Belgian Prosecutor Takes Aim at Cash Company Tax Avoidance Schemes
The Antwerp public prosecutor's office on October 19 announced that it has started an investigation into a "cash company" tax avoidance scheme allegedly set up by the owner of Belgian electrical retailer Hugo Van Praag to avoid the payment of €10.41 million in corporate income taxes.
A cash company construction involves a cash-rich company that has successfully sold its assets, but has acquired a considerable capital gains tax liability. Under Belgian law, CGT is part of the corporate income tax. (The tax rate recently was reduced to 33.99 percent, from 40.17 percent.) If the company reinvests the proceeds from the sale of its assets in other, qualifying assets, rollover relief is available for capital gains on the fixed tangible (and some intangible) assets that the company held for at least five years before the disposal.
Prosecutor Takes Aim at Tax Avoidance Schemes, Tax Notes International, 8 November 2004