Status
On December 12, 2019, the Belgian Parliament
adopted a bill to transpose Directive (EU)
2018/822 on mandatory disclosure rules
(hereinafter “DAC6” or “the Directive”) into
domestic law. The bill was published in the
Belgian Official Gazette on December 30, 2019.
The provisions will come into operation on July
1, 2020.
Please note that the summary is based on
information available as at January 1, 2020.
Scope
The scope of the legislation is closely aligned
with the Directive, with no extension of scope
proposed for VAT, customs duties or excise
duties. Belgian MDR will also only apply for
“cross-border arrangements with a potential tax
avoidance risk” (i.e. domestic transactions will
not be in scope).
Definitions
The legislation is closely aligned with the
Directive.
In particular, the definitions of “associated
enterprise”, “marketable arrangement”, “cross-
border arrangement” and “relevant taxpayer”
have the same meaning as the Directive.
In addition, the bill includes the following
definitions:
1)
I
ntermediary
The definition of intermediary mirrors t
he
def
inition presented in the Directive.
According to the explanatory memorandum, to
the extent the employees do not exercise a
management function, the tax advisory firm
itself and not its employees should qualify as
the intermediary.
2
) A
rrangement
The MDR provisions do not provide a definiti
on
of
the term “arrangement”. However,
according to the explanatory memorandum, a
n
a
rrangement requires positive action to
be
t
aken by a relevant taxpayer, a participant or an
intermediary.
The following examples are provided where the
requirements for arrangement are not met
(provided that the step is not part of a wider set
of steps that, when taken together, could fall
within the definition of an arrangement):
Application of a domestic tax regime (e.g.
t
he innovation income deduction);
Daily transactions between a hea
d office and
its foreign permanent establishment that are
purely driven by economic / business
reasons (i.e. not for tax purposes);
The mere execution of a r
outine transaction
(e.g. bank transaction).
Although the term “arrangement” is not
defined, it applies to tax planning structures
where taxable profits are shifted to a more
favorable tax regime or which reduce the overall
tax burden of the tax payer.
3) Participan
t
A
ccording to the explanatory memorandum, t
he
f
ollowing persons would not be consider
ed
“pa
rticipants”:
A loan provider whose main business activity
i
s granting loans;
An intermediary who only acts as a
n
intermediary in the arrangement (e.g only
provides assistance and is not acting as a
managing director of an entity involved in the
arrangement).
January 2020
Mandatory Disclosure Rules
Belgium enacts DAC6 transposition bill
This article provides a summary of the Belgian legislation to
transpose mandatory disclosure rules under DAC6 into
domestic law.
3) Participant (cont.)
An authorized r
epresentative of the relevant
taxpayer that files tax returns on behalf of
the taxpayer.
The explanatory memorandum also provides an
example of a foreign real estate transfer
between two Belgian tax residents and states
that the transfer should not considered a cross-
border arrangement because the asset (i.e. the
real state) is not a participant in the
arrangement.
The same applies to a Luxembourg branch 23
product which is subscribed by a Belgian
resident (unless it is part of a wider set of steps
that form a cross-border arrangement).
According to the explanatory memorandum, the
relevant taxpayer always qualifies as participant.
4) Tax Advantage
The explanatory memorandum lists four cases
where a tax advantage may be realized:
an amount is not included in the tax base;
t
he taxpayer benefits from a deduction;
a loss for tax purposes is incurred;
no
withholding tax is due and foreign tax is
offs
et.
This should not be considered to be exhaustive.
Hallmarks & Main Benefit Test
The list of hallmarks is closely aligned with
Annex IV of the Directive.
The main benefit test should also apply to the
same hallma
rks as those in the Directive (i.e.
category A and B hallmarks and paragraphs
(1)(b)(i), (c) and (d) of the category C hallmarks).
The explanatory memorandum provides some
additional guidance on selected hallmarks:
Hallmark A
(1) (confidentiality clauses): the
explanatory memorandum notes that
provisions which seek to limit the liability of
an advisor should not fall within the scope of
this hallmark.
Hallmark A(3) (standardized documentation
and/
or structures): the explanatory
memorandum notes that internal documents
that contain unfinished ideas or concepts
should not be covered by this hallmark.
Hallmark E(1) (
unilateral safe harbor rules):
the explanatory memorandum notes that the
hallmark should not apply where an advance
pricing agreement covers the transfer pricing
aspect of an arrangement.
Hallmarks E
(2) and E(3): the explanatory
memorandum states that OECD transfer
pricing guidelines should be referred to when
assessing arrangements under these
hallmarks.
Reporting - Intermediaries
The intermediary
is only obliged to report if it
has a presence in a EU Member State (local
residency, PE, incorporation or professional
registration).
Reporting timelines mirror the requirements of
the Directive, i.e. for bespoke arrangements, 30
days as of the relevant reporting trigger.
The information that is required to be disclosed
largely mirrors the requirements of the
Directive. The information should be provided in
English and in one of the official Belgian
languages.
According to the explanatory memorandum, an
intermediary is only required to report
information of which they are aware (i.e. the
intermediary should not have an obligation or
duty to investigate).
The Belgian tax authorities will assign a unique
reference number that will be used to identify
the arrangement in all Member States. The
reference number received from the Belgian
authorities and a summary of the reportable
arrangement need to be immediately forwarded
to other intermediaries and the relevant
taxpayer. No further guidance on the term
“immediately” is provided.
Where there is a reporting obligation in multiple
Member States, the priority of reporting will be
determined in the following order:
1) M
ember State where the intermediary is
res
ident for tax purposes;
2) Member State where the intermediary has
a
permanent establishment through which
the services with respect to the
arrangement are provided;
Reporting – Intermediaries (cont.)
3) Member State which the intermediary is
i
ncorporated in or governed by the laws of;
4) Member State where the intermediary is
r
egistered with a professional association
related to legal, taxation or consultancy
services.
An intermediary will not be required to report if:
The intermediary has
written evidence that
the same information is reported in another
Member State; or
There is written ev
idence that the same
information has already been reported by
another intermediary.
According to the explanatory
memorandum, the
reference number and a summary of the
reportable arrangement should be considered
sufficient proof.
Legal Professional Privilege
When an intermediary is subject to Belgian
professional confidentiality provisions, it is
required to:
notify other intermediaries that it cannot
comply with his reporting obligation, and
therefore the obligation shifts to the other
intermediaries;
if there is no other intermediary, notify the
relevant ta
xpayers about their reporting
obligations.
I
t is also possible for the relevant taxpayer to
discharge the intermediary from its professional
confidentiality obligations, in which case, the
reporting obligation would revert to the
intermediary.
According to the explanatory memorandum,
professional confidentiality should not apply in
cases of aggressive tax planning. Professional
confidentiality should also not apply to
marketable arrangements.
Reporting – Relevant Taxpayer
Reporting timelines for relevant taxpayers
should mirror the requirements of the Directive.
Where a taxpayer has a reporting obligation in
multiple Member States, the priority of
reporting will be determined in the following
order:
1) Place of residency;
2) Place of business or designated base which
benefi
ts from the arrangement is based;
3) Member State where income is received; or
4) M
ember State in which the bus
iness is
pursued.
Where multiple taxpayers are involved, the
relevant taxpayer that is to file information will
be the one that features first in the list below:
1) Taxpayer that agreed the arrangement with
the i
ntermediary;
2) Taxpayer that is managing the
im
plementation of the arrangement.
A taxpayer will not be required to report if:
The taxpayer has written evidence tha
t the
arrangement has been reported by an
intermediary; or
The taxpayer has written evidence tha
t the
arrangement has been reported by another
taxable person; or
The taxpayer has evidence that the
ar
rangement (i.e. the same information) has
been reported in another Member State.
Penalties
Non-fulfilment of reporting obligations will be
penalized as follows:
Incomplete reporting:
• Gross negligence: EUR 1,250 to EUR
12,500;
• Intentional: EUR 2,500 to EUR 25,000
Failure to report or delayed reporting:
• Gross negligence: EUR 5,000 to EUR
50,000;
• Intentional: EUR 12,500 to EUR 100,000
The prov
isions include ranges of penalties for
offences to allow scope for graduated penalties
to be applied which can be increased with
reference to frequency of offences committed.
For more information, please refer to KPMG’s EU Mandatory Disclosure Rules page or contact
the following:
Raluca Enache
Director
KPMG’s EU Tax Centre
Enache.Raluca@kpmg.com
Kris Lievens
Partner, Corporate Tax
KPMG in Belgium
klievens@k
pmg.com
The information contained herein is of a general nature and is not intended to address the circumstances of any
particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no
guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the
future. No one should act on such information without appropriate professional advice after a thorough examination of
the particular situation.
© 2020 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of
independent firms are affiliated with KPMG International. KPMG International provides no client services. No member
firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does
KPMG International have any such authority to obligate or bind any member firm. All rights reserved. The KPMG name
and logo are registered trademarks or trademarks of KPMG International.
kpmg.com/socialmedia
