The Programme Act of 18 July 2025 brings a welcome adjustment to the rules concerning tax increases in the field of income taxation. For tax assessments issued from 29 July 2025, the tax increase is waived in the case of a first contravention in good faith, which is now explicitly presumed. In two recent judgments of 18 November 2025, Ghent Court of Appeal ruled - that this new legislation must also apply to past assessments that are still being contested, based on the principle that relaxation of the criminal law should be of retrospective application. However, the question remains whether this new legislation does in fact offer taxpayers an additional opportunity to contest past assessments.
Developments under the old legislation
In the old version of article 444 ITC92 (Income Tax Code 1992), its third paragraph stated that, in the absence of bad faith, the minimum 10% tax increase could be waived. When this paragraph was introduced in 1980, the legislator clearly stated that the words "can be waived" do not indicate an arbitrary power but mean that the 10% tax increase is not applied. In other words, the legislator clearly intended that, in cases of good faith, the 10% tax increase would not be triggered.
In practice, however, the tax authorities have treated the 10% tax increase as an automatic consequence for any first contravention, regardless of the taxpayer's good faith. In many cases, automatic application of the tax increase could be considered unfair. This became particularly evident with the introduction of article 206/3 ITC92, under which a company subject to a tax increase of 10% or more can no longer deduct certain “tax assets” (such as its tax losses carried forward, accumulated dividends-received deduction, innovation income, or losses from the taxable period), either from the tax base as modified by the tax authorities or (for example, in a case of late filing) even from the entire tax base undergoing ex officio assessment (see our previous contribution).
These draconian consequences are still the subject of numerous court actions and applications for preliminary rulings to the Constitutional Court. In response to one such application, the court ruled in a judgment of 21 November 2024 that this limitation on the deductibility of tax assets, as applied in the context of an ex officio assessment due to a late-filed return, does not violate the constitutional principles of equality and proportionality (see our previous contribution). However, in the same judgment, the court also expressly recognised that, as a matter of principle, in situations where there is no bad faith, no 10% tax increase should be imposed. It thus confirmed the legislature's initial intention. Following this judgment, the new government committed to reviewing and adjusting the wording of article 444 ITC92.
The new law and its application in time
The new third paragraph of article 444 ITC92 clearly states that a tax increase is waived for a first offence committed in good faith. Good faith is presumed to exist unless proved otherwise where a taxpayer commits a first contravention (except in specific cases where the tax authorities can impose an ex officio assessment, such as for a late return). However, according to article 39 of the Programme Act, the new third paragraph only applies to assessments issued on or after the date of the law’s promulgation in the Belgian Official Gazette, i.e. 29 July 2025.
This entry-into-force provision sparked debate. Not only was an annulment appeal filed with the Constitutional Court against this provision, in ongoing proceedings taxpayers also argued that the new legislation should be applied to any assessments issued before 29 July 2025 that are still in process. In two judgments of 18 November 2025, Ghent Court of Appeal ruled in favour of that position.
The court confirmed that a 10% tax increase is a criminal penalty within the meaning of article 6 European Convention on Human Rights (ECHR) and article 4 of protocol No. 7 to the ECHR (as had previously been ruled by the European Court of Human Rights and the Constitutional Court) and confirmed that the new legal text therefore constitutes a relaxation of the criminal law, which requires to be applied retroactively (i.e. to cases dating from before it came into force) based on a general legal principle anchored in article 7 ECHR, article 15 of the International Covenant on Civil and Political Rights and article 49 of the Charter of Fundamental Rights of the European Union (being higher-ranking norms, which take precedence over the national entry-into-force provision).
The take-away is clear: in the case of a first contravention taxpayers can now cite the new rules to argue that the 10% tax increase (supposing the tax authorities cannot prove bad faith) should be set aside (with all attendant consequences) for all assessments that are currently on appeal to an administrative or judicial instance or for which the one-year filing period has not yet expired.
Going the extra mile?
What about assessments for which the filing period for tax protests has already expired? Tax law allows applications for so-called ex officio relief within five years of an assessment. However, this requires the taxpayer to demonstrate (amongst other things) the existence of a "new fact”. Unless it comes from a supranational court, a change in the court’s approach to the law does not constitute such a new fact: on that the law itself is clear. Not even two judgments of even date from a court of appeal can therefore stand as grounds for granting ex officio relief. However, Antwerp Court of Appeal has previously ruled that a new law of retrospective application does constitute a new fact justifying an application for ex officio relief. That case specifically concerned the Programme Act of 19 December 2014 amending the special assessment on secret commissions. The amended rules were held to apply retroactively to all disputes that were not yet final on its commencement date. In the Antwerp case, which was already pending and qualified as an application for ex officio relief, the court deemed that the legislation constituted a new fact and allowed the application.
The Programme Act of 18 July 2025, which likewise applies with retroactive effect, could also therefore be cited as a new fact justifying ex officio relief on assessments issued over the past five years. It is beyond doubt that this option could be of widespread practical application. Indeed, the Minister of Finance, in responding to a parliamentary question on 27 March 2025, stated that, for tax year 2022, 10% tax increases were imposed in 55,965 personal income tax cases (the total amount of revenue raised was EUR 21,852,391.59) and for tax year 2023 there were 41,524 cases (revenue of EUR 17,411,440.88). Regarding corporate income tax, 10% tax increases were imposed in 28,239 cases for tax year 2022 (revenue of EUR 50,242,608.47) and there were 19,255 cases in tax year 2023 (revenue of EUR 37,184,791.11).
Do not hesitate to contact us if you want to consider contesting an assessment based on this new development.
