Belgian State vs. VAT fraud and VAT evasion
In its battle against VAT evasion and VAT fraud, the Belgian government has adopted a Program Bill that includes not only a new ‘anti-abuse’ provision, but also a new joint liability for directors/managers in case of repeated default of VAT due.
In its circular of 24 August 2006, the Belgian VAT administration has clarified the concepts abuse and fraud.
Fraud implies a violation of the VAT regulations inspired by the intention to evade taxes. Abuse on the other hand is considered as the legal application of the VAT regulations in such a way that a fiscal advantage is achieved. The result of the structure in case of abuse is however, considered not to be in line with the intention of the applied regulation.
The Belgian VAT administration has obviously severed its tackle of VAT evasion. Consequently, a taxpayer should assure that every construction is grounded by an economic justification.
An additional measure implemented in order to avoid VAT evasion/ fraud is incorporated in the new article 93 Undecies C Belgian VAT Code. In the future repeated non- payment of VAT due by a company or a large non- profit organization will supposed to be a shortcoming in the hands of the director/manager. Although this assumption is subject to counter arguments, the risk remains that the directors/managers of the concerned company become jointly liable for unpaid VAT.
The assumption is not considered as valid in case the non-payment is caused by financial difficulties which have lead to a procedure for judicial agreement, for a failure of company or for a judicial dissolution of the concerned company.
