Filing season for corporate income tax returns is coming to a close in Belgium. The deadline for resident and non-resident companies (FY 2018) has just been extended to 10 October 2019. It is very important to meet this deadline as the sanctions for late filing have increased significantly as from assessment year 2019.

Context – ex officio assessment

Companies that do not meet the filing deadline may be taxed by way of an ex officio tax assessment, and the tax administration may determine the taxable profit on a lump-sum basis.

The lump-sum is established by means of criteria such as the turnover or the number of employees and varies per industry sector, with an absolute minimum taxable profit of EUR19,000. The tax administration may apply tax increases varying between 10% and 200%. The applicable percentage of the increase will vary depending on the company's previous filing record and the (deemed) intention to avoid taxation.

The ex officio tax assessment procedure encompasses a shift in the burden of proof: it is the company and not the tax administration that must prove the correct tax base. The company may thus provide evidence of its effective tax base, which can be done on the basis of its tax return and its annual accounts. Experience shows that the tax authorities in such cases often request more additional and detailed documentation to verify the company's accounts.

Increased sanctions – latest developments

The sanctions in the case of ex officio assessment as from assessment year 2019 (related to a financial year starting at the earliest on 1 January 2018) have been strengthened as follows:

  • The company may not offset its tax base with any deductions if a tax increase of at least 10% was established as a result of an ex officio assessment.
  • The minimum lump-sum tax base has been increased from EUR19,000 to EUR34,000 and will further increase to EUR40,000 as from assessment year 2020 (related to a financial year starting at the earliest on 1 January 2019).
  • The minimum lump-sum is increased by the following percentages in the event of repeated late filing (or absence of filing):
    • 25% for a second infringement;
    • 50% for a third infringement;
    • 100% for a fourth infringement; and
    • 200% for a fifth or any subsequent infringement.

Key take-away

The sanctions for late filing or absence of filing of a corporate income tax return by a resident or non-resident company have significantly increased as from assessment year 2019. It is therefore important to make sure that the filing deadline is met. If a potential issue is expected, one may contact the local competent administration to request an extension of the deadline, stating the reasons for the request. Such requests may be granted in certain circumstances.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.