Karel De Gucht, former EU commissioner and former government minister, and his wife, magistrate Mureille Schreurs, have won a 14-year battle against a bill for more than €800,000 in unpaid taxes, the court of appeal in Ghent has ruled.

The facts of the case date back to 2005, when the couple made around €1 million from the sale of shares. At that time, De Gucht (Open VLD) was minister for foreign affairs under the premiership of his party colleague Guy Verhofstadt.

As a result of the income, the tax authorities presented the couple in 2006 with an additional tax bill of €811,000 for undeclared income. The couple fought the bill, and 14 years later have been exonerated by the court of appeal.

The couple were not obliged to report the income, the court ruled, because it was not income in the meaning of the law, as the tax inspectors had maintained throughout. It was, rather, a result of the normal management of their private assets, income from which does not need to be declared. The tax bill is therefore ruled void.

The judgement dates from 7 January, but was not immediately announced, the couple’s lawyer explained, because the tax authorities had to decide whether to pursue their action. In fact, Bruno Cardoen said, the decided to abide by the appeal court’s ruling, which now becomes definitive.

Not only are the couple free of the tax bill, they are now richer to the tune of €30,000 each, awarded by the court in recognition of the “unreasonable attitude” of the tax authorities , Cardoen said.

“The award of an increased judicial compensation is very exceptional, seeing as how the courts tend not to accept such an application.”

In its ruling, the appeals court said that the behaviour of the tax administration has given rise to “an exceptionally complex procedural process”. It had then opened a new procedure in 2009 based solely on the fact that the couple had undertaken the renovation of an expensive property in Tuscany. Then in 2012 the accent shifted to the sale of the shares, which dated back to 1992-1995, when De Gucht was still practising as a lawyer before entering politics.

The twists and turns of the tax authorities’ charges against the couple had led them, the court said, into an “evidently unreasonable situation”.

Alan Hope

The Brussels Times

