Corporate Tax 2010 - BMR Advisors

Chapter 5
Belgium
Eubelius
Philippe Hinnekens
1 General: Treaties
1.1 How many income tax treaties are currently in force in
Belgium
Currently, Belgium is party to almost 90 bilateral income tax
treaties that have entered into effect. Treaties have been concluded
with most European countries as well as the majority of the
developed countries worldwide, including those in the Asia-Pacific
Region. Belgium was the first state to conclude a bilateral tax treaty
with Hong Kong. This offers an interesting route for structuring
investments from Chinese investors in Europe and the other way
around.
A new treaty with the US was signed in November 2006, and
entered into effect on 28 December 2007.
1.2 Do they generally follow the OECD or another model
The bilateral income tax treaties to which Belgium is a party
generally follow the OECD Model Convention, although nearly all
treaties contain some deviations from the Model Convention. Some
deviations relate to the specific characteristics of the Belgian
income tax system (e.g. article 16 relating to Directors’ fees in most
recent treaties) or to the specific needs or concerns of the other
treaty state (e.g. limitation on benefits and exchange of information
and administrative assistance provisions in the new US treaty). In
June 2007 the Belgian tax authorities published a Draft Model
Convention which should be the basis for the (re)negotiation of the
future bilateral tax treaties to be concluded by Belgium.
1.3 Do treaties have to be incorporated into domestic law
before they take effect
Yes. A bilateral tax treaty, signed on behalf of the Belgian State,
needs to be formally approved by the Parliament before entering
into force on the date specified in the treaty. Such approval is
incorporated in a formal statute.
1977 (i.e. the treaties based on the 1977 OECD Model Convention).
Some treaties include a limitation on benefits provision (e.g. with
Switzerland and with the US) or expressly exclude certain entities
from the personal scope of application of the treaty (e.g. the
Luxembourg 1929 holding company).
The treaties concluded with Luxembourg and Germany, and more
recently the treaty concluded with Hong Kong, state expressly that
the treaty does not prevent the application of domestic anti-abuse
provisions in both treaty states.
Finally, a general anti-treaty shopping provision has been included
in article 27 of the Belgian Draft Model Convention
1.5 Are treaties overridden by any rules of domestic law
(whether existing when the treaty takes effect or
introduced subsequently)
In general, neither domestic law which exists when the relevant
treaty enters into effect, nor any subsequent domestic legislation,
can overrule a bilateral tax treaty. This general principle was
confirmed by the Belgian Supreme Court in 1971 in its ruling on the
“Franco Suisse Le Ski” case. Furthermore, a more recent attempt
by the Belgian legislator to still levy income tax on pension capital
amounts paid to beneficiaries who emigrated from Belgium prior to
their retirement (article 364 bis of the Belgian Income Tax Code
(BITC)), has also been rejected by the Belgium Supreme Court in a
treaty context, on the basis of the general “pacta sunt servanda”
principle.
An exception to this principle are the rules included in the Belgian
Constitutional Code that, in theory, in the opinion of the Belgian
Constitutional Court, can overrule treaty law. In practice, however,
this Court has never condemned an international treaty entered into
by Belgium, based on a constitutional infringement.
2 Transaction Taxes
2.1 Are there any documentary taxes in Belgium
1.4 Do they generally incorporate anti-treaty shopping rules (or
“limitation of benefits” articles)
Traditionally, the bilateral tax treaties concluded by Belgium do not
include anti-treaty shopping provisions, except for the reference to
“beneficial ownership” which is required to invoke the treaty
benefits in respect of dividends, interest income and royalties, that
has been systematically included in the treaties concluded after
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Documentary taxes are due on certain formal documents and
duplicates thereof, such as notarial deeds or a bailiff’s summons.
Legislation in this matter changed in December 2006, which has
replaced stamp duties per page with lump sum duties per deed or
document, and has facilitated payment thereof through “modern”
payment facilities, such as a wire transfer. The lump sum duties per
document range from €0.15 per document (bank transcripts) to €95
(certain notarial deeds).
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