Belgium: Foreign companies holding a “qualifying” participation – new eligible conditions
Further to our announcements A16046, initially published on 18 March 2016 and updated on 24 May 2016 and A16072, dated 26 May 2016, the Belgian Government draft Law amending the eligibility criteria to benefit from the reduced withholding tax rate of 1.6995%, as set out in article 269/1 of the Belgian Income Tax Code and proposed on 23 June 2016, was approved by the House of Representatives on 8 July 2016.
The law is expected to be published in the Official Journal soon, bringing it into force.
According to the amended article 269/1 of the Belgian Income Tax Code:
- Belgian companies are not eligible to the reduced rate;
- For the benefit of the 1.6995% reduced rate, both the foreign company receiving the dividend and the issuing company must be fully subject to corporate tax and must fulfil all of the following criteria:
- The beneficiary must be either incorporated in a country other than Belgium, which is a member of the European Economic Area or the beneficiary must be incorporated in a country which has signed a double tax treaty with the Kingdom of Belgium and this double tax treaty must contain an information exchange;
- The beneficiary must be a legal entity or have a legal form similar to that foreseen by the EU Parent – Subsidiary Directive 2011/96/EU of 30 November 2011;
- The investor has a participation of less than 10%, but with a minimal value of EUR 2.5mn in a Belgian company;
- The beneficiary must hold its shares for an uninterrupted period of one year;
- The beneficiary must be fully subject to corporate tax; and
- The reduced rate is not applicable on the part of dividends that can be deduced by the beneficiary from their tax payment in their country of incorporation.
We continue to monitor the Belgian market and will provide further information as it becomes available.
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