Update: New investigation periods as of the 2023 tax yearCourt of Cassation reverses previous case law

Barbara Vervoort   |  

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In a previous article, we explained the new investigation periods as of the 2023 tax year. The tax authorities needed more time to check the increasingly complex declarations. This led to extended investigation periods of between 4, 6, and even 10 years in the event of fraud. What can the tax authorities check in this extended investigation period? The Court of Cassation (once again) considered this question.

Facilitating the extension of investigation periods for fraud

For the 2022 tax year, the tax authorities had to inform the taxpayer in a ‘written and accurate’ manner why the investigation period for fraud was being invoked. As of the 2023 tax year, a mere suspicion by the tax authorities is sufficient to invoke this 10-year investigation period. In the event of this kind of suspicion, the tax authorities must be able to demonstrate two elements.
First of all, the tax authorities must demonstrate a material element which makes it clear that the taxpayer has committed a breach of the law. Secondly, the tax authorities must demonstrate a moral element that indicates that the taxpayer has deliberately committed the fraud. These elements ensure that the tax authorities cannot extend investigation deadlines at random.

Which tax elements may be investigated during the extended assessment periods of between 6 and 10 years?

The Court of Cassation has now decided that when the extended investigation period for fraud is used by the tax authorities, it may only be used for the elements that have resulted in the assessment period having been extended.
In the 10-year period, therefore, only the fraudulent elements may be investigated. This means that non-fraudulent elements are no longer part of the extended investigation period. These should be checked in the normal investigation period of three years (for example, restaurant costs, reception costs).
Whether this new ruling by the Court also applies to the extended period of 6 years with regard to foreign income/activities is not immediately clear. It would be logical for the Court of Cassation to also extend its position to the 6-year period as otherwise a taxpayer with a complex declaration would be at a greater disadvantage than a taxpayer who was committing fraud. This therefore remains to be seen.

This is a different position taken by the Court of Cassation on the extended investigation period in relation to fraud for the benefit of the taxpayer. Investigation periods are being extended and relaxed, but on the other hand, the new ruling by the Court of Cassation gives the taxpayer greater legal certainty.

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