NOTICE TO STAFF

Subject: Application of the increase in the tax allowance for joint dependent children to spouses of officials and other servants of the European Communities who are liable to income tax in Belgium

On 9 March 2001, 13 May and 21 November 2002 DG ADMIN published Administrative Notices Nos 20-2001, 41-2002 and 97-2002 on the position of the Belgian authorities regarding the increase in the tax allowance for joint dependent children where the spouse of an official or other servant of the European Communities is liable to income tax in Belgium.

After initiating an infringement procedure against Belgium on the ground that the administrative practice followed by the Belgian authorities was discriminatory, the Commission sent the Belgian State a letter of formal notice in July 2001, followed by a supplementary letter of formal notice in June 2002.

For the record, the Belgian authorities replied to the latter on 25 October 2002. According to their reply:

• It is normally up to taxpayers themselves to decide whether children are to be treated as their dependants by filling in the relevant section of the tax return accordingly, a declaration duly completed and returned being sufficient for that purpose unless there is evidence to the contrary.

• It is not the place of the Belgian tax authorities to express a judgment on the taxpayer's decision. Only where the same dependant is claimed by two different taxpayers do the tax authorities reserve the right to settle the issue on the basis of evidence accepted under common law.

It has been accepted by the Belgian tax authorities, therefore, that a couple may decide between them which spouse the children are to be regarded as dependent on for tax purposes. Accordingly, if only the spouse of a Community official claims a child as a dependant on his or her tax return there should be no problem and that spouse should qualify for the increase in the tax allowance for joint dependent children and deductibility of crèche fees for those children.

The Belgian authorities further stated that an amended version of the circular of 10 June 1999, on which the discriminatory practice was based, would be sent to the national departments concerned in the next two months.

The Commission also asked the Belgian authorities to rectify automatically the errors made by the tax departments concerned, and advised all those who are in dispute with the tax authorities on this matter to lodge or proceed with any complaints and appeals which may be necessary in order to safeguard their rights and to ensure that the tax authorities do not use the expiry of the deadline for lodging a complaint or appeal as a reason for not making the correction in their tax payments.

The Belgian authorities have sent the Commission their new administrative circular (No Ci.RH.331/517.844) of 20 November 2002 which fully reflects Belgium's reply to the supplementary letter of formal notice. Officials of the Belgian administration are, of course, required to comply with this circular, rectifying, where necessary, any errors made. The Commission should therefore be terminating the infringement procedure and closing the case shortly.

Officials and other servants affected by this matter who receive further notices of adjustment or who are pursuing complaints are asked to contact the relevant Belgian tax authorities. If the problem persists after these steps have been taken, they are asked to set out their problem in a letter to Mr Jean-Pierre Grillo, unit ADMIN.B.3.

Horst REICHENBACH