Burden of proof

A taxpayer should be able to support the arm’s length nature of its intercompany dealings.

In order to determine the existence and the amount of the tax debt as well as to establish a violation of the provisions of the Belgian Income Tax Code 1992 (“BITC92”) or of the executive acts (such as the Royal Decree of BITC92, “RD/BITC92”), the tax authorities may invoke all the means of proof permitted by ordinary law (such as the bookkeeping of the taxpayer, official acts, individual agreements with the tax authorities, rulings, circumstantial evidence, etc.), including the official reports (“processen-verbaal”/“procès-verbaux”) drawn up by the tax authorities, but with the exception of the oath. The official reports have evidential value as proof to the contrary. The probative force of an official report only applies to the material findings of the tax authorities and not to the conclusions and/or reasoning he or she draws in the official report.

If not, there is a reversal of the burden of proof, meaning the tax authorities can bring forward their position, which the taxpayer has to counter in case he does not agree.

For example, a taxpayer who has been subject to an ex officio assessment must provide proof of the correctness of the amount of taxable income and of the other data/figures to be taken into account. Proof to the contrary of the ex officio assessment cannot therefore be provided by proving the mere inaccuracy of the ex officio assessment, but only by providing proof of the correct amount of taxable income and other information.

Therefore, having transfer pricing documentation can prove important in many cases.

TIPS & TRICKS

• Provide support of the arm’s length nature of intercompany dealings in case of an audit
  
  
• Always reply (in a timely) manner to request for information from tax authorities to avoid an ex officio assessment

Taxation – Evidence & burden of proof

Tax return

A tax return is binding on the taxpayer to the extent that the tax authorities considers it to be correct, unless the taxpayer demonstrates that the tax return is incorrect. This error may relate to a material error, an error in law or in fact, or the circumstance that fraud has been committed to his detriment. Although a tax return is therefore subject to a presumption of rightness, the taxpayer can correct any error in fact or in law by means of an administrative tax claim (“bezwaar”/“réclamation”), even if this requires a legal assessment.

A tax declaration does not form an indivisible unit. This means that the tax authorities can change certain data/figures without all the data/figures are losing its evidential value.

Existence & amount of tax debt

In order to determine the existence and the amount of the tax debt as well as to establish a violation of the provisions of the Belgian Income Tax Code 1992 (“BITC92”) or of the executive acts (such as the Royal Decree of BITC92, “RD/BITC92”), the tax authorities may invoke all the means of proof permitted by ordinary law (such as the bookkeeping of the taxpayer, official acts, individual agreements with the tax authorities, rulings, circumstantial evidence, etc.), including the official reports (“processen-verbaal” / “procès-verbaux”) drawn up by the tax authorities, but with the exception of the oath. The official reports have evidential value as proof to the contrary. The probative force of an official report only applies to the material findings of the tax authorities and not to the conclusions and/or reasoning he or she draws in the official report.

Settled case law shows that the taxpayer has the same means of proof as the tax authorities if he bears the burden of proof.

In order for the evidence to be used, it must, in principle, have been lawfully obtained. Evidence obtained unlawfully can also be used if certain conditions are met (cf. Antigone doctrine in tax matters). Evidence obtained unlawfully must only be excluded if the evidence has been obtained in such a way that it is contrary to what may be expected of a properly acting authority or compromises the right to a fair trial. The use of unlawful evidence in fiscalibus will therefore always require a balancing of interests.  

Ex officio assessment

However, in the event of an ex officio assessment (“aanslag van ambtswege”/“taxation d’office”) (in case of a late filing of a tax declaration, a late response to a request for information, etc.), the burden of proof will be reversed. A taxpayer who has been subject to an ex officio assessment must provide proof of the correctness of the amount of taxable income and of the other data/figures to be taken into account. Proof to the contrary of the ex officio assessment cannot therefore be provided by proving the mere inaccuracy of the ex officio assessment, but only by providing proof of the correct amount of taxable income and other information.