EU Commission Launches Belgian VAT Probe
By by Ulrika Lomas, Tax-News.com, Brussels
12 December 2003

The European Commission announced on Wednesday that it is to commence an in-depth investigation into a fiscal settlement concluded between the Belgian government and Belgian firm UMICORE S.A. after a 20 million euro VAT liability was waived by the national tax administration.

A statement from the Commission explained:

“The Commission's preliminary examination of the settlement terms could not determine whether the apparent VAT rebate awarded to UMICORE constitutes an extraordinary reduction of taxes normally charged on undertakings or if the settlement is justified under the terms of the Belgian VAT Code as a general exemption for intra-Community trade."

The action by the Commission will allow the Belgian authorities to “further clarify” the relevant substantive and procedural rules that are applicable in similar situations in Belgium. In addition it will also invite third parties to comment on these aspects o the investigation.

The statement continued:

“According to the Commission's preliminary findings, the ISI (the Belgian tax administration, the Inspection Spéciale des Impôts) uncovered a suspect carousel of precious metal trades that aimed to avoid VAT payments. The investigation undertaken by national authorities is said to have uncovered the existence of a potentially vast fraud scheme involving big precious metal traders that received silver from legitimate suppliers including UMICORE."

“The Belgian authorities have informed the Commission that UMICORE considers that the transactions at issue should have been exempted from VAT. Furthermore, the undertaking was found not directly to participate in the fraud and to be in good faith."

“The probe launched today will aim to clarify these issues and arguments, by calling for the Belgian authorities and the other interested parties to comment on the settlement.”

.