It is widely known that the Belgian tax rules are highly complex. On top of this, the amount of tax codes in the income tax return form increased significantly during the last years.
It should be no surprise that some taxpayers—both individuals and companies—make mistakes when completing their income tax return, resulting in erroneous filings. Such errors have traditionally exposed taxpayers to automatic tax increases and administrative fines.
Since 2022, the tax administration has applied almost systematically a tax increase if a taxpayer (individual or company) submits an erroneous tax return and the undeclared income exceeds EUR 2,500 EUR. Tax increases are also often applied for less obvious mistakes, such as a wrong calculation of available deductions or even if the tax return is amended by the tax authorities based on a different interpretation of the rules.
Taxpayers often consider these increase unfair because they may be unaware of the mistake made. In theory, taxpayers can challenge this tax increase if they can demonstrate good faith. However, in practice, such objections are rare. Many taxpayers are either unaware of the possibility of objecting against the increase or reluctant to initiate such proceedings. And even when they do, the outcome is unpredictable.
Recently, in a judgement of the Constitutional Court concerning the application of tax deductions in the case of late filing of a tax return, the court stated that taxpayers should not automatically face a 10% tax increase for filing an erroneous return if they acted in good faith.
Building on this judgement, on November 28, 2024, the Minister of Finance announced the end of automatic tax increases. As the minister pointed out, the law itself allows the tax administration to refrain from imposing the minimum 10% tax increase in cases where there is no evidence of bad faith. Properly adhering to the principles embedded in the law is the only way to prevent unjustified penalties for taxpayers.
The minister has thus confirmed that the tax administration's approach will now change. The automatic and systematic application of these tax increases should therefore be a thing of the past.
From now on, taxpayers who submit an erroneous tax return in good faith and for the first time will be spared the 10% tax increase and administrative fines. The 10% tax increase will henceforth apply only in cases of bad faith or repeated mistakes.
Axelle Lallemand
BDO in Belgium
It should be no surprise that some taxpayers—both individuals and companies—make mistakes when completing their income tax return, resulting in erroneous filings. Such errors have traditionally exposed taxpayers to automatic tax increases and administrative fines.
Since 2022, the tax administration has applied almost systematically a tax increase if a taxpayer (individual or company) submits an erroneous tax return and the undeclared income exceeds EUR 2,500 EUR. Tax increases are also often applied for less obvious mistakes, such as a wrong calculation of available deductions or even if the tax return is amended by the tax authorities based on a different interpretation of the rules.
Taxpayers often consider these increase unfair because they may be unaware of the mistake made. In theory, taxpayers can challenge this tax increase if they can demonstrate good faith. However, in practice, such objections are rare. Many taxpayers are either unaware of the possibility of objecting against the increase or reluctant to initiate such proceedings. And even when they do, the outcome is unpredictable.
Recently, in a judgement of the Constitutional Court concerning the application of tax deductions in the case of late filing of a tax return, the court stated that taxpayers should not automatically face a 10% tax increase for filing an erroneous return if they acted in good faith.
Building on this judgement, on November 28, 2024, the Minister of Finance announced the end of automatic tax increases. As the minister pointed out, the law itself allows the tax administration to refrain from imposing the minimum 10% tax increase in cases where there is no evidence of bad faith. Properly adhering to the principles embedded in the law is the only way to prevent unjustified penalties for taxpayers.
The minister has thus confirmed that the tax administration's approach will now change. The automatic and systematic application of these tax increases should therefore be a thing of the past.
From now on, taxpayers who submit an erroneous tax return in good faith and for the first time will be spared the 10% tax increase and administrative fines. The 10% tax increase will henceforth apply only in cases of bad faith or repeated mistakes.
Axelle Lallemand
BDO in Belgium