Context

For many years the Belgian tax authorities had to watch helplessly while taxable pensions slipped out of the hands of the Belgian Treasury due to the fact that pensioners emigrated to more tax friendly destinations prior to the payment of their pension lump sum, surrender value or savings. In order to put a stop to this practice, in 1992 the so-called “anti tax evasion” rule of article 364 bis was introduced into the Belgian Income Tax Code.

This anti tax evasion rule stipulates that pension lump sums, surrender values and savings, which are paid or attributed to a taxpayer who has transferred his residence or centre of interest abroad prior to the payment, are deemed to have occurred the day before the transfer. The rule took effect as of January 1, 1993 and as a result applies to all pension lump sums, surrender values and savings which are paid as of that date.

From the date of its taking effect, the above-mentioned anti tax evasion rule has given rise to considerable discussion between the Belgian tax authorities and beneficiary taxpayers, because of its inconsistence with most of the international conventions concluded by Belgium in order to avoid double taxation (the so-called double taxation treaties).

News

In a recent decree, the Brussels Court of Appeal came to the conclusion that the article 364 bis of the Belgian Income Tax Code 92 results in an erosion of the taxation authority, and that the article is a violation of the stipulation of the double taxation treaty concluded between Belgium and France. As such, the Brussels Labour Court blew the whistle on the Belgian tax authorities (Brussels, February 15, 2002).