Administrative circular on anti-abuse provision for registration duties and inheritance taxes published

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On 20 July 2012, the tax authorities published an administrative circular on the new anti-abuse provision for registration duties and inheritance tax purposes, which was introduced in the Program Law of 29 March 2012 (click for the full text of the circular: in Dutch / in French). Although the circular only covers anti-abuse in the framework of inheritance tax and registration duties, some of the examples also have a relevant income tax impact. Where the first circular only contained a general and theoretical overview of the new provision (click here for prior coverage), the second circular lists examples of transactions indicating whether or not they constitute abuse of tax law.

Non-exhaustive lists

It should be noted that the assessment of the existence of abuse of tax law must be done on a case-by-case basis. As a result, it is not possible for the tax authorities to provide for an exhaustive list of safe c.q. suspicious transactions. However, the administrative circular lists some transactions which do or do not constitute abuse of tax law according to the tax authorities.

Abuse of tax law

For example, the following transactions are considered to constitute abuse of tax law (unless the taxpayer is able to prove the existence other than tax motives):

SterfhuisclausuleClause mortuaireDistribution clause of community property to one specific spouse
Gesplitste aankoop van goederen voorafgegaan door schenking van geld door de verkrijger van het vruchtgebruik aan de verkrijger van de blote eigendom met eenheid van opzetAcquisition scindée précédée par une donation des fonds par l’acquéreur de l’usufruit à l’acquéreur de la nue-propriètè en cas d’unité d’intentionSplit purchase of property preceded by the donation of money by the buyer of the usufruct to the buyer of the bare property with unity of intent
Erfpachtconstructies tussen gelieerde vennootschappenConstruction emphythéose entre sociétés affiliéesLong term lease constructions between affiliated companies

No abuse of tax law

The following transactions (among other) are considered not to constitute abuse of tax law (unless they are part of a broader abusive construction):

Handgift/bankgiftDonations manuelles ou effectuées par virement bancaireManual donation/ Donation made by a bank transfer between accounts
Schenking voor een buitenlandse notarisDonations devant un notaire étrangerDonation executed before a foreign notary
Gefaseerde schenking van onroerende goederenDonations échelonnées des biens immobiliersSuccessive partial donations of immovable property
Schenking met voorbehoud van vruchtgebruik of ander levenslang rechtDonations avec réserve d’usufruit ou d’un autre droit viagerDonations with retention of usufruct or any other lifetime right
Tontine-/aanwasclausulesClauses de tontine et d’accroissementAccruer and accretion clauses
Duolegaat voor zover dit na verrekening van de last resulteert in een substantiële netto-bevoordeling van de verenigingLegs de duo, pour autant que, suite au calcul de la charge, il en résulte un avantage net substantiel pour l’associationDual legacy in so far it results in a substantial net advantage for the charity association

Conclusion

EY Tax Consultants welcomes the initiative of the government and the tax authorities to provide specific examples regarding the application of the new anti-abuse provision and hopes that the same exercise will be made for the purposes of income taxation.