‘Bureaucracy is the death of good work’

The tax authorities want to be able to check whether landlords declare their rental income correctly. That objective is legitimate, but in the majority of cases she already has that information.

One point of contention of the farmers’ protests should be embraced by the entire society. In addition to the nitrogen and environmental problems, the focus was on the heavy administrative burdens. An important part of productive time has to be sacrificed on forms. There have been a number of constants in my career: more taxes, more tax cut-offs and expanding bureaucratization. Sectors other than agriculture are also suffering. So a common struggle.

To take the sting out of the protests, the governments committed to reducing this tax in kind. The soothing words are not yet cold before the Minister of Finance announces a form that must now be added to the tax return. Anyone who rents real estate and wants to deduct the rent as business expenses must complete a dilapidated form and add it to the tax return. A farmer who leases forty plots of land must therefore complete forty forms. If he does not do so, the rent is not deductible. The financial damage can amount to more than 50 percent of the rent.

The tax authorities want to be able to check whether landlords declare their rental income correctly. That objective is legitimate, but in the majority of cases she already has that information. Almost all rental agreements have been registered. With an efficient flow of information, the controller should have it available. Apparently that efficiency is not there and the government is therefore passing on its core task to a third party. Expensive dead time for citizens due to a failing government.

The form is also user-unfriendly. It is a form where data must be specially requested, such as the national number. Good luck to all tenants who have to deal with a deceased landlord. The exercise must then be repeated: track down the heirs and collect the data. One can also only mention two landlords per property. From the third onwards an additional attachment must be added.

With increasing bureaucratization, it is no coincidence that more and more case law is emerging. Fortunately, the judges attach less importance to form and give priority to content. For example, a judge recently had to consider a similar form on which all payments to tax havens must be stated. You know, it appears in the media every year. This concerns more than 300 billion euros, which, according to the CEO of the ABVV, Miranda Ulens, can be used to finance the 32-hour week: “More than 1 billion euros per day is currently flowing from our country to tax havens. That money could be used to improve wages.” She forgets to mention that these are almost entirely reimbursements for goods and services that have nothing to do with fraud. The sanction for this form is also that the payments are no longer deductible.

There was an Antwerp company that organized worldwide transport and logistics and called on service providers all over the world. People also live in tax havens. The company complied with its obligations and included the form with its declaration, but symbolically stated 0.1 euros on the form and referred to an appendix with all the details and all the correct amounts. The administration found this incorrect and rejected the cost deduction. However, she received all the information.

That defies all imagination and fortunately the judge dismissed the tax authorities. The aim of the obligation is to give the government the opportunity to check whether payments to the tax haven are justified. The contents of the appendix allowed the tax authorities to do this. The fact that the form was not completed as required by law and bureaucracy really does not matter.

The author is a partner at Tiberghien Advocaten

Also read: