Karel De Gucht, former federal minister and European commissioner, has lost a legal battle with the tax authorities over what they claimed was tax evasion.
The tribunal of first instance in Ghent was ruling on a dispute between De Gucht and his wife Mireille Schreurs on one side, and the tax authorities on the other. De Gucht had claimed tax relief in Belgium for losses made by the couple’s agricultural concern in Italy.
The taxman said that was not possible, and De Gucht was ordered to pay back the tax relief as well as a 50% penalty. De Gucht and his wife took the decision to court.
The court this week ruled in favour of the tax authorities. And, although the ruling states that De Gucht did not wilfully deceive the tax authorities, it did uphold a penalty, cutting it from 50% of the sum owed to 10%.
The case relates to 40,000 euros of losses made by the Italian company in 2010. The tax inspectors said those losses could not be deducted from Belgian taxable income, but the lawyer for De Gucht and Schreurs argued that a previous tax case involving the couple held that income from another company in Italy could be taxed. What applied for profits ought, the defence said, to apply equally for losses.
The other case remains to be adjudicated finally. In that case, dating back to 2005, De Gucht had made a profit of 1.2 million euros on the sale of shares in a zinc company. The tax authorities handed him a bill for more than 976,000 euros, which he contested. In February this year a court ruled the calculation had been based on improper investigation of the couple’s financial affairs, and struck it down. In the meantime, with delays and interest, the sum owed had run up to 1.5 million – more than the entire income from the sale in the first place.
However the Belgian state has appealed that ruling, and it will now be up to the court of appeal in Ghent to give a final ruling on whether or not De Gucht and his wife must pay.