Accounting rulings now possible as well

Since 30 December 2016, companies have been able to request Individual Rulings concerning Accounting Law from a separate Panel within the Belgian Accounting Standards Board (hereafter referred to as the "BASB"), in which it is established how the law must be applied to a particular situation or transaction. That is the consequence of an Act of 12 December 2016, published in the Belgian Official Journal of 20 December 2016 (from page 57).

Until now the job of the BASB consisted of providing advice to the Government and the Parliament and, by means of opinions and recommendations, contributing to the development of the theory of accounting and to defining the principles of regular bookkeeping. In practice, of course, companies could always informally suggest to the BASB to deal with a certain theme. These recommendations are not legally binding, but they are authoritative.

Now there exists a formal procedure and the obligation for the BASB to respond within a period of two months to requests for an Individual Ruling concerning Accounting Law. The procedure in the new law is based on the procedure that already exists in order to obtain a so-called "advance ruling” in tax cases from the Dienst Voorafgaande Beslissingen/Service des Décisions Anticipées (the Service for Advance Rulings, hereafter referred to as the "DVB/SDA"), set up by the Act of 24 December 2002.

A request for a decision of the BASB must contain the same data as a request for an advance ruling of the DVB/SDA. Amongst other things, the applicant must join a complete copy of any requests that were filed for the same subject with a government and all decisions already issued on the subject.

The Panel only deals with requests about situations and transactions that have not yet had any annual accounts law elaboration or consequences, and about which no administrative appeal or judicial action between the Belgian State and the applicant is pending.

If the request has primarily tax-law consequences, it can only be dealt with if the applicant agrees that the BASB consult with the competent tax authority or with the DVB/SDA, unless the primacy of the accounting law was already acknowledged in a specific case.

Finally, a request is excluded if at the time it is filed, essential elements of the described transaction or situation relate to a flight country that does not work together with the OECD or the described transaction or situation has no economic substance in Belgium. These exclusions are taken over verbatim from the Act of 24 December 2002. In a tax context these exclusions are self-evident. By also excluding these cases from requests for the Panel within the BASB, one avoids that a request is filed with the BASB purely because it cannot be filed with the DVB/SDA.

The Panel informs the applicant within fifteen working days about the response period, and answers within a period of two months (the DVB/SDA has a period of three months for this). The decisions are also published anonymously on the website of the BASB.

The law does not specify whether the Individual Rulings on Accounting Law are legally binding. Given the analogy with the tax rulings, that might be a benchmark for this evaluation. Tax rulings are not binding for courts of appeal and district courts, but they are for the tax administration (apart from a few exceptions). In June 2004 this last rule was inscribed in the Act of 24 December 2002.

These rules go without saying for tax rulings, given that the DVB/SDA is a service within the FPS Finance and in addition thus also forms part of the executive power. The BASB, by contrast, is an autonomous institution, financed by a contribution that is paid by every company which files its annual accounts with the National Bank. The new law does provide that in the Board for Individual Rulings on Accounting Law within the BASB at least one member must also be a senior official within the DVB/SDA.

Thus it remains unclear for the moment whether the Individual Rulings are binding (i) vis-à-vis the tax authority and (ii) vis-à-vis the courts of appeal and district courts. Caution suggests assuming that the Individual Rulings are not binding, but that they are authoritative.

The new power of the BASB will provide greater clarity about the application of the accounting law in individual cases, yet it might not exclude all conceivable later discussion.

For more information on this topic, you can consult Sophie Deckers (author) and Gwen Bevers (unit head).