Belgium: Filing Obligations, Tax Assessment and Tax Collection after a Merger or Split-up – Tax Administration Provides Guidance

TAXATION

In a Circular dated 1 December 2010 (Circular AOIF 70/2010, Ci. RH. 81/600.928), the tax administration provides guidance on the tax return filing obligations, the tax assessment and the tax collection after a merger or split-up.

Filing obligations

In the cases where the transaction results in the dissolution of a company without liquidation, the acquiring company is obliged to file a tax return for the dissolved company relating to the period until the effective date of the transaction. The competent tax authority of the dissolved company remains competent for the verification and assessment of the income of the dissolved company. The filing must be done within one month after the date the shareholders of both companies have formally agreed to the transaction, and in any case no later than six months after the effective date of the transaction.

Tax assessment

The tax assessment of the dissolved company will be addressed to the acquiring company within the normally applicable time periods.

Tax collection in case of a split-up

In the case of a split-up, the collection of taxes from each of the acquiring companies is based on the pro rata part of the net assets of the split-up company allocated to each of the acquiring companies, unless the split-up deed provides otherwise. The tax administration therefore recommends that in the case of a split-up the acquiring companies provide the tax authorities with the following information: (i) their respective part of the tax due by the split-up company (in principle based upon the acquired net assets), and (ii) their respective bank account number. Finally, the tax administration adds to the circular a standard form to be used for that purpose.

Ruling Commission – "Back to Business"

On 18 October 2010, the Belgian supreme administrative court (Raad van State/Conseil d'Etat) annulled the appointment of three of the six members of the Belgian ruling commission (See, this Newsletter, Volume 2010, No. 10, p.15). As a result of this annulment, the ruling commission could not validly take any advance decisions. This created uncertainty which could discourage potential foreign investors.

Although resigning Minister of Financial Affairs, Didier Reynders, confirmed in October 2010 that a solution would quickly be found to ensure the continuity of the ruling practice, the matter proved to be rather politically sensitive. On the one hand, it was argued that the appointment of members of the ruling commission was too delicate for a resigning government that can only deal with current affairs. On the other hand, the relationship between the ruling commission and the tax administration was brought into question. Indeed, there have been tensions between the two institutions in cases where the tax administration intended to open a tax investigation with respect to companies that had already been granted a ruling.

A solution to the current impasse has now been found. A number of agreements have been entered into by and between the ruling commission and the tax administration and have been subsequently confirmed by the Council of Ministers. First, it has been agreed that the members of the ruling commission will be reappointed. Second, there will be more communication between the ruling commission and the tax administration, which means, inter alia, that every decision of the ruling commission will need, in principle, a preliminary non binding advice from the tax administration.

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