Use of unlawfully obtained proof in tax matters is possible

Spotlight
15 September 2015

In Belgium, taxation normally starts with the voluntary and timely submission of the tax declaration by the taxpayer. A tax declaration is deemed to be correct until proven otherwise. The burden of proof rests with the tax administration, which has been granted a number of well-defined audit powers by legislation. In practice, in some cases the tax administration does not respect the boundaries of its legal audit powers. The question then arises whether or not the tax administration is entitled to use proof which it has obtained in violation of legal rules.

Traditionally it was accepted that proof obtained in violation of a legal rule is unlawful and must be excluded, often leading to the taxation being declared null and void. In recent years there has been discussion in the Belgian courts about this traditional point of view, following acknowledgement by the Court of Cassation that a minor mistake regarding the gathering of proof in a criminal case should not necessarily lead to the acquittal of the accused (the so-called "Antigoon" case law). The criminal judge has to consider the balance between the rights of defence and the public interest before excluding the unlawfully obtained proof. In the meantime, this case law has been enacted in legislative texts. It has been unclear for a long time, however, whether or not these principles could also be applied in tax matters.

In a decision rendered on 22 May 2015, the Court of Cassation settled this issue. The Court ruled that the tax court must also make a comparative assessment. The Court considers that the use of unlawfully obtained proof by the tax administration has to be measured against the principles of good governance and the right to a fair trial. Except where the legislator provides for a special sanction, unlawfully obtained proof in tax matters can only be excluded when:

  • the proof was obtained in a way that conflicts with what may be expected from a properly acting government to such an extent that its use must be deemed inadmissible under any circumstances; or
  • its use jeopardises the right of the taxpayer to a fair trial.

In evaluating this, the judge can take into account such possible factors as the purely formal nature of the unlawfulness, its effect on the right or freedom protected by the violated rule, the intentional nature of the unlawfulness, and a situation where the infringement is so serious that it surpasses the unlawfulness by far.

There is no doubt that this case law is a veritable windfall for the tax administration. The real-life impact in practice, however, remains unclear. For each violation in the gathering of proof, judges will have to apply the test in concreto. At this point, the direction in which the judges will decide cannot be predicted. However, it should be emphasised that the new test does not provide a safeguard for the tax administration based on which it could simply ignore the procedural rules of Belgian tax law.