Logical outcome of the court case
The Court predictably considered the Belgian regulation to constitute an unequal treatment. Belgium argued that the obligation to issue a tax slip to foreign recipients helps the other state to carry out tax audits and to check whether the taxpayer has declared all its income. The Court did not agree and considered that the administrative tolerance for payments to Belgian recipients is based on the premise that the risk of tax fraud is lower for service providers who are subject to Belgian accounting law and have VAT invoicing obligations than for taxpayers who are not subject to such obligations. However, accounting law and VAT are largely harmonized within the European Union, reason for which service providers established in other Member States and those established in Belgium are subject to comparable obligations. The issuance of tax slips is clearly not considered necessary to enable the Belgian tax authorities to perform its tax audits. Consequently, the information contained in the tax slips is not indispensable for the tax authorities of the other Member States in order to check the tax declarations of service providers established in their territory.
Finally, the Court states clearly - and in a very general way - that the potential separate assessment of secret commissions is a disproportionate penalty, especially since this penalty can also be imposed if the income is still taxed with the foreign recipient.
Belgian legislator anticipated and changed the law already
The Belgian legislator has anticipated this conviction and in an Act of 21 January 2022 "containing various tax provisions" abolish the obligation to issue a tax slip (tax form 281.50) when the intended expenses are related to supplies or services carried out by a taxpayer established within the EEA (EU plus Iceland, Norway and Liechtenstein). However, for these transactions there is still a legal or regulatory obligation to issue an "invoice or a document in lieu thereof".
The new legal regulation applies to commissions, fees, etc. paid as of January 1st, 2021. Therefore, the judgment of the European Court is not necessarily relevant for the future, but may remain so for potential litigation regarding previous payments.
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This newsflash is for information purposes only and cannot be relied upon as legal advice.
