Global Tax Alert | 26 July 2013

Belgian administrative circular letter reinforces secret commissions tax as the exception and not the rule

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On 22 July 2013, Belgium's Finance Minister and tax authorities issued a new administrative circular letter relating to the secret commissions tax.1

The law of 17 June 2013 introduced a new exception to the secret commissions tax.2 The above-mentioned circular letter (which is an internal instruction issued by the Belgian tax authorities) further clarifies these exceptions, making the secret commissions tax the exception rather than the general rule.

This Alert covers the general principles and the exceptional cases related to the secret commissions tax.


In Belgium, the tax deductibility for corporate tax purposes for certain categories of expenses (commissions, salary and benefits in kind) is subject to an additional reporting obligation.

Non-reporting could lead to a secret commissions tax of 309% at the level of the paying entity. Two basic exceptions exist in Belgian legislation:

  • when the debtor was able to prove that the payment was duly and timely reported in the tax return of the beneficiary;
  • in cases where the beneficiary had not spontaneously and timely reported the payment in his tax return, but the income was nonetheless taxed with the consent of the beneficiary within the ordinary three-year assessment period (new exception introduced by the law of 17 June 2013).

Only under the first exception, the tax deductibility of the expense would be safeguarded. Under the second exception, although successful in avoiding the secret commission tax, the expense itself would still be considered as non-tax deductible.

Administrative circular letter

Further clarifications on the exceptional character of the secret commissions tax

In the circular letter, the Belgian tax authorities have confirmed that:

  • The secret commissions tax will no longer be applied when the income has been taxed at the level of the beneficiary to the extent that this tax is final.
  • The secret commissions tax is to be considered as an exceptional measure and can thus only be applied in cases where it is no longer possible to levy a final tax at the level of the beneficiary.
  • In cases of doubt, the Belgian tax authorities must give priority to taxing the income at the level of the beneficiary over trying to levy the secret commissions tax at the level of the debtor of the expense.

With respect to restoring the tax deductibility of the envisaged expense, the circular letter further clarifies that double taxation is to be avoided at all cost. In principle, the tax deductibility of the expense will no longer be denied when the income has been taxed at the level of the beneficiary, especially in the absence of bad faith.

The tax authorities will check the aforementioned principles by random sampling.

Other clarifications

Other than the exceptional character, the circular letter also foresees a ”temporary secret commissions tax” in cases where:

  • The beneficiary has been taxed on the income but said tax is not final (e.g., beneficiary still has the possibility to file for an objection).
  • The final character of the tax cannot be guaranteed (e.g., period of assessment has not ended yet).

However, in both cases, the circular letter foresees that, as soon as the final character of the tax has been

assessed, the debtor of the expense can file for an ex officio relief for the secret commissions tax.

Finally, the aforementioned rules also apply for expenses paid to foreign beneficiaries and that the rules and exceptions may be different on a country specific basis (e.g., final character of the tax may be assessed differently).

Entry into force

The guidelines will be applied as from tax year 2014 (accounting years ending between (and including) 31 December 2013 and 30 December 2014) but the circular letter allows, to a certain extent, the principles to be applied on pending cases as well.


The new circular letter provides for legal certainty on the application (and the exceptional character) of the secret commissions tax.

Companies should nevertheless be aware that less uncertainty also involves more responsibility.


1. AAFisc Nr. 30/2013 – AGFisc N° 30/2013.

2. See EY Global Tax Alert, Belgian House of Representatives adopts miscellaneous tax provisions in Budget 2013, dated 21 May 2013.

For additional information with respect to this Alert, please contact the following:

Ernst & Young Tax Consultants SCCRL/BCVBA, Brussels
  • Herwig Joosten
    +32 2 774 9349
  • Werner Huygen
    +32 2 774 9404
  • Steven Claes
    +32 2 774 9420
  • Kurt Van Der Voorde
    +32 2 774 9281
  • Peter Moreau
    +32 2 774 9187

Ernst & Young LLP, Belgium-Netherlands Tax Desk, New York
  • Arne Smeets, Belgium
    +1 212 773 2093
  • Bart Desmet, Belgium
    +1 212 773 3068
  • Dirk Stalenhoef
    +1 212 773 3390
  • Jan van den Enden
    +1 212 773 4417
  • Sebastiaan Kuijper
    +1 212 773 5187
  • Mark de Jager
    +1 212 773 5331
  • Jeske Ladan
    +1 212 773 4909
  • Maaike Muit
    +1 212 773 7026
  • Yorick Vreenegoor
    +1 212 773 7025
Ernst & Young LLP, Belgium-Netherlands Tax Desk, Chicago
  • Frank Schoon
    +1 312 879 5508

Ernst & Young LLP, Belgium-Netherlands Tax Desk, San Jose
  • Frank van Hulsen
    +1 408 947 6503
  • Michiel van der Maat
    +1 408 947 6678

EYG no. CM3682