Belgium: new circular fiscal letter

Alessandro PasutFollowing two rulings issued by the Court of Justice of the European Union, the Belgian tax authorities published a circular letter dealing with refunds of withholding tax on Belgian source dividends to non-resident entities subject to a foreign corporate income tax regime. The circular outlines the conditions under which a foreign company can reclaim a refund of withholding tax in relation to Belgian source dividends which did not qualify for withholding tax exemption under the extended Belgian implementation of the EU Parent-Subsidiary Directive. It also provides for some additional clarification in relation to the previously issued circular regarding withholding tax refund claims on behalf of regulated investment companies Apart from what applies to regulated investment companies the main general conditions for foreign companies to file Belgian dividend withholding tax refund claims can be summarised as follows:

- Qualifying beneficiaries: any foreign company which does not have a Belgian permanent establishment to which the qualifying shareholding is attributable. This includes non-EEA resident companies, provided the double tax treaty with the relevant country contains an ‘exchange of information’ clause;

- Qualifying dividend: Belgian-source dividend that would have qualified for the Belgian participation exemption if the foreign company had been taxable in Belgium on such a dividend. Thus the foreign company must have held, for an uninterrupted 1-year period and in full ownership, Belgian shares representing less than 10% of the Belgian company’s issued capital but having an acquisition value of at least 2.5 million euro. The circular limits refund claims to foreign companies resident in either in the E.E.A. or in ‘Third Countries’ with whom Belgium has concluded a Double Tax Treaty containing an exchange of information clause. The same limitation now also applies to regulated investment companies.

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