Flanders to Impose Fines Up to €800,000 for Subsidy Fraud

The Flemish government is introducing administrative fines of up to €800,000 for subsidy fraud, closing a loophole that allowed fraudsters to escape meaningful punishment when prosecutors declined to pursue cases. The measures, announced Monday by Flemish Minister of Justice Zuhal Demir and Minister of Budget and Finance Ben Weyts, will take effect in the course of 2027.

Under the new framework, fraudsters will face fines on top of the mandatory full repayment of fraudulently obtained funds — even when the public prosecutor’s office decides not to prosecute a case. Flanders distributed €19.5 billion in subsidies in 2025, according to VRT NWS.

Closing the Prosecution Loophole

“Today fraudsters sometimes escape a real sanction when the public prosecutor does not prosecute,” Demir said. “Returning wrongly obtained money can hardly be called a punishment. We are closing that loophole. From now on, a hefty fine will also follow.”

The administrative fines complement the criminal framework established under the new Belgian Penal Code, which entered into force on September 1, 2026. Article 691 of the code makes subsidy fraud a criminal offense nationwide, defining it as making false or incomplete statements to obtain a subsidy, failing to notify authorities when eligibility is lost, or using subsidy funds for unauthorized purposes, as detailed in the new Penal Code.

The maximum fines vary by type of offense: up to €800,000 for lying or withholding important information to obtain or retain a subsidy, up to €600,000 for deliberately using subsidy money for other purposes, and up to €120,000 for deliberately concealing that one has no — or only partial — right to a subsidy. These match the criminal penalties under the new code.

Flanders will now be able to handle such cases administratively and impose fines itself, making it possible to tackle subsidy fraud uniformly across all Flemish policy domains. The approach is “legally watertight” thanks to an earlier Flemish decree, HLN reports.

Tightened Security Checks

Alongside the fines, the government is strengthening controls to prevent Flemish tax money from reaching individuals or organizations involved in violent radicalization, violent extremism, or terrorism. The Inspection of Finance will be able to consult with OCAD — Belgium’s Coordination Unit for Threat Assessment — and the federal police to determine whether a subsidy applicant is known in connection with such activities.

Already-awarded subsidies can also be reviewed. When there are serious indications of concern, further payments are temporarily stopped while an investigation is ongoing. Subsidies may then be refused, suspended, terminated, recovered, or made subject to additional conditions.

“Those who want to undermine our society should not expect that same society to pay for it,” Demir said. “That’s why we are building a solid safety lock, both before and after the granting of a subsidy.” She added: “The fight against radicalization is not only a task for police and security services. We must also be vigilant in the spending of tax money. The government cannot fight extremism with one hand and unintentionally finance it with the other.”

The extremism-related controls follow a contentious November 2025 decision in which the Flemish government cut subsidies for several organizations over alleged links to “violent extremism,” including the left-wing climate activist group Code Rood, as VRT NWS reported at the time.

A Pattern of Fraud Scandals

The new measures come amid a series of high-profile subsidy fraud cases that have shaken confidence in Flemish oversight. Most notably, the Flemish Social Inspection recovered or blocked €19 million in subsidies from two large temporary employment agencies for fraud involving the training leave system, as VRT NWS reported on September 3. The fraud involved forged attendance lists and non-existent training courses.

The scandal traced back to November 2025, when an investigation by HLN revealed that temporary employment agencies Accent Jobs and Itzu were fraudulently claiming subsidies for training that did not exist or did not qualify, prompting Minister Demir to suspend subsidies for the entire temporary employment sector, as VRT NWS reported at the time.

The training leave system has since been reformed effective September 1, 2026, with stricter criteria for qualifying training courses, new sanctions for training providers, and exclusion periods of up to two years for fraudsters (four years for repeat offenses), according to the Flemish government.

Another prominent case involves former Open VLD politician Sihame El Kaouakibi, who faces trial in October 2026 for allegedly embezzling at least €500,000 in subsidies through her youth organization Let’s Go Urban, as VRT NWS reported.

Implementation Questions Remain

While the policy direction is clear, several open questions remain about implementation. There is currently no central body tracking the total amount of subsidy fraud in Flanders — each department controls and sanctions independently, with varying levels of rigor. Investigating complex fraud cases requires specialized inspectors, and it remains unclear whether additional staff will be hired. One option under consideration is funding new inspectors through the fines collected.

Civil society organizations have also expressed concerns about the government’s approach to defining “violent extremism” and the potential for politically motivated decisions about which organizations receive subsidies. The November 2025 cuts drew criticism from the socio-cultural sector, with organizations like De Federatie warning about threats to organizational freedom and autonomy.

What to Watch For

The new administrative fines are expected to take effect in the course of 2027, with the exact timeline still to be determined. Observers will be watching how the Flemish government funds additional inspection capacity, how the administrative system interacts with criminal prosecutions under the new Penal Code, and whether affected organizations mount legal challenges to the measures.

For now, the message from Flanders is clear: subsidy fraud will no longer be a cost of doing business. As Demir put it, “Whoever commits subsidy fraud not only steals from the taxpayer, but also from people and organizations that do need the support.”