On 10 February 2010, the Antwerp Court of Appeal handed down an important decision relating to this subject, all the more significant as it was pronounced in a penal matter.

One knows that in many cases judged by the tax courts, the tax department position, consisting in taxing the sellers of companies known as cash companies on capital gains, is rejected for the reason that the transaction comes under the normal management of private assets, or in any case, that they do not conceal benefits or abnormal profits taxable as diverse incomes.

For a few years now, the tax department has been trying, by all possible means, including dilatory, to have this type of cases decided by the penal courts, of which it expected a more repressive attitude.

A judgement of the tribunal correctionnel of Antwerp, dated 17 January 2008, had moved the local business community, because it had condemned to heavy sentences people, often well known, who had sold their company shares to Swedes who had stated they wanted to carry out investments as re-employment of the capital gains operated before the share transfer, and who had done nothing like this, being apparently satisfied with pocketing the amounts credited on the accounts of the acquired company. If the condemnations of the Swedes did not surprise anybody, the infringement appearing obvious because of the undeclared income, that of the sellers, who declared being in good faith and not to know the fraudulent intentions of the purchasers, appeared more surprising. It was all the more shocking as the capital gains they carried out had almost always been regarded as nonchargeable by the tax courts.

The Antwerp Court of Appeal has just reformed the judgement of the tribunal correctionnel. While maintaining the condemnation of the Swedish buyers, it pronounces an acquittal for all the other parties, that is to say the sellers and their advisers. The Court notes that it is not established that these people knew the fraudulent intentions of the purchasers, and moreover, - and this is undoubtedly the most significant reason - that by obtaining for their shares a higher price than the one they would have obtained if they had taken into account the future taxation at the time of the transfer does not show any bad faith on their behalf. Indeed, the Court found that it was normal to obtain for the shares a selling price higher than the difference between the amount of the liquidities and the provisions for possible taxes, since the purchaser could have legally avoided paying the taxes by carrying out investments in accordance with article 47 of the Code of the Income taxes.

This decision contradicts once again the position of the Parliamentary commission on tax evasion. The latter had acted on the basis of the idea - recognized inaccurate by nearly all the jurisprudence - that all the operations of cash companies are fraudulent on part of all the parties involved, and is now opposed a denial, this time, by a Court of Appeal sitting in a penal matter.

Moreover, it is stunning to note that this Commission had presented the way the prosecution of Antwerpen had acted (by suing all the involved parties, including the sellers in good faith, the banks and the advisers of the parties), as a model to follow in cash company cases. The prosecution is rebutted today by its Court of Appeal, and the conclusions of the report of the investigation Commission lose the little credibility they still may have had.

Thierry AFSCHRIFT