Your monthly update on Tax, Accounting and Legal matters - November 2018

VAT

Immovable letting - VAT

The new law on the VAT option on immovable letting has finally been published in the Belgian Official Gazette (Law of October 14, 2018). This new legislation is a major VAT reform with respect to the letting of immovable property whereby a possibility is foreseen to subject immovable letting to VAT. The new legislation will come into force on January 1, 2019.

The VAT reform essentially comes down to a broader possibility to subject immovable letting to VAT and consists of three main cornerstones: B2B lease subject to VAT; short term rental subject to VAT and an enlargement of the scope of the letting of warehouse facilities.

The possibility to subject letting to VAT brings along the desired effect that the right to deduct VAT will arise in the head of the lessor/owner.

GLOBAL MOBILITY SERVICES

Foreign equity plans: potential new tax reporting and withholding obligations

Equity-based compensation plans are heavily used by companies to align the financial interests of employees of foreign subsidiaries throughout the world with shareholders and are used to provide an incentive to share in any future appreciation in the company’s stock.

The tax withholding and reporting requirements with respect to these plans continue to garner a high-degree of attention from tax authorities throughout the world.

So far, a reporting obligation is required when stock options (falling under the scope of the Stock option law of March 26, 1999) are granted by a foreign entity to individuals working for a Belgian company. These reporting obligation would be extended – for equity incentives granted as from January 1, 2018 - to the grant of free shares, shares at a discounted price and any other benefit in kind linked to such an equity-based compensation plan and would arise regardless of whether the Belgian entity acts as intermediary in the grant process or whether the related costs are charged on to the Belgian entity.

A withholding tax obligation would also be applicable for equity incentives granted from January 1, 2019.

LEGAL

UBO-register: deadline postponed to 31 March 2019

The register of "Ultimate Beneficial Owners" (in short "UBO register") was introduced by the Law of 18 September 2017 to prevent money laundering and terrorist financing and to restrict the use of cash.

In application of the Royal Decree of 30 July 2018 which determines the operational details of the UBO-register, companies, (international) non-profit associations, foundations and trusts or similar legal entities have to register information about their ultimate beneficial owners into the UBO-register by 30 November 2018 at the latest.

However, the Federal Public Service Finance has postponed this deadline to 31 March 2019.

Protection of trade secrets

Until recently, protecting trade secrets in Belgium was not an easy task. There was no legal definition of the concept of a "trade secret", and the opportunities to restrain the unlawful acquisition, use or disclosure of such information was also very limited. On July 8, 2016, the European legislator therefore introduced the EU Trade Secrets Directive 2016/943, which has now been transposed into the Belgian law of 30 July 2018 on the Protection of Trade Secrets (hereinafter the "Law") that entered into force on 24 August 2018.

The Law provides a framework for companies to protect themselves against the unlawful acquisition, use or disclosure of their trade secrets.

The most remarkable innovation is the introduction of a legal definition of a "trade secret": to be considered a trade secret, the information must cumulatively (a) be secret in the sense that it is not generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question, (b) have a commercial value because it is a secret and (c) have been the object of reasonable measures in order to secure its secrecy (e.g. confidentiality clauses, physical access limitations, cyber security, …).

The Law furthermore stipulates the circumstances under which the acquisition, use and disclosure of a trade secret is considered unlawful or not.

With a view to maintaining a trade secret, the Law provides for temporary and conservative measures on the one hand and for remedial measures on the other hand. It also provides for a limitation period and the guarantee of confidentiality of legal proceedings concerning trade secrets. 

Although the Law does not translate into any immediate obligations for companies, it is recommended to identify and inventory what information is considered as trade secret and what reasonable measures are currently taken to protect this information. Furthermore confidentiality clauses entered into with employees and other parties should be reviewed in order to reflect the legal definition of trade secrets and the legal innovations introduced by the Law.

KEEP IN MIND THE DEADLINE

• VAT return October 2018: before November 20, 2018
• Personal income tax return IY 2017 (Belgian residents):
  • Tax on web – proxyholder: November 5, 2018
• Personal income tax return IY 2017 (Belgian non-residents):
  • On paper: November 8, 2018
  • Tax on web: December 6, 2018
  • Tax on web – proxyholder: December 6, 2018