New penalty payment sanction to enforce cooperation – first court decision in favor of the tax authorities

For the first time, the tax authorities have won a case for the application of a penalty payment against a taxpayer in a decision pronounced by Bruges Court of First Instance. The tax authorities initiated legal proceedings against the taxpayer because he refused to grant access to digital data under the supervision of a judicial sequestrator. The Court confirmed the tax authorities’ right to access the sealed data and imposed a penalty payment of €2,500 per day to ensure compliance.

Facts 

At the beginning of 2022, the tax authorities conducted an unannounced audit at the taxpayer’s premises based on Article 319 of the ITC 1992 and Article 63 of the VAT Code. Due to significant resistance by the taxpayer, the tax authorities filed summary proceedings to obtain specific data that the taxpayer refused to disclose.

The Ghent Court of Appeal ruled in favour of the tax authorities. It ordered the taxpayer, under the supervision of a judicial sequestrator and after filtering the emails from the legal counselors, to provide complete copies of certain mailboxes and digital data within 72 hours of the notification of the judgment.

Although the taxpayer agreed to comply with the Ghent Court decision by July 2023, it did not allow for copies to be taken of any of its digital data stored in the cloud. Despite repeated requests from the tax authorities, the taxpayer continued to resist. Finally, the tax authorities initiated a new case before Bruges Tax Court.

The Court was not convinced by the taxpayer’s arguments, e.g. that the data was mixed with the data of another group company and the taxpayer invoked the right to non-self incrimination.

The Court imposed a penalty payment of €2,500 per day, with a maximum of €50,000, to ensure compliance with the obligations as mentioned above. This penalty will take effect 48 hours after the taxpayer has been notified of the judgment.