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3rd international comparative study of the personal income tax return process shows 

Regionalisation of real estate gives Belgian tax payer headache

The study shows that fiscal transparency is on the rise worldwide. 97% of the surveyed countries exchange information with other countries, or will do so soon.

Brussels, 19 May 2015 – The 3rd edition of Deloitte's Comparative study of the 2015 personal income tax return process looks into how the Belgian tax return relates to other countries. This study provides a comprehensive overview of the process of submitting a personal income tax return in 34 countries.
Overall, Belgium performs quite well and is slightly ahead in the field of computerisation but is lagging somewhat in terms of the complexity of the return.

Number of codes increases substantially in Belgium
This increase is practically entirely due to the regionalisation of real estate. Although not all codes on the tax return form need to be completed (49% of tax payers need to enter 10 or less codes), the Belgian tax return form is very extensive. Since 2000 the number of codes has more than doubled, which means the Belgian tax return form now has 772 fields, which potentially need to be completed. Spanish tax payers also have a form with more than 700 fields.

Belgian tax return becomes more complex
Completing a tax return is, inevitably, a very time-consuming task, not in the least because the form is getting systematically longer. Belgians say they spend 2 to 5 hours on average on this "laborious process" which means they are doing better than tax payers in Australia, Russia and South Korea who spend more than 5 hours. Moreover, completing a tax return has become more complicated due to the regionalisation of real estate, especially for owners of several properties and in situations with several mortgages on one property.

Electronic declaration gains popularity worldwide
The FPS Finance recently reported that the Belgian tax authorities received almost 3.5 million tax returns via Tax-on-web last year. In almost three quarters of the surveyed countries, just as in Belgium, the tax return can be submitted electronically, or on paper. In 23% of countries the tax return must in principle be filed electronically, subject to a number of exceptions. This is not the case in Luxembourg, where the paper tax return is still the standard.

Big brother knows a lot
Belgium also does well in terms of pre-completed individual data on the electronic tax return form. The study shows that more and more countries are completing the tax return in advance. This year it is already the case in two thirds of the surveyed countries, whereas three years ago only a third of the countries pre-completed information on the tax return.

Belgium efficient in taxing movable income
Since income year 2013, movable income in Belgium has been subjected to a liberatory withholding tax (a standard rate of 25%, subject to a number of exceptions). This measure makes Belgium one of the most efficient countries in terms of collecting taxes on movable income.

Tax authorities penalise people who submit their returns late
The Belgian tax authorities only allow an extension if justified by special circumstances. If you do not obtain an official extension and the personal income tax return is submitted late, fines range between € 50 and € 1,250. The study shows that approximately three quarter of the surveyed countries do not take late tax returns lightly. Only in Luxembourg no extension is granted, but late submission of the return is not penalised.

Refund or surcharge?
In Belgium the tax return process is completed with the issuance of a tax assessment notice stating any amount to be refunded or surcharge to be paid. Settlement of the balance is not made until the assessment notice has been received, whether the taxpayer is entitled to a refund or has to pay a surcharge. In only 44% of countries the settlement of balance coincides with the receipt of the assessment notice, while in the other 56% no formal assessment notice is required to complete the process.

Worldwide tax transparency to become the standard
Because increasingly an individual’s tax situation exceeds national boundaries, almost all countries are moving toward worldwide tax transparency. 97% of the surveyed countries exchange information with other countries, or will soon do so. Belgium has been playing an exemplary role in this regard: for several years the Belgian tax authorities have exchanged data with other countries (such as the Netherlands, France and the UK).

Tax inspections
Belgium follows a fixed pattern in the selection of files for an in-depth inspection or tax audit. This year as well the tax authorities have submitted their priority list. One of their focuses will be on company directors.
A quarter of the surveyed countries opts for this approach, which thanks to datamining increasingly leads to the desired result, namely the collection of the correct amount of tax owed.

About the study
The comparative study of the tax return process in the personal income tax was first conducted by Deloitte in Belgium in April 2012 in 22 countries. In the second and third edition tax consultants in 34 countries were surveyed about the similarities and differences in the tax return process. The full results are available here.

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