Citizens and businesses are given the opportunity through the tax regularization system to rectify their tax situation once in a legal manner. This procedure offers a unique opportunity to voluntarily report undeclared or incorrectly declared income and past actions to the tax authorities, without the risk of fiscal and criminal prosecution.
Below we explain exactly what tax regularization entails, who can make use of it, the conditions under which it is possible, how the process works and the practical steps required to submit a regularization request correctly.
What is tax regularization?
Fiscal regularization is a type of second chance for citizens and business owners who in the past certain revenues not declared or not correctly declared have. So it is a legal option to rectify the tax situation. This means that you can still have that income, capital or VAT transactions voluntarily reports to the tax authorities.
In return, you get tax and criminal immunity, in other words, you will not be prosecuted for these mistakes or omissions.
For whom is this scheme intended?
Anyone who has to pay taxes can take advantage of tax regularization: self-employed, sole proprietors, partnerships and individuals. More specifically, taxpayers who have not declared income or not correctly declared income in the past and want to rectify this situation, without penalties or prosecution.
What are the main conditions for using tax regularization?
Single use
First, the system of tax regularization provides that here, as a taxpayer, you can only one-off use of it. So it is not possible to apply for regularization of income again within, say, 10 years when you have applied regularization of other income on today.
Payment within 15 calendar days
A second condition relates to the payment of tax due. Payment must be made within 15 calendar days upon receipt of the letter from the Contact Point assessing the admissibility of the regularization declaration. In addition, no reservation may be made regarding payment.
Origin revenue
Third, regularization may not cover income derived from, among other things serious crimes such as terrorism or money laundering, illegal narcotics trafficking, human trafficking, serious environmental crime, counterfeiting of goods, piracy, stock market crimes, swindling, hostage-taking, theft, extortion or crimes related to a state of bankruptcy.
No tax audit yet
On top of that, there may No tax audit initiated yet or already in progress its Regarding income. Has a tax audit been opened? Then this income can no longer be regularized.
Type of tax
Finally, the tax regularization system applies only to federal taxes, being personal, corporate, legal entities tax and VAT, as well as some regional taxes for which a cooperation agreement was signed with the federal government.
How will this income be taxed?
A distinction is made between the 'tax lapsed capitals' and the 'unearned income'. Tax-forfeited capitals are the income on which the taxman can no longer tax, given the deadlines for doing so.
The unearned income will be taxed to their standard rate, increased by 30%. Suppose a company regularizes 100 euros of undue income obtained last year through this system, the normal rate of 25% will be levied increased by 30%. This 100 euros will thus end up being taxed at 55%. If these are regularized VAT transactions, the increase of 30% will only apply if the income was not regularized within professional income.
The tax lapsed income by contrast, will be charged to a fixed charge of 45%. Suppose the same 100 euros of the previous example is time-barred, then 45% tax will be due on it.
How to apply. Step by step
- The regularization declaration must be submitted to the Contact Point Regularization of the FPS Finance.
- In the return, you must state what income or capital you want to regularize.
- In addition, you should have a statement add in which you explain where the money is coming from, the amount and over what period of time.
- A letter will then be sent to you in which the Contact Point will explain the admissibility of the declaration reviews. In that letter, the amount of tax due established.
- You must pay this amount, definitively and without reservation, to pay within 15 calendar days upon receipt of the aforementioned letter.
Upon receipt of payment, you will receive a regularization certificate as proof that your fiscal situation has been put in order.
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