Tax mediation: A second chance for taxpayers and the tax authorities

The government agreement emphasizes the need to strengthen communication between both parties and adopt a more collaborative approach. Tax mediation offers exactly this: a platform where both parties can reach a solution together without court intervention.

This process not only helps resolve conflicts more quickly but also contributes to a better understanding between taxpayers and the tax authorities. Tax mediation is therefore a timely and valuable solution that fully aligns with the objectives of the government agreement.

Additionally, the judicial landscape is increasingly recognizing the value of mediation. Following several successful pilot projects in courts, more and more official settlement chambers have been established. On December 19, 2023, this development was enshrined in law. Since 2018, judges have had a formal ‘conciliation duty’ in disputes, meaning that mediation plays an increasingly important role in legal proceedings. Judges are increasingly referring parties to mediation chambers or certified mediators, whether at the request of the parties themselves or on their own initiative.

What is mediation?

Mediation, as defined in Articles 1724-1737 of the Judicial Code, is a structured procedure in which two or more parties, with the assistance of a certified mediator, attempt to resolve their dispute voluntarily. This law, in effect since 2005, provides an alternative way to settle conflicts outside the courtroom.

The mediator is an independent and certified professional who acts as a trusted facilitator for the parties. They encourage communication, create a safe environment for discussing all aspects of the dispute, and ensure that everyone is heard. The mediator remains neutral and does not provide solutions or advice but helps the parties reach their own resolution. The parties retain full control over the outcome.

The rules of mediation are set in advance in a mediation protocol, signed by all parties. Mediation can be stopped at any time without affecting any potential legal proceedings. If successful, the agreements are recorded in a mediation agreement, which can be ratified by a court and thus becomes legally binding.

What is tax mediation?

On June 18, 2018, the mediation law was revised to include the possibility of tax mediation under certain conditions. Since then, public legal entities can also participate in mediation as a party.

There is no official specialization as a ‘tax mediator.’ These mediators are typically specialized in business and civil law, often with a background in taxation.

Tax mediation is possible at all stages of a tax dispute. The chances of success are higher when tax mediation is initiated early in the process, as the positions of the parties are often less rigid at that stage.

However, tax mediation is not possible in certain situations, such as when:

• The tax increase exceeds 50%, for example, in cases of severe penalties or fraud.
• The dispute involves criminal aspects, such as tax fraud.
• The case is already before a court or a final ruling has been issued.
• The dispute concerns strictly regulated tax matters, such as VAT or excise duties, where there is little room for negotiation.

In all other cases, tax mediation remains an effective yet often underutilized option within the tax procedure, with the potential for highly positive results.

What is the difference between tax mediation and the tax mediation service?

There is often confusion between tax mediation (mediation law) and the Tax Mediation Service of the FPS Finance. Both aim to resolve tax disputes, but there are significant differences.

The Tax Mediation Service of the FPS Finance is available before a lawsuit and can be requested after receiving a tax assessment but before a final ruling. Its application within the tax procedure is therefore limited. Additionally, mediation is conducted by an FPS official, who acts on behalf of the tax administration, which may make it feel less neutral compared to true tax mediation, where an independent mediator intervenes. The Tax Mediation Service is free of charge but has a more restricted scope.

On the other hand, tax mediation provides a fully independent solution for tax disputes at all stages of the process, including after the tax assessment and even during the enforcement of a tax debt.

What are the benefits of (tax) mediation?

• Time-saving: An intensive but short procedure.
• Confidential and discreet: Information is protected, fostering trust.
• Solution from the parties themselves: More satisfaction for those involved, as they remain in control.
• Sustainable solutions: Mediation prevents future conflicts and can restore relationships between parties.
• Legally enforceable agreement: The outcome has legal force and must be honored.
• Comprehensive approach: Underlying issues are addressed, preventing future surprises.

What can our experts at PKF BOFIDI do for you ?

• Include a Mediation Clause: We can incorporate mediation clauses into agreements, ensuring that parties commit to trying mediation before going to court.
• Guide Tax Mediation: We assess the possibility of tax mediation with our clients, which often saves time and costs. We support them throughout the process with our expertise in tax dispute resolution and assist in selecting a qualified independent mediator.
• Act as an Independent Tax Mediator: We can serve as mediators in tax disputes between other parties, acting as a neutral and independent facilitator to achieve a resolution.

Do you have questions about tax mediation? Contact our experts—they will be happy to assist you.