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BELGIUM & LUXEMBOURG DEVELOPMENTS 2009/2010
Marc Gouden,
Philippe & Partners
In 2008, we were proud to report that Philippe & Partners had been granted the
Belgian Legal Award in the category “Banking & Finance” and in 2009 our firm had
received the award of the “Best Belgian law firm” of the year.
During the 2010 ceremony, Philippe & Partners was again nominated in several
categories and has been awarded (for the second time) the first prize in the
category “Banking & Finance”.
More information on:
http://www.droitbelge.be/legal-awards/winners2010.html
1.2.
The
political situation in Belgium
Such as reported over the two last years, Belgium has been in a politically
difficult situation ever since the elections in 2007:
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Immediately after the elections, the Flemish christian-democrat Mr Leterme had
been struggling over months to find a coalition (Belgium having its longest
period without government after an election with almost 200 days).
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Finally, after a “temporary government” formed by former Prime Minister Mr
Verhofstadt (Flemish liberal), a government with Mr Leterme as Prime Minister
was approved by the Parliament in March 2008.
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After several months of political inactivity, internal disagreements and a
resignation of the Prime Minister refused by the King, Mr Leterme (and his
government) finally resigned in December 2008 (as a consequence of the so-called
“Fortis crisis”).
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A new government had been appointed in December 2008 with the Flemish christian-democrat,
former Minister and up till then President of the Parliament, Herman Van Rompuy.
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After not even one year of activity, Mr Van Rompuy has however been elected as
the first permanent President of the European Counsel and again Mr Leterme was
appointed Prime Minister.
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One of the (politically major) topics the Government and the parties of the
Parliament majority had agreed to deal with, was the language issue of several
communes located in the Flemish region, at the immediate border with the
Brussels (bilingual) region and where lots of French-speaking Belgians live and
have specific rights. After several attempts (and failures) by Mr Leterme,
former Prime Minister Jean-Luc Dehaene was appointed by the King in order to
work on a consensus / proposal. He used the Eastern holidays of April 2010 to
finalize a proposal, but the most extreme parts of the Flemish and Walloon
Liberal parties rejected these proposals and the Flemish Liberals decided to
quit the Government. As a consequence the Prime Minister presented (again) the
resignation of this Government to the King, who accepted it after several days.
New elections will have to be held in June.
1.3.
The
political situation in Luxembourg
* As mentioned last year, elections took place in Luxembourg shortly
after the OASIS meeting 2009.
Although the christian-democrats were already, after the 2004 election, at a
historically high level, they managed to increase their presence in Parliament
with one additional seat. The coalition partner, the socialist party, lost one
seat, but a new christian-democrat – socialist Government was formed after the
elections, with Mr Jean-Claude Juncker as Prime Minister.
* The so-called “Luxembourg-model” is based on three-party discussions
between the industry representatives, the workers representatives and the
Government. Every time the social and economic situation of the country so
requests, a “tripartite” (a negotiation round between these three parties) is
organised in order to agree on the content of the new regulations which shall
govern in the future the major economic topics (social security, workers rights,
taxes, ...). The last “tripartite” took place in 2006 and unpopular measures had
to be accepted by the workers representatives, because the State estimated that
quite substantial savings were necessary.
A new “tripartite” was convened for this spring. Because the financial situation
of the Luxembourg State was, in the end, for the years 2006 to 2008 by far not
as bad as announced in 2006, the workers representatives had announced that they
would not easily accept new “difficult” measures for the workers. But, after the
financial and economic crisis, the view of the Government was that very
important measures had to be taken and that quite important cuts in the
Luxembourg welfare state had to be operated. The last negotiation round, last
week, was closed without parties having reached an agreement and the Government
and the industry consider that this situation is basically due to the inflexible
attitude of the workers representation.
Because it is the first time in Luxembourg history that a “tripartite” doesn’t
reach a consensus, observers wonder if this would be the end of the
“Luxembourg-model” ...
The UE Directive 2007/64/EC on payment services was implemented in Belgium by
three different laws:
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Law dd. December 10th 2009 on payment services
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Law dd. December 21st 2009 on payment institutions
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Law dd. December 22nd 2009 amending the law on the financial sector
The first of these laws also regulates consequences in Belgium of violations to
the EU Regulation on trans-border payments.
The new rules applicable to the payment professionals are principally based on:
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an adequate information to be provided by the professional to the user;
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the rules applicable to the payment operations.
We are not going to analyse this in detail, as it refers to a EU Directive and
is thus known/implemented in the other Member-States as well.
By a law dd. January 18th 2010 (amending the law dd. January 11th
1993 on money laundering), Belgium implemented the third EU Directive 2005/60/EC
and its execution Directive 2006/70/EC as well as several GAFI recommendations.
The scope rationae personae has been broadened:
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the scope is no longer defined by reference to licenses (i.e. as professional of
the financial sector), but based on general definitions;
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the law will be applicable to UCITS which sell their products directly to
clients;
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but persons or companies which have only a very limited financial activity may
request an exemption.
“Financing of terrorist activities” has now been defined in the law itself and
no longer by a mere reference to the EU framework decision of June 13th
2002 and the New York Treaty dd. December 9th 1999.
Regarding the “know your client” obligations, a person (or a trust, a
foundation, …) who has at least 25% of the shares or of the voting rights of a
company or other legal body, is presumed to be the final economic beneficiary
(or, if it is a trust, a foundation, .. the beneficiary(ies) of the latter) of
that company. Every person or company holding at least 25% of a company’s
shares, has to notify the company within 6 months as of January 18th
2010. This is to make it easier for the companies to fulfil their identification
obligations towards the professionals, by allowing them to know who their
shareholders are (if the shares are not registered shares).
If, for any reason, a professional cannot or no longer identify his client (and
economic beneficiary), he may not enter into a commercial relation or must
terminate such relation.
The professionals have to assess the risks per types of clients / transactions
and the obligations are softened for low risk profiles.
The transaction supervision requirements are strengthened and the obligation to
draft a written report in case of suspicious transactions is now also applicable
to all the professionals subject to the law (and not only those of the financial
sector).
Equally, the requirement to have internal control procedures and to appoint an
anti-money laundering responsible are also extended to all the professionals.
Cash transactions of an amount equal or higher than 15.000 € were already
previously forbidden, but this prohibition has been strengthened and especially
it is now also applicable to several successive transactions (below this amount)
which appear to be linked.
Suspicious transactions have to be declared to the CTIF by the professional. An
exception existed however already for lawyers who don’t have to declare
transactions of which they became aware within the assessment of the client’s
legal situation or whilst defending the client’s interests. This exception has
now been extended to the other non-financial professionals (notary public,
accountant, auditor, tax advisor). However, this exception is not applicable to
all those professionals (including the lawyers) if they participate actively in
the transaction, if they advise their clients on the transaction or if they know
that the client has requested their legal advice for money laundering purposes.
The professionals who have declared a suspicious transaction are not authorised
to inform the client or third parties. An exception is however introduced for
the lawyers, notary publics, accountants, auditors and tax advisors who may
inform (i) other professionals (even of another of those professions) working
within the same company, as well as (ii) colleagues (of the same profession but
from another firm) who advise the same client on the same transaction.
The so-called law “on commercial practices and the consumer protection” of July
14th 1991 had been amended several times over the years, had become
quite difficultly read- and understandable and was, on different topics, no
longer in line with current market practices.
It has been replaced by a new law on “market practices and consumer protection”
dd. April 6th 2010.
The major changes can be summarized as follows:
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More freedom for the vendors in price reduction announcements: the previously
restrictively enumerated practices have been abolished and all means which do
not create confusion may be used.
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More freedom for the vendors with regard to the previously very strictly
regulated sales periods.
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Simplification of the rules applicable to value or price reduction tickets.
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It is no longer necessary to have the indications on the product as well as the
users’ manual in the law of the linguistic region where the product is sold. Any
for the consumer comprehensible language or method (pictures, ...) are allowed.
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For transactions over the Internet, the vendor may no longer use “opt-out”
methods, obliging the consumer to “unclick” options or products which he doesn’t
want to buy.
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The cooling-off period for contracts which are concluded outside the vendors’
premises or by means of telecommunication is extended from 7 to 14 days, however
the prohibition for the vendor to request the payment (or even an advance
payment) before the end of the cooling-off period is abolished.
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Such as already mentioned in our last year’s contribution, after a decision of
the ECJ, the previously applicable prohibition of “joint offers” had to be
abolished, which is done by this new law (except for the financial sector where
it remains applicable).
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The prohibition to sell under the purchase price is maintained, however selling
with a very low profit margin is now allowed and the exceptions to the general
prohibition are broadened. This prohibition is applicable not only in B2C
relations but also for B2B transactions, however it doesn’t apply to producers
nor to service providers.
The new law enters into force on May 12th 2010.
We had reported last year that the Government was working on a change of the
Company Code in order to facilitate the creation of new companies by “starters”.
These works have resulted in a law dd. January 10th 2010.
Previously, the “smallest” company in Belgium was the so called “Société privée
à responsabilité limitée” (limited liability partnership), with a minimum
capital of 18.550 € (of which at
least 1/3 has to be paid up at the
incorporation). This form of company can have only one shareholder (but in this
case 2/3 of the capital have to be paid up
at incorporation).
The new law introduces a so-called “Starters SPRL (“SPRL-S”)”:
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Only physical persons can be shareholders of such an SPRL and they may not hold
more than 5% of the voting rights in another SPRL. The shares may not, after the
incorporation, be transferred to a legal body (as long as the company is not
transformed into an “ordinary” SPRL).
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The minimum capital requirement is 1 €, but the capital has to be gradually
increased, over the five first years (or if the company intends to employ at
least 5 full time workers), to the standard minimum capital of 18.550 € (and
once this amount is reached the company has to be transformed into an “ordinary”
SPRL by a change of the articles of association). To achieve this capital
increase, 25% of the annual profits have to be reserved. The financial plan,
established before the incorporation, has to be prepared by a professional
(accountant or auditor).
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The manager(s) must be (a) physical person(s).
The payment services Directive mentioned under section 2.1. above for Belgium,
has also been implemented in Luxembourg (by a law dd. November 10th
2009).
The EU Directive 2005/56/EC on trans-border mergers has (finally!) been
implemented in Luxembourg by the law of June 10th 2009.
The EU Directive 2005/29/EC concerning unfair B2C commercial practices has been
implemented by a law dd. April 29th 2009.
Initially it was planned to implement this Directive together with the totally
new “Consumer Code” which is discussed in Parliament since 2008. As the adoption
of this Code took more time than expected and as there was a risk for Luxembourg
to be condemned by the ECJ for delay in the implementation of the Directive, the
law proposal was divided and the part related to these new consumer protection
measures was adopted separately.
Currently the Consumer Code is still discussed in the Commission for Economic
affairs of the Parliament. The initial proposal of the Government was to
consolidate almost without changes (except those minor changes necessary for the
consolidation) most (but not all) of the different existing legislations related
to consumer protection (price indications, commercial practices, abusive
contract clauses, consumer goods guarantees, “distant” contracts, timesharing,
consumer credits and travel contracts). Several new ideas had however been
introduced (increased pre-contractual information, uniformed cooling-off period
of 14 days, ...). Several of these changes have however been criticised and
other changes are now proposed by the Government.
More information in the next year’s report.
By a law of March 3rd 2010, Luxembourg also (finally) introduced in
its legislation (Criminal Code and Criminal Procedure Code) the principles of a
criminal liability for companies.
Criminal sanctions against the company do however not exclude sanctions and
liability of the individuals (managers, …).
The criminal liability is applicable to all types of companies and legal bodies
(except the State and the communes) and for all types of infringements.
It is however subject to several conditions:
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The author of the infringement has to be a body of the company (board, …) and/or
(a) member(s) of such a body.
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If the individual, author of the infringement, is not found guilty, the company
may not be condemned either.
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The infringement has to be committed “in the name and in the interest” of the
company.
Several types of sanctions are possible:
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Fines:
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equal to the double of the amount of the fine applicable to an individual;
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however for several infringements the amount can be multiplied by 5 (terrorism
or financing of terrorism, prohibited weapons, drugs, money laundering,
corruption, …);
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minimum of 500 € for less severe infringements and a maximum of 750.000 € for
criminal infringements;
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Seizure;
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Prohibition to participate in public tenders;
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Exclusion from the benefit of public aids;
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Liquidation of the company.
We reported last year that Luxembourg had, in April 2009, been mentioned by the
OECD on its (“grey”) list of the countries having not or not substantially
implemented the internationally agreed tax standards.
Very quickly Luxembourg announced that within 6 months the required minimum of 12 tax conventions with other states
without reservations to paragraph 5
of article 26 of
OECD’s Model Tax Convention (2008 version), would be signed.
Actually 20 treaties (or additional protocols) have been signed by Luxembourg
(currently Luxembourg has double taxation treaties in force with 57 countries!).
A law proposal n°6072 regarding the ratification of these new taxation treaties
or additional protocols and introducing a new national procedure to be followed
by the Luxembourg tax authorities in order to comply with the OECD standards on
information exchange “on demand” had been quickly filed by the Government and
was adopted in a really short period by the Parliament.
The principles of this new national information collection procedure introduced
by the law of March 31st 2010 can be summarized as follows.
A new national procedure for the collection of information
This new procedure is only applicable in case of requests based on 26 of OECD’s
Model Tax Convention and not to previously existing procedures in national law
or based on European directives.
1. The Luxembourg tax authority has to check if the request is compliant with
the text of model article 26, OECD’s interpretation principles of this text
(especially whether the requesting authority has used all its national
information collection possibilities, the request is precise enough, the reasons
why the person to be questioned should be holding the information, ...) and the
potential specific conditions inserted in the applicable double taxation treaty
(f.i. name and address of the person to be questioned in the treaties with
France, the U.K., Belgium, Monaco, Liechtenstein, ...).
2. The authority is going to notify – by registered letter – an injunction to
the person who is holding the information (all kinds of third parties: financial
institution, insurer, commercial partner, ...). This notification has to be
drafted in a way enabling the recipient to check if the request complies with
the legal provisions. It is important to stress that by this notification to the
information holder, the person(s) on whom information is requested is/are deemed
to be notified too (which means that the information holder should, without
delay, take the necessary measures to forward this notification to its
client/business partner).
3. The information holder has to disclose the information to the tax authority
at the latest within one month following the notification, but is not obliged to
take specific measures to collect information which he doesn’t have yet.
4. Within the same period of one month, the information holder and/or any other
person having a legitimate interest (especially the person on whom information
is held) may file a recourse against the injunction with the Administrative
Court. Such recourse suspends the effects of the injunction during the time of
the procedure (first degree and appeal). The Chamber of commerce had requested
that the hearings of the Court should mandatorily be held in camera, but
it was reminded that the Court has the possibility to do so whenever it deems
appropriate.
5. If the information holder does not disclose the information, an
administrative fine of up to 250.000 € may be imposed on him.
The Conseil d’Etat had suggested dividing the law proposal into two parts (one
related to the ratification of the treaties and the other to the new internal
procedure) in order to have more time to finalize the second part, but the
Government convinced Parliament that any delay in the adoption of the new
procedure would be considered by the other countries as an ultimate attempt to
prevent the information exchange from entering into force. However, the
Government and the different parties agree that the new procedure will probably
need some fine tuning in the coming years.
Which kind of information?
It being reminded that the information exchange based on model article 26:
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is possible for all “such information as is foreseeably relevant” (which
is quite broad, but the request has to be related to clearly individualized
information and may not be “fishing expedition”)
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is “concerning
taxes of every kind
(...)
of the Contracting States, or of their political subdivisions or local
authorities”
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is a purely administrative exchange of information (outside mutual judicial
assistance)
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but is limited to specific requests from one authority to another (no automatic
information exchange).
The collected information can only be used to satisfy the international request
for information and cannot be used for internal taxation purposes by the
Luxembourg tax authorities.
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OASIS