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Tax Insights - 08-2019 -Anti-abuse provision

Corporate Tax Reform – Modification of the closing date of the financial year
New circular

 

The law of 25 December 2017 on the corporate income tax reform includes a specific anti-abuse provision regulating the entry into force of the Summer’s Agreement new fiscal provisions. Under this anti-abuse provision, any alteration made to the closing date of a financial year as of 26 July 2017 will be disregarded for the application of the corporate income tax reform. 

In 2018, we have contacted the tax authorities on an anonymous basis in order to know their position regarding the practical application of this anti-abuse provision. The tax authorities informed us that the anti-abuse provision should not be automatically applied because its strict application would lead to many practical difficulties. The tax authorities also informed us that this provision would only be applicable in case the taxpayer decides to modify the closing date in order to benefit from certain tax measures (pre or post reform). 

In the meantime, the tax authorities have changed its position and recently issued a new circular (circular 2019/C/50 of 17 June 2019 regarding the application of anti-abuse provisions relating to the entry into force of the law of 25.12.2017). In this circular, the tax authorities describe the practical consequences of the application of the anti-abuse provision in the context of the preparation of the tax returns. The circular specifies that the anti-abuse provision will apply for any change made to the closing date of the financial year, whether voluntary or not.

Based on the above, if the closing date of your company’s financial year will be modified between 26 July 2017 and the end of tax year 2021, a specific treatment must be applied in your corporate tax return. In practice, the company must calculate, for the same tax return, a taxable basis for two periods: a period for which the different provisions relating to the first phase of the reform of corporate tax are not taken into account and a period for which these provisions must be taken into account. In this context, the company have to set up an intermediary closing date in order to determinate the taxable basis for the two periods.

If you would like more information on this topic, or if you wish our assistance with the completion of these formalities, do not hesitate to contact the Tax team of RSM Belgium (intertax@rsmbelgium.be).
 

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