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Payments made to Luxembourg as from FY 2015

Since January 1, 2010, corporate tax payers must report all direct and indirect payments made to tax havens (art. 307 BITC 1992). As tax havens are considered:

1. States mentioned on a list of States with or without a low level of taxation, which means having a nominal corporate tax rate below 10% (art. 179 RD/BITC 1992) - 'Belgian' blacklist;

2. States which, during the entire taxable period in which the payment is made, are considered by the Global Forum on Transparency and Exchange of Information for Tax Purposes as not applying the OECD standard for the exchange of information 'effectively or substantially' - 'OECD' blacklist.

Regarding the second category, in November 2013 the OECD published the first results of its Peer Review. Luxembourg, Cyprus, the Seychelles and the British Virgin Islands (BVI) were considered to be non-compliant with the OECD standard. Payments made to those jurisdictions during taxable periods beginning on or after 1 December 2013 (in most cases financial year 2014/assessment year 2015) had to be reported.

In a recent circular letter, the tax authorities stated that the non-reporting of payments to Luxembourg, Cyprus and the BVI does not automatically result in the non-deductibility of those payments.

The BVI were no longer considered non-compliant in July 2015, but are still on the 'Belgian' blacklist and therefore payments to the BVI still have to be reported.


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Jos Goubert

Tax Knowledge Dept.

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