Since July 2025, the tax surcharge regime applicable to a first offence has changed. Article 444, third paragraph, of the Income Tax Code 1992 (ITC 92) now provides that the surcharge is waived for a first offence committed in good faith.
The reform has revived debate on the very notion of good faith. Good faith is presumed where a return is incomplete or inaccurate, but the presumption no longer applies where the return was not filed on time and gives rise to an ex officio assessment. The contours of the notion have been clarified in an administrative circular. The reform also raised the question of its entry into force, which the Constitutional Court settled in the taxpayer's favour.
Following the amendment of Article 444, the tax authorities set out their reading of good faith and bad faith in Circular 2025/C/49, which provides guidelines on the matter.
Good faith is defined there as a person's inner conviction that their situation complies with the law and that they are acting without infringing the rights of others. The circular stresses its factual nature: the notion depends on the concrete elements of the case.
Bad faith, for its part, is approached by reference to Article 1.9 of the Civil Code: a person is in bad faith if they know the facts or the act to which their good faith relates, or ought to have known them in light of the concrete circumstances. The circular is careful to distinguish this notion from the intention to evade tax. A taxpayer may be in bad faith without being a fraudster, and its example is telling: a person who deliberately refrains from filing their return solely to slow down the authorities' work, even though the return would be in their favour, is in bad faith but evades no tax.
A. Inaccurate or incomplete return: good faith is presumed
Where the taxpayer has filed an inaccurate or incomplete return, good faith is presumed. The tax authorities may nevertheless rebut the presumption by demonstrating the taxpayer's bad faith, in which case a 10% surcharge applies.
A judgment of the Leuven Court of First Instance of 16 January 2026 provides a first clarification, favourable to the taxpayer, on the concrete elements on which the authorities may base a finding of bad faith and thus shift the burden of proof. In that case, the company was challenging several corporate income tax adjustments relating to expenses it had deducted and which the authorities had disallowed under Article 49 ITC 92. The intention to evade tax was not at issue. To establish bad faith, the authorities relied on two elements: the size of the adjusted amounts and the fact that several legal provisions had been breached. The court held that these elements were not, on their own, sufficient to establish bad faith. As the presumption had not been rebutted, the 10% surcharge was cancelled.
We hope this position will become settled case law, confining the rebuttal of the presumption to situations where bad faith is concretely demonstrated.
Ex officio assessment: good faith must be demonstrated
The situation is reversed where the taxpayer is subject to an ex officio assessment, in particular where no return has been filed or a return has been filed late. The presumption is then excluded by law, an exclusion upheld by the Constitutional Court. It is therefore up to the taxpayer to establish their good faith, failing which a 10% surcharge is applied.
The circular takes a strict line on this point. It states that where the ex officio assessment was preceded by some correspondence, such as reminders, or where deliberate obstruction of the investigation has been established, it will be rather difficult for the taxpayer to prove good faith. Yet a notice of ex officio assessment is almost always preceded by such reminders. The circular thus adopts a severe stance towards mere negligence or oversight: a taxpayer who does not respond quickly enough to reminders risks being denied the benefit of good faith. The stakes are significant, as the actual application of the surcharge results in the disallowance of the deduction of carried-forward losses.
Despite the severity shown by the circular regarding ex officio assessments, we maintain that good faith can always be established on the basis of objective elements specific to the case. The following may usefully be put forward: the isolated nature of the failure, supported by a history of returns filed on time; the circumstances that led to the delay or failure to file, such as the dissolution of a company, a change of agent or documents not being received; or the regularisation eventually carried out, which shows the intention to comply with the law. It remains to be seen how the courts will assess good faith in this situation.
The legislator had reserved the new regime for assessments entered in the tax roll from 29 July 2025 onwards (the date of the assessment notice). It is at that stage, and not at the time of the return or the audit, that the surcharge is actually applied and that it is therefore determined whether the old or the new regime applies. By making the date of entry in the roll the tipping point, the law kept assessments entered in the roll before 29 July 2025 under the old regime.
This limitation was quickly challenged. Several lower courts set it aside even before the Constitutional Court had ruled. The Ghent Court of Appeal, in two judgments of 18 November 2025 and 3 February 2026, together with the Leuven Court of First Instance, in a judgment of 16 January 2026, accepted that the new regime applied to assessments entered in the roll before 29 July 2025. These decisions found in favour of the taxpayer on the basis of the principle that a more lenient criminal law applies retroactively.
In its judgment of 18 June 2026, the Constitutional Court confirmed this position. It recalled that the surcharge under Article 444 is predominantly punitive in nature and constitutes a criminal-law sanction, a classification it had already adopted in its judgment no. 12/2025. This criminal nature triggers the application of Article 7(1) of the European Convention on Human Rights (ECHR). While that provision expressly enshrines the non-retroactivity of harsher criminal laws, the European Court of Human Rights has also recognised in it the converse principle that a more lenient criminal law applies retroactively. The Constitutional Court confirmed that the new surcharge regime is indeed a more lenient criminal law, since it turns what was merely an option to waive into an obligation, introduces a presumption of good faith and thereby places the burden of proof on the authorities. It was therefore not legally justified to restrict its application to assessments entered in the roll from 29 July 2025. The Court accordingly annulled that temporal limitation.
The annulment has retroactive effect and applies erga omnes. The presumption of good faith may therefore be invoked for any assessment that is not yet final and can still be submitted to an administrative or judicial body. The date of entry in the roll is thus no longer relevant; all that matters is that the case is not yet final.
Given this punitive classification of the surcharge, and beyond the notion of good faith required by the tax authorities, the court always remains the guarantor of the proportionality of the sanction imposed in light of the seriousness of the offence, any previous sanctions, similar decisions and the impact the sanction will have on the taxpayer. The question of impact is crucial here, because applying a tax surcharge of at least 10% means that tax losses and other normally deductible items can no longer be set against taxable profit. The real financial impact for a taxpayer who filed late may therefore far exceed the amount of the surcharge itself, making the sanction disproportionate — something the court has a duty to review.
The reform of Article 444 significantly strengthens the position of the taxpayer acting in good faith, and the Constitutional Court has extended its scope to all pending disputes, regardless of the date on which the assessment was entered in the roll. Litigation is now shifting towards the assessment of good faith. In the case of an inaccurate or incomplete return, the burden of proof lies with the authorities, and the first decisions are demanding as to the elements capable of establishing bad faith. In the case of an ex officio assessment, the burden is reversed, but demonstrating good faith remains possible, provided it rests on objective and concrete elements. Although the authorities seem to take a fairly strict view of good faith, it remains to be seen what position the courts will take on this point.
As soon as you receive a notice, we recommend gathering all the facts capable of establishing good faith and responding without delay.