During recent years, the Belgian income tax system has been characterized by the following trends:
- overall (and substantial) increase of the level of income taxes
- introduction of numerous new rules and of changes to existing rules
- measures to increase the overall taxable basis by chasing down ‘tax delinquents’
All of the recent changes have put additional pressure on the system and have fueled the debate for fiscal reform. Such reforms should on the one hand reduce the high tax burden, especially on income, derived from professional activities and should also result in an overall simplification of the tax system.
In the meanwhile, a proposal has been approved by the Belgian government to introduce a number of small changes to the tax system in view of simplification. Although the simplifications are much too limited in order to even compensate a small portion of the complications, which were recently added to the system during the past two years, one of the changes actually is quite interesting.
A traditional source of frustration for tax payers is the fact that it is easy to lose tax deductions, if these are not immediately and correctly requested in the annual tax form. As the normal period for correcting the tax return is very short (6 month deadline to file a claim against an erroneous tax assessment), deductions are often lost. In addition, if one discovers an error for a given year, it is usually no longer possible to also make corrections for the same error for previous years.
Under the new rules, the tax authorities will be obliged to correct the tax assessment in case they find out or are informed of the fact that a tax deduction remains unused (for any reason) during a period of 5 years (starting on January 1 of the year of assessment (which usually is the year following the year of income).
The new procedure would be very easy and it would no longer be required that a formal tax claim is filed and also the existence of new elements is not to be proven by the tax payer. In addition, the new rule would apply already on income of 2013 (assessment year 2014).
The following tax reductions are to be covered by the new law:
- long term savings (article 145 1 to 145 16 ITC 92);
- gifts to recognized institutions (art. 145 33 ITC 92);
- PWA- or service vouchers (art. 145 21 to 145 23 ITC 92);
- child care expenses (art. 145 35);
- energy savings expenses for a home (art. 145 24 ITC 92);
- home renovations in designated urban areas (art. 145 25 ITC 92);
- purchase of an electric car and installation of a charging point (art. 145 28 ITC 92);
- renovation o f a social rental home (art. 145 30 ITC 92);
- expenses for protection of a home against burglary or fire (art. 14531 ITC 92);
- development fund expenditure (art. 14532 ITC 92);
- bonds of “Kringloop-, Starters- or Energy fund” (art. 145 26, 145 27 and 145 29 ITC 92);
- salaries of home personnel (art. 145 34 ITC 92);
- expenses for monuments and landscapes (art. 145 36 ITC 92).