Constitutional Court on new Article 444 ITC: good faith prevails, but not on every point

Background

Since 29 July 2025, Article 444 ITC has provided that no tax increase may be imposed in respect of a first infringement committed in good faith. For first-time infringements, taxpayers are presumed to have acted in good faith, except in cases of ex officio tax assessments. The Belgian legislator limited the temporal scope of this new regime to assessments established as from 29 July 2025. This temporal restriction, together with two other aspects of the amended regime, was challenged before the Constitutional Court in an action for annulment.

What the Court decided

The action for annulment raised three grounds: (i) the temporal limitation of the new rules; (ii) the exclusion of the good-faith presumption for ex officio assessments; and (iii) the absence of an equivalent regime for VAT.

The Constitutional Court upheld the first ground. It held that the more lenient regime must also apply to assessments established before 29 July 2025 that have not yet become final, in accordance with the lex mitior principle, which requires the retroactive application of a lighter penalty and is enshrined in Article 7(1) ECHR. Reaffirming its established case law that tax increases under Article 444 ITC are criminal in nature, the Court concluded that the temporal restriction infringes the constitutional principle of equality and non-discrimination, read in conjunction with Article 7(1) ECHR.

The Court dismissed the remaining two grounds. With respect to ex officio assessments, it found the difference in treatment to be objectively and reasonably justified, noting that such assessments are generally preceded by exchanges with the taxpayer and may, in certain circumstances, result from conduct aimed at obstructing a tax audit. In those situations, a presumption of good faith is difficult to reconcile with the underlying facts.

On VAT, the Court found the difference in treatment objectively justified given the distinct nature of income tax and VAT and noted that VAT rules already offer comparable relief mechanisms based on good faith.

Practical implications and remaining questions

Taxpayers still involved in an administrative or judicial dispute over an assessment issued before 29 July 2025 can now fully rely on the new good-faith regime for first infringements. The Court's confirmation of this principle is a welcome clarification that enhances legal certainty.

That said, our team makes a number of observations regarding the Court's reasoning on ex officio assessments.

On VAT, our team renews its call for the legislator to align the good-faith regime across income tax and VAT, in line with the coalition agreement.