The Belgian Court of Audit Publishes a Follow-Up Report on the Cayman Tax Implementation
26 Jan 2026
The Belgian Court of Audit (Rekenhof/Cour des comptes) issued a follow-up report on 10 December 2025 assessing the government's progress in the implementation of its previous recommendations on the Cayman Tax regime. The report finds that while significant legislative improvements have been made, several recommendations remain pending or unaddressed.
The Cayman Tax and its Evolution
Belgium introduced the Cayman Tax in 2015 as a measure to fight tax evasion and tax avoidance through legal structures, particularly foreign entities such as trusts, foundations, and low-taxed companies. The tax operates on a “look-through” or fiscal transparency principle, whereby the income from these legal structures is taxed directly at the level of their founders or beneficiaries, as if they had received the income personally.
The regime was strengthened in 2017 through the so-called “Cayman Tax 2.0”. Following the Court of Audit’s critical report published on 21 June 2023, which identified significant weaknesses in the law’s application and enforcement, the legislator introduced further reforms through the Program Law of 22 December 2023. These amendments, collectively referred to as “Cayman Tax 2.1”, aimed to close loopholes and address the problems flagged by the Court of Audit.
However, the reformed law faced legal challenges. On 18 September 2025, the Constitutional Court partially annulled four provisions of Cayman Tax 2.1, finding that certain measures violated constitutional principles of equality and proportionality. Notably, the Court struck down:
Certain aspects of the new exit tax, limiting the scope to profits within Belgium
The 50% concentration rule for collective investment institutions (dedicated funds) to the extent that it lacked a rebuttal mechanism
The exclusion from the CFC exemption of foreign companies subject to similar CFC rules
The restrictive definition of “economic activity”.
In light of the reform enacted by the Program Law of 22 December 2023 and of the decision of the Constitutional Court, the Court of Audit did a follow up analysis to assess the implementation of the recommendations contained in its previous report.
Progress and Gaps
In its follow-up report, the Court of Audit concludes that the legislative amendments under Cayman Tax 2.1 have largely addressed the problems identified in the 2023 report regarding the application of the law. Of the 14 original recommendations, six have been fully implemented, four are in progress, and four remain unimplemented or only partially addressed.
Among the implemented measures, the law now establishes a legal presumption that any natural person listed in a UBO register as an ultimate beneficial owner is considered a founder of the legal structure, subject to rebuttal. This addresses previous difficulties in identifying taxpayers subject to the regime. Additionally, loopholes involving chain structures, where ordinary companies were inserted to circumvent the tax, have been closed by expanding the definition of “intermediate structure” to include any company or entity holding shares in a subsidiary structure.
A new reporting obligation has also been introduced, which requires taxpayers to attach a detailed annex (Form 276 CJC) to their tax returns from tax year 2024 onwards, providing comprehensive information about legal structures, income received, and assets held. This will enable the tax administration to better monitor compliance and calculate revenues generated by the Cayman Tax.
However, according to the findings of the Court of Audit, several recommendations remain unaddressed. The tax administration still lacks bulk access to UBO registers for risk analysis purposes, as the Data Protection Authority denied authorization for such consultations. Access to the full ICIJ leak databases (such as the Panama Papers and Pandora Papers) remains unavailable, limiting investigative capabilities. Systematic data exchange between the federal tax administration and regional inheritance tax authorities has not yet been established. Additionally, the ministry has not formulated any SMART (specific, measurable, acceptable, realistic, and time-bound) objectives for evaluating the effectiveness of the Cayman Tax.
Observations
Datamining
The Court of Audit considers its recommendation to refine risk analysis by bulk access to the UBO register is unaddressed. The same goes for the recommended simplification of the procedure for investigations into foreign bank accounts involving legal constructions.
In this regard, we would like to point out the following: in a draft bill of 3 October 2022, a provision was inserted to allow bulk access by the tax authorities to the UBO register, which contains personal data, in view of datamining applications aiming at the investigation of complex international private constructions, among other things. As rightfully mentioned by the Court of Audit, the Data Protection Authority considered such bulk access to the UBO register not compliant with the requirements of necessity and proportionality. Hence the criticised provision was withdrawn from that bill, and it was stated in parliamentary works that the issue regarding activities of datamining, datamatching, including profiling, would be addressed in a separate law.
In the recently adopted law containing various provisions of 18 December 2025, the legislator changed its strategy and allowed the large-scale scanning of financial data in the Central Point of Contact (see our newsflash of 17 December 2025: https://www.pwclegal.be/en/news/a-tax-reform-amending-the-statute-of-limitations-and-ccp-framewo.html). We pointed out that this legislation came with numerous privacy concerns (see our newsflash of 16 January 2025 – link toevoegen). Nevertheless, it will be an important instrument that could, in our opinion, lead to focused Cayman tax investigations.
Investigation and assessment periods
In the follow-up report, the Court of Audit refers to the extension of investigation and assessment periods for complex tax returns and fraud to 10 years. This does however ignore the amendments by the law of 18 December 2025 containing various provisions that further reduce the statutes of limitations for complex tax returns to 4 years, and to 7 years in case of fraud (see our newsflash of 17 December 2025: https://www.pwclegal.be/en/news/a-tax-reform-amending-the-statute-of-limitations-and-ccp-framewo.html).
However, due to these subsequent changes in procedural measures and a gap in the provisions governing the entry into force of these measures, additional complexity kicks in for audits of legal constructions for which the 10-year period could still apply (see our article in Accountancy& Fiscaliteit, 2025, n°29, p.1).
Selection for audit
From the follow-up report of the Court of Audit, it can be deduced that the tax authorities are exploring different sources to cross-link data to investigate legal constructions:
The exchange of information by the General Administration of Patrimonial Documentation and with the Flemish Tax Authorities (VLABEL). However, discussions are ongoing to provide sufficient security guarantees.
Cross-links with information from DAC 6 reporting (the disclosure by intermediaries of cross-border tax arrangements). The report mentions that three of these DAC6 reports are selected for further investigation.
The analysis of notifications of legal constructions in Personal Income Tax returns, which in 2023 lead to two pre-investigations by the Special Tax Investigation squad ‘STI’ (BBI/ISI).
A test project was launched to include some source data from the International Consortium of Investigative Journalists (ICIJ), the so-called Leaks, in the Data Integrated Operational System of the Special Tax Investigation squad.
The STI cross-linked the files of Belgian residents that emigrated in 2024 with notifications of a legal construction in Personal Income Tax returns to verify the payment of the exit tax, and identified 50 taxpayers owing the exit tax.
Principled discussions
Notwithstanding the annulment of certain problematic provisions of the Caiman Tax 2.1 by the Constitutional Court, a number of uncertainties and divergent opinions remain. In this regard, the follow-up report of the Court of Audit refers to the position of the Belgian tax authorities in Circular letter 2024/c/79 with regard to the interaction between the application of the Cayman Tax and double tax treaties. While the position of the tax authorities is that the double tax treaties ratified by Belgium do not preclude the Cayman Tax from taking effect, this was contradicted by case law.
In our opinion, depending on a case-by-case analysis of the relevant DTT, strong arguments can be developed to support the non-applicability of the Cayman tax in non-abusive situations (see also our newsflash of 20 December 2024: https://www.pwclegal.be/en/news/exploring-circular-2024-c-79--interaction-of-the--cayman-tax--wi.html and our article in Fiscologue Int., n° 493, p.4).
Key Takeaways
The Court of Audit’s follow-up report reveals that the effective enforcement of the Cayman tax is still a work in progress, but the government has demonstrated responsiveness by enacting significant reforms within 18 months of the initial report.
On the other hand, these reforms were partially annulled by the Constitutional Court, and legal uncertainty regarding certain points remains. We will of course monitor the ongoing evolution of this complex tax regime.
The report also indicates that efforts are being made to close the gaps in data access and inter-administrative cooperation, and several initiatives have been taken to cross-link information in view of its selection for audits. Therefore, taxpayers with foreign structures should prepare for an intensification of audits once the datamining efforts of the tax authorities will bear fruit.
Finally, we reiterate our view that the Cayman tax should not apply in a number of non-abusive situations, such as in the case of normally imposed European legal constructs, based on the principles of European law, even if the legislation is not clear on this subject.
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