Belgium is from both legal and practical perspective in a position to exchange banking information to the standard since 1 July 2011

245 Some of Belgium’s EOI partners reported that there were cases in which Belgium refused to provide banking information All of these requests were received prior to the adoption of the law on access to bank information Since 1 July 2011, all EOI requests for bank information have been responded to as confirmed by comments from Belgium’s treaty partners Belgium is also able to respond to requests for bank information in relation to a taxable period starting after 1 July 2011, even when the information needed predates this date

PEER REVIEW REPORT – PHASE 2 – BELGIUM © OECD 2013

COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION –