The best place to keep untaxed income, and keep it that way, is still in a Belgian bank account, according to the Court of Auditors in a new report.
The Court of Auditors (CoA) is the official agency charged with auditing the government’s finances, and its latest report concerns what are known as ‘fiscal regularisations’ – a sort of amnesty by which anyone with undeclared income can bring it out into the open, on payment of back taxes and a penalty.
The report points out that despite several rounds of regularisations, there is still an estimated €40 billion of untaxed income resting in Belgian bank accounts.
And despite calls from international agencies for banks to be more open to reporting untaxed capital, Belgium is still one of the worst offenders for its own citizens, the CoA said.
“Due to Belgian fiscal banking secrecy, these funds remain out of sight of the tax authorities and the public prosecutors,” the Court writes.
“That is why the Court of Auditors recommends an adjustment of the regularisation and money laundering legislation so that the focus shifts to the black money in Belgian bank accounts.”
The problem is that many of those who took part in previous regularisations only declared their income from the previous five to seven years – as far back as the tax authorities can probe unless they have clear evidence of fraud.
“The earlier partial regularisations made it possible to repatriate the entire underlying capital to Belgian banks after the regularisation,” the report states.
“During previous regularisations, the Belgian banks allowed this without further ado.” That practice has now been changed, but the tax authorities and the courts have too little insight into the old dirty money, the Court said.
“Due to Belgian banking secrecy, the tax authorities can only gain access to Belgian bank accounts, including balances and transactions, if the tax authorities can prove a form of fraud. This means that the capital repatriated at the time remains out of sight of the tax authorities and the public prosecutors’ offices. In that respect, the black or gray assets of Belgians find safer accommodation in a Belgian than in a foreign bank account.”
For foreign bank accounts, meanwhile, an automatic data exchange takes place with 108 jurisdictions, which goes much further in terms of transparency than the system operating in Belgium.
For the government, finance minister Vincent Van Peteghem (CD&V) has informed the court that the law was changed in December – while the CoA report was in preparation – to allow tax and legal authorities access to balances and transactions. The question now is, will that be enough to bring €40 billion of hidden funds out into the open?