Article 499 of the Income Tax Code 1992 (ITC 92) confirms that a taxpayer may lodge a complaint against a cadastral income (“CI”) notification “within two months of the date of notification”.
This tight deadline creates an unjustified difference in treatment compared with other deadlines available to taxpayers in tax matters, particularly income tax, for a number of reasons.
The first is that this notification is not preceded by any formally organised exchange of views between the taxpayer and the tax authorities concerning the determination of the tax base. In income tax, a pre-litigation dialogue must take place (rectification of the tax return or automatic assessment), to allow the taxpayer to make an initial assessment of the tax base rectified or determined by the tax authorities. As expected, when tax is assessed on the basis of a tax return, the taxpayer is already aware of the components of the tax base. Once the tax has been assessed, the taxpayer has a very comfortable period of one year in which to lodge a claim, in any case with all of the relevant information in view.
Secondly, and this is the main argument, the CI notifications fail to provide adequate reasons. The letter of notification often limits itself to telegraphic terms such as “revaluation”, “significant change”, “change of boundary between parcels”, followed by the figure used for the new cadastral income.While the words used may give a clue as to the origin of the notification, there is no concrete justification for the figure used. The theoretical rules for determining the amount of cadastral income do indeed appear in the Code, but the application to the case in question, the valuation method used, and the calculation do not appear in the document. If the taxpayer wants to know more, the taxpayer (whether individual, company or not-for profit entity)can lodge a complaint (because an exchange of views with the tax administration is then necessary),but that is assuming they reac in time, and the time they have to react is too short!
Any counter-argument is therefore turned on its head.
It is true that the legal requirement to give reasons for the claim is simplistic: the requirement is to mention an income to set against the one given in the notification. You are not required to give reasons for this alternative figure. This raises the question of what amount should be proposed if we do not know how the initial figure was determined?
Thirdly, if no claim is made within the time limit, the CI notified will be that of the property (or equipment or tools) for as long as the asset in question exists, subject to any revisions to cadastral income, which are extremely rare in practice. In income tax, the situation is reassessed every year. In addition, the CI that has become final in the absence of a complaint within the time limit, will apply not only to the title holder the real earnings management (rem)at the time of notification, but also to all successive ones when the title is transferred, who will then have to pay the withholding tax based on this RC without being able to call this tax base into question.
A few months ago, the Liège Court of First Instance (Civ. Liège, 23 February 2023, RGCF 2024, 242; Taxwin) showed understanding towards a taxpayer faced with a typical cadastral income notification: The taxpayer submitted a claim, but it was submitted too late.During the taxpayer’s appeal, the court found that the document was concealed – there were no details of the calculation, no explanation of the subdivision into lots included in the notification, no concrete factual elements, no precise description of the plot or its surface area, and no elements justifying the significant change.
The judge deduced that the taxpayer could not understand the scope of the tax notification. Relying on the text of article 499 of the ITC 92, which admittedly sets the time limit of claim to two months with an exception in the case of “force majeure”, it acknowledged the existence of a case of this nature, declared the claim admissible and, consequently, the legal action that followed it. The court then annulled the notification on the grounds that the area measurements used in the property documentation were incorrect.
Force majeure will only save those taxpayers who have successfully appealed to the courts. In our view, legislative changes should be used more constructively to replace this necessarily individual remedy for the brevity of the right of complaint. Cadastral income notifications should contain an explicit statement of reasons.
In summary, it is obvious that the property documentation should determine the cadastral income on a case-by-case basis in light of precise criteria, elements of comparison and methods, and not in a random manner.It should then reveal them automatically in the notification. The taxpayer must be given time to examine the notification and to assess, with the help of a property or tax professional if necessary, whether it is appropriate to lodge a complaint within a period well in excess of two months.
For further information, please contact:
Olivier Bertin, Partner, Bird & Bird
olivier.bertin@twobirds.com
