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Belgian tax authorities point out red flags that trigger a tax audit.

In addition to making sure you report all income and only claim the deductions you qualify for, be aware that certain parts of your tax return tend to trigger more scrutiny.

In an official communication last week, the tax authorities listed the various grounds for audits that are planned for the future or already ongoing. This to encourage taxpayers to meet their tax obligations correctly.

This ‘red flag list’ will allow you to better assess the risk that you will be audited in the coming months or might receive a request for information from the tax office.

If you are a private individual and…

  •  you claim the deduction for alimony or financial support paid, especially for payments made to beneficiaries abroad;
  •  you are a company director or manager and claim the deduction for your actual business expenses;
  •  you are the owner of Belgian real estate, but did not report the earned income correctly in your return in case the property was    used for professional purposes by the tenant;
  • you did not file a tax return, despite the reminder(s) sent to you by the tax office.

If you represent a company and …

  • you did not properly withhold payroll tax on the salaries paid to your foreign employees who are seconded to Belgium for a period longer than 183 days per year;
  • the turnover appears to be ‘abnormal’ in comparison to the turnover of companies in a similar situation, or evolves in an a priori ‘abnormal’ situation according to various parameters known by the tax administration;
  •  you did not respect the ‘80%-rule’ to allow the premiums paid for supplementary pension to be deducted as business expenses for the company;
  • you have created a tax exempted reserve for future risks and costs,
  • irregularities are detected in the amount of losses carried-forward from a previous tax year;
  • you did not file a tax return, despite the reminder(s) sent to you by the tax office.

Private individuals and companies can be selected in the coming weeks and months for a tax audit based on the above indicators. For private individuals, the automated processing of the tax return can already result in a selection in case of irregularities, irrespective of the above ‘red flag list’.

In addition to the specific indicators mentioned above, the tax office can obviously still select you on other grounds to verify your personal tax situation or that of your company.