The Brussels Court of fi rst instance agreed on June 29, 2011 with the Belgian tax authorities’ arguments that the application of the Belgian Foreign Tax Credit (FTC) regime in a number of old cases constituted a sham, as the underlying transactions were not based on genuine business reasons. This case law relates to some tax planning which was applied in the early 1990s. In the case at hand, the court found it clear from the facts that the taxpayer envisaged a set of transactions with the main purpose of offsetting taxable income against the FTC. This decision underpins once again the importance of genuine business reasons and suffi cient substance, whereby a loan generating interest income for the exact amount to offset the taxable basis with the FTC, and the lack of business reasons for this loan, do not meet these requirements. As a result, this case law could be important for compagnies with pending ‘old’ FTC claims (resulting from tax planning schemes in the 1990s).

Circular Letter Regarding Reporting Obligations for Payments to Tax Havens - Addendum Published

On July 28, 2011, the Belgian tax authorities published an addendum to the circular of November 30, 2010 which provided clarifi cations with respect to the obligation to report payments to recipients in tax havens if the payment reaches a EUR 100.000 threshold. The addendum states that payments made by banks, credit institutions and fi nance companies are out of scope to the extent they perform payment orders for their account holders or solely act as an intermediary. This circular clarifi es the very broad and general rules on payment to tax haven countries. These rules could have a material impact for all structures (e.g, holding/ fi nancing) involving a tax haven country.