High-Risk Tax Jurisdictions
Payments made by Belgian companies to beneficiaries in tax havens are subject to a special reporting requirement. This applies to payments made to countries that do not effectively or substantially comply with the OECD standard for transparency and information exchange. Over the past few months, several changes have been made to these lists: Malta is no longer considered a tax haven, while Egypt has now been added. Additionally, Antigua and Barbuda have been removed from the European list, but are considered partially compliant by the OECD.
According to the Belgian tax authorities, a country is classified as a tax haven if it meets one of the following criteria:
- it has been designated by the OECD Global Forum as non-compliant or partially compliant with international information exchange standards.
- it is included in the EU list of non-cooperative jurisdictions, or
- it appears on the Belgian list of low-tax or no-tax jurisdictions. The Belgian tax authorities have compiled a consolidated list of tax havens, which is available online.
Cross-Border Payments
The reporting requirement applies only if:
- the payment is made directly or indirectly to individuals (or permanent establishments) located in a tax haven, or
- is processed through bank accounts held by such individuals (or by financial institutions based in tax havens), and
- the total amount of payments during the taxable period exceeds €100,000.
These payments must be reported using Form 275 F, which must be included with the (Resident or Non-Resident) Corporate Tax Return in Belgium.
Failure to comply with the reporting obligation can have significant consequences. In principle, these payments are not tax-deductible (provided they relate to deductible expenses). The deduction ban also applies even if the payments have been reported but cannot be proven to be part of genuine and legitimate transactions with entities other than artificial structures.
Apparently, in 2023, 1,065 Belgian companies reported payments to tax havens totalling €465 billion. The majority of payments were made to the UAE (80%), followed by Malta (4.5%), Uzbekistan (3.9%), the Cayman Islands (3.1%), and Turkey (2.7%). From this, we can deduce that nearly the entire amount is paid to recipients in the UAE.
OECD Tax Transparency List
The OECD list is compiled by the Peer Review Group within the OECD Global Forum. This group periodically assesses whether countries comply with information exchange standards and assigns ratings: compliant, largely compliant, partially compliant, or non-compliant.
Since 2022, Belgian tax authorities have considered both non-compliant and partially compliant countries as tax havens, which represents a tightening of previous regulations.
Since Malta was classified as partially compliant, the reporting obligation also applied to payments made to that country—provided the €100,000 threshold was exceeded. This had a significant impact on international groups, as Malta is frequently used for financing structures. However, Malta has now been removed from the list (largely compliant), while Egypt has been added (partially compliant), meaning that payments to Egypt are now subject to the reporting requirement.
Other Tax Haven Lists
The EU tax haven list is typically revised twice a year, with the latest update in October 2024. The next revision of the list is scheduled for February 2025.
Currently, 11 jurisdictions remain on the list: American Samoa, Anguilla, Fiji, Guam, Palau, Panama, Russia, Samoa, Trinidad & Tobago, the Virgin Islands, and Vanuatu. Antigua and Barbuda have been removed, but the impact is minimal as the OECD still classifies them as partially compliant.
Meanwhile, Belgium’s tax haven listhas remained unchanged for many years. However, in 2024 the Minister of Finance announced an update in preparation for the implementation of Pillar 2. Despite the UAE introducing corporate taxation in 2023, the minister confirmed that they have no plans to remove it from the Belgian tax haven list.
Determining the Effective Date
A key issue concerns the effective date from which a country gains or loses its tax haven status. According to the Belgian Income Tax Code, the reporting obligation must be assessed at the time of payment. However, there is ongoing debate about whether the relevant date should be when the OECD makes its decision or when the peer review report is published. Given the importance of this distinction, a formal clarification from the tax authorities would be beneficial to provide some legal certainty.
Moreover, it is unclear why taxpayers must consult all three tax haven lists, adding further uncertainty and complexity to its application.