General
Digital ‘collaboration’ platforms that connect suppliers of services to their customers are subject to new reporting obligations. These were introduced because many service providers (including Airbnb providers) allegedly do not declare their revenue obtained through such digital platforms. Until the introduction of the new reporting obligation in the Belgian Income Tax Code, it was difficult for the Belgian tax authorities to trace such revenue or, for example, to identify these providers for an audit. According to the parliamentary preparatory texts, this obligation’s purpose is to augment transparency regarding revenue generated through these platforms and thus to combat any omission or fraud relating to the declaration of such revenue.1 The new provision introducing this obligation has applied since 9 January 2021.
Scope
The services to be reported are those that are defined as ‘services’ under the Belgian VAT Code and that are provided to natural (C2C) or legal persons (C2B) in Belgium by a natural person who is a Belgian or non-Belgium resident. It is irrelevant whether the service provider acts in the context of a professional activity.
Obligations
The new regulation obliges the digital platform to inform all its users offering services through its platform of their Belgian social and tax obligations. They must even be provided with an electronic link to the websites of the Belgian public services for the purpose of these social and tax obligations.
In addition, the digital platform is required to deliver an electronic document to its users indicating, among other things, their known identity, fiscal number2 or (if they do not have one) full name and address, the date the activity on the platform was launched or terminated, the description of the services provided by the user, the gross amount of the transactions carried out by the user through the platform, if applicable broken down according to the nature of the service provided and – if appropriate – the amount and nature of any sums retained. A summary of this document must also be submitted to the tax administration no later than 31 March of the year following the year for which the information is provided. This means that such a document must be submitted for the first time by 31 March 2022.
Registration for non-Belgian platforms via a representative in Belgium
When the digital platform is established abroad and does not have a branch office in Belgium, it is required to appoint a representative in Belgium who is responsible for fulfilling the obligations as described above. The digital platform will also have to report this information to the Belgian Ministry of Economy and submit the written agreement with its Belgian representative.
Authorised electronic platforms
These obligations to inform the supplier of the service and the tax authorities do not apply to the information communicated by ‘authorised electronic platforms’3 to the recipient of the revenue and to the competent tax authorities under Article 90(2) of the Belgian Income Tax Code. The obligation to inform the recipients of such revenue of their social and fiscal obligations already applies regarding those ‘authorised electronic platforms’.
Penalties
Since no specific tax penalty provisions were linked to these new reporting obligations, the general penalty provisions of the Belgian Income Tax Code apply, namely the administrative fine ranging from EUR 50 to EUR 1,250 per violation (Article 445 I.T.C. 1992).
DAC7
In mid-2020, the European Commission proposed amending the Directive on Administrative Cooperation by extending the EU tax transparency rules also to digital platforms (DAC 7).4 As soon as these future reporting obligations enter into force in Belgian domestic legislation, the Belgian information obligation will cease to apply. Based on the current DAC 7 proposal, so-called 'platform operators' will be obliged to provide information on revenues obtained from transactions realised through the platform to a national tax authority. In addition, they would also be required to provide certain information (e.g. an overview of the revenue that a seller/provider generates from the relevant activities, an overview of the commissions and fees that the platform grants to the sellers/providers) on the sellers of goods and providers of services. This national tax authority will then automatically exchange this information with the other national tax authorities of other European Member States.
Belgian referral to the European Court of Justice
Despite the new Belgian reporting obligation, one should keep in mind the preliminary questions raised as a result of the Belgian Constitutional Court ruling of 26 November 2020.5 The judgment was prompted by an appeal for annulment against the information obligation contained in the Brussels regional tax on tourist accommodation imposed by Airbnb. In this regional tax, a similar reporting obligation was provided for intermediaries for tourist accommodation establishments located in the Brussels Capital Region.
Airbnb argued that the information obligation under this regional tax is essentially an unauthorised restriction within the meaning of the European Directive on e-commerce.6 This Directive seeks to ensure that Member States do not restrict the free movement of ‘information society services’ provided from another Member State more than is necessary and proportionate. However, this Directive does not apply to the field of taxation. In this context, the Belgian Constitutional Court has referred a number of preliminary questions to the Court of Justice; the most relevant of which are: ‘Does the imposition of an information obligation in the context of taxation fall under the exclusion of 'taxation' within the meaning of the Directive on electronic commerce? Moreover, if not, does the information obligation go beyond what is necessary and proportionate?’.
The outcome of these preliminary questions and the subsequent ruling by the Constitutional Court will also be paramount for the assessment and ‘viability’ of the new Belgian reporting obligation, laid down in federal tax legislation (as opposed to the question laid before the Court of Justice, which concerned a regional tax). If the obligation to provide information under the Brussels region tax is to be considered contrary to this Directive on e-commerce, then it could be argued that the new – federal – reporting obligation also violates this Directive, since both reporting obligations are quite similar and essentially have the same objective. Although the federal reporting obligation concerns ‘services’ in general whereas the Brussels regional tax only concerns information about a specific type of service (provider), one may wonder whether this difference would justify different treatment. It could perhaps be considered prudent if the Belgian legislator had waited to introduce the new, more general reporting obligation until more clarity had been obtained from the European Court of Justice. But one may also wonder whether the Belgian authorities are really concerned about the outcome of these preliminary questions. After all, by the time the European Court of Justice has ruled on the Brussels tourist accommodation tax case, DAC 7 could already be transposed into domestic law and discussions about this new reporting obligation will – at that time – have become a rear-guard action.
Conclusion
DAC 7 is coming and the Belgian prelude to it might appear peculiar and raise some questions in light of the pending case law before the European Court of Justice regarding a similar provision. It nonetheless exists and adds a (temporary) additional layer of compliance obligations for digital platforms operating ‘in Belgium’. Entities subject to it must comply with this new requirement.
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Please do contact us if you need any further assistance on this topic:
Gert Vranckx - Senior Associate (gert.vranckx@tiberghien.com)
Rik Smet - Associate (rik.smet@tiberghien.com)
Kimberly Van Sande - Associate (kimberly.vansande@tiberghien.com)
1 Act of 9 December 2020 relating to various tax and anti-fraud provisions, DOC 55 1683/002, 11-12.
2 i.e. state register number or social security number.
3 These are platforms that meet certain criteria and have obtained a qualification as such by the Belgian government in relation to the tax treatment of revenue within the so-called “sharing economy”.
4 COM (2020) 314: Proposal for a COUNCIL DIRECTIVE amending Directive 2011/16/EU on administrative cooperation in the field of taxation.
5 https://www.const-court.be/public/n/2020/2020-155n.pdf.
6 Directive 2000/31/EC of 8 June 2000.
