Criminal tax fraud is the act of violating a provision of the tax legislation, with fraudulent intent or an intent to cause harm. It therefore requires both a violation of a legal provision and an intent to defraud.
Belgian tax law also provides for the notion of “serious tax fraud (organised or not)”. This notion is however not defined in the legislation. It is at the Court’s discretion to determine whether certain acts qualify as serious tax fraud and could therefore result in higher criminal sanctions. The courts will take into account facts such as whether forged documentation is used, the amount of tax evaded, etc.
Under Belgian law, in order for a tax offence to be criminally prosecuted, there needs to be a violation of a provision of a Belgian tax code (e.g. the income tax code, the VAT code, the code of miscellaneous duties and taxes, the code of transfer taxes, the code of inheritance taxes, etc.) or in the decrees implementing such code, which is committed with fraudulent intent or with the intent to cause harm.
If the tax adjustment results from a violation of a tax obligation with fraudulent intent or with the intent to cause harm, it could potentially trigger criminal proceedings, irrespective of the amount of such tax adjustment. Under the law, there is hence no quantitative trigger for a tax adjustment to trigger criminal proceedings. That being said, in practice, if the tax adjustment concerns relatively small amounts, this will typically not be criminally persecuted, unless there would be other aggravating circumstances which merit a criminal persecution.
If high amounts are involved, taking into account the abnormal nature of such amounts in view of the taxpayer’s activities and /or wealth, the tax offence may qualify as a ‘serious tax fraud, whether organised or not’ which is subject to heavier sentences.
In the vast majority of cases, criminal proceedings of tax offences are triggered by tax officials discovering tax fraud and transferring the case to the public prosecutor. In the case of serious tax fraud, whether or not organised, the tax officials are required to inform the public prosecutor.
It should be noted that in Belgium, the Belgian tax authorities can also levy severe administrative penalties for tax fraud (a tax increase of 50% to 200%). Considering that both the Belgian tax authorities and the public prosecutor can investigate and levy penalties/fines for tax fraud (which could give rise to double sanctions in violation with the non bis in idem principle), the Belgian legislator introduced the so-called una via principle in the prosecution of tax fraud cases, which in principle entails that a tax fraud case will be handled either as an administrative case by the tax authorities, or as a criminal case by the public prosecutor. A consultation between the tax authorities and the public prosecutor will take place in order to determine the approach and the initiation of either an administrative procedure or a criminal procedure. If the Belgian tax authorities already levied additional taxes and applied an administrative penalty, that does not necessarily entail that the case cannot longer be criminally prosecuted however (provided that the procedures are coherent and take into account the non bis in idem principle).
Yes, the existence of a criminal tax offence (such as tax fraud/evasion) requires criminal intention, i.e. an intention to harm or defraud.
There is a currently a federal self-disclosure program applicable in Belgium until the end of 2023 for VAT, income taxes, federal registration taxes and miscellaneous taxes, which grants immunity from criminal proceedings (see more on this in the response to question 9).
Apart from that, Belgian law does not explicitly provide that the spontaneous filing of an amended tax return and full payment of the applicable tax would shield a taxpayer from the initiation of criminal proceedings for fraud or forgery. In certain cases, the initial incorrect/incomplete tax return may hence still qualify and be prosecuted as tax fraud (with tax forgery), even if the return was spontaneously amended afterwards. That being said, in order for an act to constitute tax fraud, one of the conditions is that the individual must have fraudulent intent or intent to harm, rather than simply make a genuine mistake whilst filing their tax returns. The same goes for forgery in a tax context, i.e. the forgery has to be committed with the intent to commit tax fraud. In practice, a spontaneous amendment of the tax return or a self-disclosure (i.e. before the start of a tax audit) will often avoid the initiation of criminal proceedings and is often taken into consideration when determining whether a certain taxpayer is in good or bad faith. The spontaneous amendment of a tax return and full payment of applicable tax may also be taken into account as a mitigating circumstance when determining the penalty (or in the context of a settlement – see answer to question 13).
Yes. The public prosecutor may prosecute tax fraud offences in one of two ways: either upon the valid notification by the tax authorities or at their own initiative in absence of a notification from the tax authorities.
The general statute of limitation to criminally prosecute tax fraud is 5 years, but can be extended to 10 years under certain circumstances. This also applies to forgery.
With respect to income tax and VAT, the administrative audit and assessment period in cases of tax fraud has been increased to 10 years (as of financial/income year 2022 for income taxes and as of 1 January 2023 for VAT). The statute of limitation for recovery of income tax assessed (including tax increases/late payment interest) is 5 years as of the date of assessment.
There are other specific statutes of limitation for other taxes/duties/... (such as transfer taxes and regional taxes).
The 5 or 10 year statute of limitation to criminally prosecute tax fraud starts to run as of the moment the violation is committed. However, certain offences such as forgery or money laundering are lasting violations, in which case the statute of limitation only starts to run as of the moment the violation ended. That also entails that certain violations such as money laundering in practice may never be statute-barred.
With respect to income tax, the statute of limitation for the 10-year audit/assessment period starts from the 1st of January of the year following the income year/financial year (in the event that a company’s financial year does not correspond to the calendar year, this period is prolonged by a period equal to the period between 1 January and the closing date of the financial year). For VAT such period begins to run on December 31 of the year in which the VAT became " due ", which is when the relevant invoice is issued.
Under the Belgian Income tax and VAT code, a criminal fine ranging from EUR 20,000 to EUR 4 million can be imposed in case of income tax or VAT fraud.
For individuals, a prison sentence can be imposed ranging from 8 days to 2 years (or to 5 years in case of “serious tax fraud” or forgery). Such prison sentence can, but does not need to, be applied on top of the aforementioned criminal fine. Given that a company cannot be subject to a prison sentence, the law provides for a conversion of prison sentences into pecuniary sanctions for companies.
In certain cases, the Court may also order the confiscation of the illicit proceeds.
Fines and prison sentences can also be imposed for tax fraud concerning other taxes/duties/fee such as registration duties and other regional taxes.
In practice this could help to demonstrate good faith and may in certain instances mitigate criminal liability or allow for a settlement/lower sanctions.
Yes, there is a currently a federal self-disclosure program applicable in Belgium until the end of 2023 for VAT, income taxes, federal registration taxes and miscellaneous taxes, which grants immunity from criminal proceedings.
This program entails that the taxpayer spontaneously files a regularisation tax return with a dedicated team within the Belgian tax authorities, following which a regularisation levy must be paid within 15 calendar days after the payment notification. The payment must be made "definitively and without any reservation".
Income that is not time barred from a tax perspective is generally taxed at its normal applicable tax rate increased by a levy of 25% on the underlying income. Accordingly, if the applicable tax rate is 30%, the regularisation levy will amount to 55%. For income that is time barred from a tax perspective, the regularisation levy equals to a percentage of 40% of the underlying capital.
The taxpayer is granted fiscal immunity through such tax regularisation. The tax authorities can therefore no longer audit and/or tax the relevant income after regularisation, nor can they impose tax increases, fines or late payment interest with respect to this income. Importantly, in addition to the tax immunity, the declarant is also granted criminal immunity.
Although this is an element that is typically taken into account by the public prosecutor, there is no specific exemption in the legislation in case of full payment of the tax assessment by the taxpayer outside of the self-disclosure program (see answer to question 4 and 11).
There is generally no impact on the general statute of limitation periods of the tax authorities, but there are certain special statutes of limitations which could become applicable (in addition to the normal statutes of limitation).
With respect to income taxes, a special reassessment period applies when a court procedure (often a criminal law procedure) reveals that taxable income was not declared in one of the five years prior to the year in which the court procedure was initiated. In such case the tax assessment must be levied within twelve months of the date on which no further appeal or objection may be lodged against the court decision in relation to such court procedure.
Note that in case a criminal law procedure is initiated for a tax offense such as tax fraud, the criminal court is also competent for the civil law claim of the tax authorities regarding the tax and tax penalties due (e.g. a tax increase). The tax authorities are hence involved in the criminal proceedings.
In light of the non bis in idem principle (double jeopardy), the Belgian legislator introduced the so-called una via principle for the prosecution of tax fraud cases so that a tax fraud case will be handled either as an administrative case by the tax authorities, or as a criminal case by the public prosecutor. A consultation between the tax authorities and the public prosecutor will take place in order to determine the approach and the initiation of either an administrative procedure or a criminal procedure. In case a criminal procedure is initiated for a tax offense such as tax fraud, the tax authorities may file a civil law claim regarding the tax and tax penalties due for which the criminal court is competent.
It is possible to reach a tax settlement with the tax authorities and/or a criminal settlement with the prosecutor (insofar as the offence does not appear to be of such a nature that it should be punished by a principal sentence of more than two years of imprisonment). However, a criminal settlement with the prosecutor can only be reached after the perpetrator of the offence has paid the taxes due, including tax penalties and interest, and provided the tax authorities have agreed to the settlement.
Both individuals/directors and companies can be prosecuted under Belgian law.
An offence committed on Belgian territory shall be punished in accordance with the provisions of the Belgian law even if the offence is committed by foreigners. Foreign employees / directors can hence be prosecuted in Belgium for offences if the offence is considered committed in Belgium.
If the prosecution relates to the payment of Company’s taxes, the company will always be liable. There may however be joint liability for the employee/director.