Belgium: New dividend withholding tax rates available to foreign companies holding a “qualifying” participation - Update
Note: This announcement, originally published on 18 March 2016, has been updated to include a new version of the Self-declaration for reduced dividend withholding tax rate of 1.6995% form. The updated document has been attached below.
Clearstream Banking1 would like to inform customers that, effective
immediately
it can offer customers, for beneficial owners that are foreign companies holding a “qualifying participation” in the Belgian parent company distributing the dividend, a reduction or exemption of withholding tax.
This follows clarification received from Clearstream Banking’s depository in regard to the certification requirements.
Reduced withholding tax rate of 1.6995%
Eligibility criteria
A reduced withholding tax rate of 1.6995%2 on dividends can be granted to foreign investors provided that they fulfil the following criteria, as set out in Article 269/1 of the Belgian Income Tax Code.
The foreign investor must:
- Be incorporated in a European Economic Area country or in a country having signed a double taxation treaty with Belgium containing an exchange of information provision;
- Have one of the legal forms described by Directive 2011/96/EU of 30 November 2011, or comparable for a beneficiary resident in a non-EU jurisdiction;
- Hold a participation of less than 10% in the capital of the Belgian distributing company but for an acquisition value of at least EUR 2.5 million;
- Hold the shares for an uninterrupted period of one year;
- Not be able to deduct the Belgian withholding tax from the tax payable in its country of incorporation;
- Have certified to the Belgian Tax Authorities that it complies with all the above-mentioned required conditions.
Certification requirements and deadlines
To apply for the dividend withholding tax rate of 1.6995%, the eligible beneficial owner must complete the appropriate self-declaration released by the Belgian Tax Authorities attached below for each eligible dividend payment and provide it to Clearstream Banking by the following deadlines:
- For a tax relief at source: no later than five business days (by 18:00 CET) before the respective Payment Date;
- For a quick reclaim request: no later than four calendar days (by 18:00 CET) after Payment Date.
In addition to the self-declaration, customers are kindly requested to send a per payment corporate action instruction (MT599 – ATT PTR TAX SERVICES) with the following details by the above mentioned deadlines:
- Account;
- ISIN;
- Payment Date;
- Beneficial Owner name and address;
- Position; and
- Applicable tax rate.
The procedure for standard reclaim of withholding tax applied to such entities has not yet been confirmed by the Belgian Tax Authorities. We continue to monitor the situation and will provide further information as it becomes available.
Exemption of withholding tax
Eligibility criteria
As per Royal Decree of 21 December 2006, incorporating the EU Parent-Subsidiary regime Directive 2011/96/EU (formerly 90/435/CEE), a parent company that meets the following conditions can be eligible for an exemption on dividends distributed by a subsidiary established in Belgium:
The parent company must:
- Be established in a member state of the EU other than Belgium or in a country having signed a double taxation treaty with Belgium containing an exchange of information provision;
- Have one of the legal forms described by Directive 2011/96/EU of 30 November 2011, or comparable for a beneficiary resident in a non-EU jurisdiction;
- Hold a participation of more than 10% in the capital of the Belgian distributing company for an uninterrupted period of one year;
- Be subject to corporate tax or similar, without being exempt from it;
- Have certified to the Belgian Tax Authorities that it complies with all the above-mentioned required conditions.
Certification requirements and deadlines
In order to apply for the exemption of dividend withholding tax, the eligible beneficial owner must complete the appropriate self-declaration (attached below) released by the Belgian Tax Authorities. This document is valid for the calendar year of the date of signature and must be provided by the following deadlines:
- For tax exemption at source: no later than five business days (by 18:00 CET) before the first dividend payment concerned;
- For a quick refund request: no later than four calendar days (by 18:00 CET) after Payment Date.
In addition to the self-declaration, customers are kindly requested to send a per payment corporate action instruction (MT599 – ATT PTR TAX SERVICES) with the following details by the above mentioned deadlines:
- Account;
- ISIN;
- Payment Date;
- Beneficial Owner name and address;
- Position; and
- Applicable tax rate.
The procedure for standard reclaim of withholding tax applied to such entities has not yet been confirmed by the Belgian Tax Authorities. We continue to monitor the situation and will provide further information as it becomes available.
Further information
For further information about procedures, customers may contact the Clearstream Banking Tax Help Desk, Clearstream Banking Client Services or their Relationship Officer.
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1. Clearstream Banking refers collectively to Clearstream Banking AG, registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500, and Clearstream Banking S.A., registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Trade and Companies Register under number B-9248.
2. This tax rate is equal to 5% of the Belgian corporate tax (33.99% - including the supplementary 3% crisis contribution).