Belgium
This report analyses the implementation of the AEOI Standard in Belgium with respect to the requirements of the AEOI Terms of Reference. It assesses both the legal frameworks put in place to implement the AEOI Standard and the effectiveness of the implementation of the AEOI Standard in practice.
The methodology used for the peer reviews and that therefore underpins this report is outlined in Chapter 2.
Overall findings
AEOI legal framework
Belgium’s legal framework implementing the AEOI Standard is in place but needs improvement in order to be fully consistent with the requirements of the AEOI Terms of Reference. While Belgium’s international legal framework to exchange the information with all of Belgium’s Interested Appropriate Partners (CR2) is consistent with the requirements, its domestic legislative framework requiring Reporting Financial Institutions to conduct the due diligence and reporting procedures (CR1) has a deficiency significant to the proper functioning of an element of the AEOI Standard. More specifically, a deficiency has been identified in Belgium’s enforcement framework.
Overall determination on the legal framework: In Place But Needs Improvement
Effectiveness of AEOI in practice
Belgium’s implementation of the AEOI Standard is on track with respect to the requirements of the AEOI Terms of Reference to ensure the effectiveness of the AEOI Standard in practice. This includes ensuring Reporting Financial Institutions correctly conduct the due diligence and reporting procedures (CR1) and exchanging the information in an effective and timely manner (CR2). Belgium is encouraged to continue its implementation process accordingly, to ensure its ongoing effectiveness.
Overall rating in relation to the effectiveness in practice: On Track
General context
Belgium commenced exchanges under the AEOI Standard in 2017.
In order to provide for Reporting Financial Institutions to collect and report the information to be exchanged, Belgium:
enacted “Loi du 16 décembre 2015 réglant la communication des renseignements relatifs aux comptes financiers, par les institutions financières belges et le SPF Finances, dans le cadre d’un échange automatique de renseignements au niveau international et à des fins fiscales”; and
Under this framework Reporting Financial Institutions were required to commence the due diligence procedures in relation to New Accounts from 1 January 2016. With respect to Preexisting Accounts, Reporting Financial Institutions were required to complete the due diligence procedures on High Value Individual Accounts by 31 December 2016 and on Lower Value Individual Accounts and Entity Accounts by 31 December 2017.
Following the initial Global Forum review, Belgium amended its legislative framework to address issues identified, effective from 1 January 2018.
With respect to the exchange of information under the AEOI Standard, Belgium:
is a Party to the Convention on Mutual Administrative Assistance in Tax Matters and activated the associated CRS Multilateral Competent Authority Agreement in time for exchanges in 2016;
has in place European Directive 2011/16/EU on Administrative Co-operation in the Field of Taxation as amended by Directive 2014/107/EU; and
has in place agreements with five European third countries.1
Table 1 sets out the number of Financial Institutions in Belgium that reported information on Financial Accounts in 2021 as defined in the AEOI Standard (essentially because they maintained Financial Accounts for Account Holders, or that were related to Controlling Persons, resident in a Reportable Jurisdiction). It also sets out the number of Financial Accounts that they reported in 2021. In this regard, it should be noted that Belgium requires the reporting of Financial Accounts held by non-residents based on a prescribed list of exchange partners and some accounts may be required to be reported more than once (e.g. jointly held accounts or accounts with multiple related Controlling Persons), which is reflected in the figures below. These figures provide key contextual information to the development and implementation of Belgium’s administrative compliance strategy, which is analysed in the subsequent sections of this report.
Table 2 sets out the number of exchange partners to which information was successfully sent by Belgium in the past few years (including where the necessary frameworks were in place, containing an obligation on Reporting Financial Institutions to report information, but no relevant Reportable Accounts were identified). These figures provide key contextual information in relation to Belgium’s exchanges in practice, which is also analysed in subsequent sections of this report.
In order to provide for the effective implementation of the AEOI Standard, in Belgium:
the Federal Public Service Finance (the tax authority) has the responsibility to ensure the effective implementation of the due diligence and reporting obligations by Reporting Financial Institutions and for exchanging the information with Belgium’s exchange partners;
technical solutions necessary to receive and validate the information reported by Reporting Financial Institutions were put in place by introducing the “MyMinfin CRS Portal” and
the Common Transmission System (CTS), and in the European Union (EU) the Common Communication Network (CCN), are used for the exchange of the information, along with the associated file preparation and encryption requirements.
It should be noted that the review of Belgium’s legal frameworks implementing the AEOI Standard concluded with the determination that Belgium’s domestic legal framework is In Place But Needs Improvement and its international legal framework is In Place. This has been taken into account when reviewing the effectiveness of Belgium’s implementation of the AEOI Standard in practice. Where particular identified gaps in Belgium’s legal frameworks directly impact its implementation in practice, these are mentioned below.
Findings and conclusions on the legal frameworks
The detailed findings and conclusions on the AEOI legal frameworks for Belgium are below, organised per Core Requirement (CR) and sub-requirement (SR), as extracted from the AEOI Terms of Reference (see Annex C).
CR1 Domestic legal framework: Jurisdictions should have a domestic legislative framework in place that requires all Reporting Financial Institutions to conduct the due diligence and reporting procedures in the CRS, and that provides for the effective implementation of the CRS as set out therein.
Determination: In Place But Needs Improvement
Belgium’s domestic legislative framework is in place and contains most of the key aspects of the CRS and its Commentary requiring Reporting Financial Institutions to conduct the due diligence and reporting procedures, but it needs improvement in relation to the framework to enforce the requirements (SR 1.4). More specifically, Belgium does not have rules to prevent the circumvention of the due diligence and reporting procedures.
SR 1.1 Jurisdictions should define the scope of Reporting Financial Institutions consistently with the CRS.
Belgium has defined the scope of Reporting Financial Institutions in its domestic legislative framework in accordance with the CRS and its Commentary.
SR 1.2 Jurisdictions should define the scope of Financial Accounts and Reportable Accounts consistently with the CRS and incorporate the due diligence procedures to identify them.
Belgium has defined the scope of the Financial Accounts that are required to be reported in its domestic legislative framework and incorporated the due diligence procedures that must be applied to identify them in accordance with the CRS and its Commentary.
SR 1.3 Jurisdictions should incorporate the reporting requirements contained in Section I of the CRS into their domestic legislative framework.
Belgium has incorporated the reporting requirements in its domestic legislative framework in accordance with the CRS and its Commentary.
SR 1.4 Jurisdictions should have a legislative framework in place that allows for the enforcement of the requirements of the CRS in practice.
Belgium has a legislative framework in place to enforce the requirements in a manner that is largely consistent with the CRS and its Commentary. However, a deficiency has been identified. More specifically, Belgium’s legislative framework does not include rules to prevent Financial Institutions, persons or intermediaries from adopting practices intended to circumvent the due diligence and reporting procedures. This is a key element of the required enforcement framework and is therefore material to the proper functioning of the AEOI Standard.
Belgium should amend its domestic legislative framework to include rules to prevent Financial Institutions, persons or intermediaries adopting practices intended to circumvent the due diligence and reporting procedures.
CR2 International legal framework: Jurisdictions should have exchange relationships in effect with all Interested Appropriate Partners as committed to and that provide for the exchange of information in accordance with the Model CAA.
Belgium’s international legal framework to exchange the information is in place, is consistent with the Model CAA and its Commentary and provides for exchange with all of Belgium’s Interested Appropriate Partners (i.e. all jurisdictions that are interested in receiving information from Belgium and that meet the required standard in relation to confidentiality and data safeguards).
SR 2.1 Jurisdictions should have exchange agreements in effect with all Interested Appropriate Partners that permit the automatic exchange of CRS information.
Belgium has exchange agreements that permit the automatic exchange of CRS information in effect with all its Interested Appropriate Partners.
SR 2.2 Such an exchange agreement should be put in place without undue delay, following the receipt of an expression of interest from an Interested Appropriate Partner.
Belgium put in place its exchange agreements without undue delay.
SR 2.3 Jurisdictions should ensure that the exchange agreements in effect provide for the exchange of information in accordance with the requirements of the Model CAA.
Belgium’s exchange agreements provide for the exchange of information in accordance with the requirements of the Model CAA.
Findings and conclusions in relation to effectiveness in practice
The detailed findings and conclusions in relation to effectiveness in practice of AEOI for Belgium are below, organised per Core Requirement (CR) and then per sub-requirement (SR) as extracted from the AEOI Terms of Reference (see Annex C).
CR1 Effectiveness in practice: Jurisdictions should ensure that in practice Reporting Financial Institutions correctly implement the due diligence and reporting procedures, which includes a requirement for jurisdictions to have in place an administrative framework to ensure the effective implementation of the CRS.
Belgium’s implementation of the AEOI Standard is on track with respect to ensuring that Reporting Financial Institutions are correctly conducting the due diligence and reporting procedures and are therefore reporting complete and accurate information. This includes ensuring effectiveness in a domestic context, such as through having an effective administrative compliance framework and related procedures (SR 1.5), and collaborating with exchange partners to ensure effectiveness (SR 1.6). Belgium is encouraged to continue its implementation process to ensure its ongoing effectiveness.
SR 1.5 Jurisdictions should ensure that in practice Reporting Financial Institutions identify the Financial Accounts they maintain, identify the Reportable Accounts among those Financial Accounts, as well as their Account Holders, and where relevant Controlling Persons, by correctly conducting the due diligence procedures and collect and report the required information with respect to each Reportable Account. This includes having in place:
an effective administrative compliance framework to ensure the effective implementation of, and compliance with, the CRS. This framework should:
be based on a strategy that facilitates compliance by Reporting Financial Institutions and which is informed by a risk assessment in respect of the effective implementation of the CRS that takes into account relevant information sources (including third party sources);
include procedures to ensure that Financial Institutions correctly apply the definitions of Reporting Financial Institutions and Non-Reporting Financial Institutions;
include procedures to periodically verify Reporting Financial Institutions’ compliance, conducted by authorities that have adequate powers with respect to the reviewed Reporting Financial Institutions, with procedures to access the records they maintain; and
effective procedures to ensure that Financial Institutions, persons or intermediaries do not circumvent the due diligence and reporting procedures;
effective enforcement mechanisms to address non-compliance by Reporting Financial Institutions;
strong measures to ensure that valid self-certifications are always obtained for New Accounts;
effective procedures to ensure that each, or each type of, jurisdiction-specific Non-Reporting Financial Institution and Excluded Account continue to present a low risk of being used to evade tax; and
effective procedures to follow up with a Reporting Financial Institution when undocumented accounts are reported in order to establish the reasons why such information is being reported.
In order to ensure that Reporting Financial Institutions correctly conduct the due diligence and reporting procedures, Belgium implemented all but one of the requirements in accordance with expectations. The key findings were as follows:
Belgium implemented an overarching strategy to ensure compliance with the AEOI Standard developed after conducting a risk assessment that took into account a range of relevant information sources, including information about supervision activities from financial regulators, information from whistle-blowers and other public available information. Belgium’s compliance strategy facilitates compliance and incorporates a credible approach to enforcement. Belgium intends to keep its compliance strategy and risk assessment under review to ensure its effectiveness on an ongoing basis.
Belgium has worked effectively to understand its population of Financial Institutions, including relevant non-regulated entities, utilising various relevant information sources, such as lists of regulated entities maintained by financial regulators and the Foreign Financial Institution list for FATCA purposes. Belgium is taking action to ensure that Reporting Financial Institutions are classifying themselves correctly under its domestic rules and reporting information as required. Belgium intends to keep its understanding of its Financial Institution population up to date on a routine basis.
The institution responsible for implementing Belgium’s compliance strategy appears to have the necessary powers and resources to discharge its functions. With respect to resourcing, Belgium has assigned the equivalent of two full time staff to monitor and ensure compliance by Reporting Financial Institutions, which have access to IT systems and tools to conduct risk assessments. Overall, they appear to have effectively implemented an operational plan to verify compliance with the requirements, incorporating appropriate compliance activities.
It appears that Belgium effectively enforces the requirements, including through in-depth reviews and the inspection of records of Reporting Financial Institutions and the application of dissuasive penalties and sanctions for non-compliance. It also appears that effective action is taken to ensure self-certifications are obtained as required and to follow up on undocumented accounts.
Belgium will also keep its jurisdiction-specific lists of Non-Reporting Financial Institutions and Excluded Accounts under review to ensure they continue to pose a low risk of being used for tax evasion purposes.
Belgium, however, was unable to demonstrate how it would address the circumvention of the requirements under the AEOI Standard where this is identified. This reflects its lack of a legal basis to do so, although it is noted that such cases have not yet been identified.
Table 3 provides a summary of the specific activities undertaken, or that are planned to be undertaken, in relation to each of the key parts of the framework described above.
With respect to the Financial Account information collected and sent by Belgium, the presence of the key data points of the Tax Identification Numbers and dates of birth appeared to be in line with most other jurisdictions. However, information provided by Belgium showed a significantly higher number of undocumented accounts reported by its Reporting Financial Institutions, when compared to other jurisdictions, which should only occur when it is not possible for the Reporting Financial Institutions to identify whether the accounts are held by Reportable Persons. Follow-up discussions confirmed that Belgium is aware of this issue and is taking steps to address it.
Three exchange partners highlighted issues with respect to the information received, such as missing accounts. Follow-up discussions confirmed that Belgium is aware of these issues and is seeking to improve the situation. More generally, the majority of the exchange partners that received a significant number of records from Belgium indicated that they achieved a success rate when matching the information received from Belgium with their taxpayer database that was broadly equivalent to, or better than, what they usually achieve.
Based on these findings it was concluded that, overall, Belgium is meeting expectations in ensuring that Reporting Financial Institutions correctly conduct the due diligence and reporting procedures, including by having in place the required administrative compliance framework and related procedures. It was also noted that Belgium is unable to demonstrate its capability to address circumvention schemes where they are detected. Belgium is encouraged to continue its implementation process accordingly, including by addressing the recommendations made.
Belgium should put in place a clearly defined policy that, where circumvention is identified, action is taken to address it. Reference is made to the recommendation made when assessing Belgium’s legal frameworks implementing the AEOI Standard.
Belgium should continue to address the issues raised by its exchange partners.
SR 1.6 Jurisdictions should collaborate on compliance and enforcement. This requires jurisdictions to:
use all appropriate measures available under the jurisdiction’s domestic law to address errors or non-compliance notified to the jurisdiction by an exchange partner; and
have in place effective procedures to notify an exchange partner of errors that may have led to incomplete or incorrect information reporting or non-compliance with the due diligence or reporting procedures by a Reporting Financial Institution in the jurisdiction of the exchange partner.
In order to collaborate on compliance and enforcement, it appears that Belgium implemented all of the requirements in relation to issues notified to them (i.e. under Section 4 of the MCAA or equivalent) in accordance with expectations. Belgium has the necessary systems and procedures to process the notifications from partners as required. In particular, Belgium received a notification from one partner and successfully processed it in a timely manner, resolving the issues raised. It also appears that Belgium will notify its partners effectively of errors or suspected non-compliance it identifies when utilising the information received.
Based on these findings it was concluded that Belgium is fully meeting expectations in relation to collaborating with its exchange partners to ensure that Reporting Financial Institutions correctly conduct the due diligence and reporting procedures. Belgium is encouraged to continue its implementation process accordingly, to ensure its ongoing effectiveness.
CR2 Effectiveness in practice: Jurisdictions should exchange the information effectively in practice, in a timely manner, including by sorting, preparing, validating and transmitting it in accordance with the AEOI Standard.
Belgium’s implementation of the AEOI Standard is on track with respect to exchanging the information effectively in practice, including in relation to sorting, preparing and validating the information (SR 2.4), correctly transmitting the information in a timely manner (SRs 2.5 – 2.8) and providing corrections, amendments or additions to the information (SR 2.9). Belgium is encouraged to continue its implementation process accordingly, to ensure its ongoing effectiveness.
SR 2.4 Jurisdictions should sort, prepare and validate the information in accordance with the CRS XML Schema and the associated requirements in the CRS XML Schema User Guide and the File Error and Correction-related validations in the Status Message User Guide (i.e. the 50000 and 80000 range).
Feedback from Belgium’s exchange partners did not raise any specific concerns with respect to their ability to process the information received from Belgium and therefore with respect to Belgium’s implementation of these requirements. More generally, none of Belgium’s exchange partners reported rejecting more than 25% of the files received.
Based on these findings it was concluded that Belgium is fully meeting expectations in relation to sorting, preparing and validating the information. Belgium is encouraged to continue its implementation process accordingly, to ensure its ongoing effectiveness.
SR 2.5 Jurisdictions should agree and use, with each exchange partner, transmission methods that meet appropriate minimum standards to ensure the confidentiality and integrity of the data throughout the transmission, including its encryption to a minimum secure standard.
In order to put in place an agreed transmission method that meets appropriate minimum standards in confidentiality, integrity of the data and encryption for use with each of its exchange partners, Belgium uses the CTS for exchanges with non-EU jurisdictions and the CCN for exchanges with EU jurisdictions.
Based on these findings it was concluded that Belgium is fully meeting expectations in relation to agreeing and using appropriate transmission methods with each of its partners. Belgium is encouraged to continue to ensure the ongoing effectiveness of its implementation.
SR 2.6 Jurisdictions should carry out all exchanges annually within nine months of the end of the calendar year to which the information relates.
Feedback from Belgium’s exchange partners did not raise any concerns with respect to timeliness of the exchanges by Belgium and therefore with respect to Belgium’s implementation of this requirement.
Based on these findings it was concluded that Belgium is fully meeting expectations in relation to exchanging the information in a timely manner. Belgium is encouraged to continue to ensure the ongoing effectiveness of its implementation.
SR 2.7 Jurisdictions should send the information in accordance with the agreed transmission methods and encryption standards.
Feedback from Belgium’s exchange partners did not raise any concerns with respect to Belgium’s use of the agreed transmission methods and therefore with Belgium’s implementation of this requirement.
Based on these findings it was concluded that Belgium is fully meeting expectations in relation to sending the information in accordance with the agreed transmission methods and encryption standards. Belgium is encouraged to continue to ensure the ongoing effectiveness of its implementation.
SR 2.8 Jurisdictions should have the systems in place to receive information and, once it has been received, should send a status message to the sending jurisdictions in accordance with the CRS Status Message XML Schema and the related User Guide.
One exchange partner highlighted in 2018 delays in the sending of status messages by Belgium. It was noted that Belgium appears to be successfully addressing this issue to ensure that status messages are sent in accordance with the requirements.
Based on these findings it was concluded that Belgium is fully meeting expectations in relation to the receipt of the information. Belgium is encouraged to continue to ensure the ongoing effectiveness of its implementation.
SR 2.9 Jurisdictions should respond to a notification from an exchange partner as referred to in Section 4 of the Model CAA (which may include Status Messages) in accordance with the timelines set out in the Commentary to Section 4 of the Model CAA. In all other cases, jurisdictions should send corrected, amended or additional information received from a Reporting Financial Institution as soon as possible after it has been received.
Belgium has responded to notifications and provided corrected, amended or additional information in a timely manner and no such concerns were raised by Belgium’s exchange partners and therefore with respect to Belgium’s implementation of these requirements.
Based on these findings it was concluded that Belgium is fully meeting expectations in relation to responding to notifications from exchange partners and the sending of corrected, amended or additional information. Belgium is encouraged to continue to ensure the ongoing effectiveness of its implementation.
Assessed jurisdiction’s comments on the assessment of effectiveness in practice
Belgium would like to thank the assessment panel and the Secretariat for the very constructive collaboration and their ongoing support in the implementation of the AEOI Standard. In a general way, Belgium will continue the work to ensure the ongoing effectiveness of the AEOI Standard and in particular to make the necessary legislative changes as soon as possible to address the recommendation made during the assessment of the domestic legislative framework implementing the AEOI Standard.
Note
← 1. Andorra, Liechtenstein, Monaco, San Marino and Switzerland.