Association Afschrift on Belgium’s new bank secrecy laws

Transcript

In an attempt to crack down on tax evasion Belgium has changed its bank secrecy laws to give inspectors greater access to bank accounts. World Finance speaks to Jonathan Chazkal of Association Afschrift about how the rules have changed and what guarantees taxpayers have under this increased scrutiny.

World Finance: How much latitude do the tax authorities have under the old system to contact banks directly for client information?

Jonathan Chazkal: Basically, before the new law, a tax inspector was only able to check your bank accounts in Belgium in two particular situations. The first one would be if an administrative appeal would already be filed against a claim by the tax authorities. Then the tax inspector could go and check your bank accounts only for facts related to that claim. The second situation was in the event of an organised tax evasion, tax fraud, where even the bank would have collaborated with the taxpayer. So it was very particular situations in which the tax authorities could inspect your bank accounts.

World Finance: Now how have the rules changed under the new laws?

[I]t’s a much broader definition, it gives much more possibilities to the tax authorities to go and inspect your bank accounts

Jonathan Chazkal: According to the new law, a tax inspector could check your bank accounts in the event that he sees a sign of tax evasion. So it’s a much broader definition, it gives much more possibilities to the tax authorities to go and inspect your bank accounts, and the law gives examples of what is a sign of tax evasion. For example, the fact of having an account abroad that you have not declared, or for example not filing a tax report. What could not be upheld as a sign of tax evasion is the sole fact that you did not file on time a tax report. But because the definition is so much broader, it is easier for the tax authorities to ask the bank for information about the tax payer.

World Finance: Are there any guarantees that the taxpayer can expect under the new law?

Jonathan Chazkal: There are two guarantees, it’s not so easy for the tax authorities to just go to a bank and ask them to look into the bank account of a taxpayer. First of all, the tax authorities themselves have to send a questionnaire to the taxpayer himself, and it’s only in the event that the taxpayer refuses to answer that the tax authorities could go and ask the bank about his accounts. A question that arises and that was not decided yet in Belgium by a court is the right of silence, a right that is also applicable in tax matters, is that a refusal or is that an answer, and can or not the tax authorities then go and inspect your bank account? A second guarantee the taxpayer has is that in the event the taxpayer wishes to inspect his bank accounts, the tax inspector has to obtain the authorisation of his director. So that’s another guarantee the taxpayer has as well.

When they decided to introduce that new law, the Belgian government also decided to establish a central registry

World Finance: With all of these changes abounding, how will the Belgian government even be able to keep track of people’s bank accounts?

Jonathan Chazkal: When they decided to introduce that new law, the Belgian government also decided to establish a central registry where all the banks every year will have to file all the bank numbers of every Belgian resident. Those records will be kept in that central registry for eight years and for the tax authorities it would then be much easier to know which account is related to which taxpayer, because up until that central registry, the only accounts the tax authorities were aware of were the accounts with which the taxpayer would pay his taxes, or the one where he would ask for a reimbursement of his taxes.

World Finance: Now have any international rules influenced the Belgian government’s decision to clamp down on this particular issue?

Jonathan Chazkal: I think that this whole new law and the whole lifting of bank secrecy has to do also with a broader international context. We are talking nowadays about exchange of information before older countries, members of the OECD. If you look today to what’s going on in Switzerland, we get clients that tell us that the banks told them that if they do not regularise their situation in their home country they should just leave the bank, so it is very important now to regularise the situation in your home country so you could still have these account abroad that offer always a very good private banking.

World Finance: Jonathan, thank you so much for joining us today.