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Reclaiming wrongly withheld tax on dividends of Belgian (quoted) companies

With the “Tate and Lyle” ruling of 12 July 2012 the Belgian Court of Justice has brought an end to the discriminatory practice in Belgium relating to withholding tax on dividends.

A European company retaining a share of less than 10% of the capital of a Belgian company, but with an acquisition value of at least 1.2 million euros (2.5 million euros from 1 January 2010), is owing Belgian tax on the paid dividends. When on the other hand these dividends are received by a Belgian company, no tax is payable.

The Court has decided that this is incompatible with the free movement of capital.

European (holding) companies finding themselves in this situation can reclaim the wrongly withheld tax by either submitting a notice of objection within a period of six months, or a request for ex-officio exemption within a period of 5 years. 
The conditions under which the administration will accept the request to return wrongly withheld tax on were established in the Belgian circular no. Ci.RH.233/609.568 (AGFisc Nr. 26/2013) of 28.06.2013.

The law firm “Vanhaute advocaten” has already successfully conducted numerous procedures and will be pleased to assist you.

Fiscal regularisation also after 2 January 2014 still possible ?

We have received the question as to whether the regularisation of non-declared foreign income is still possible in Belgium.

Although the very last fiscal regularisation discussions have ended, one can still “spontaneously” regularise in Belgium at the local tax office, tax inspectorate or the public prosecutor.

This procedure has advantages and disadvantages. The country of residence tax is in this case taken into account, and no supplementary municipal tax is payable. The other side of the coin is that we can no longer call upon the former rates of the tax increase (10% to 15% on the regularised income), as provided for in the Belgian Programme Law of 2005, and that the tax authorities will apply the tax increase in conformity with article 444 of the Belgian Code on the income tax (10% to 200% of the supplementary tax). 

International Tax Specialists Group (ITSG)

As each year, in 2014 Vanhaute lawyers will also represent Belgium at the assemblies of the International Tax Specialist Group (seehttp://www.itsgnetwork.com/public/index.asp) held on 8 and 9 May in Milan (European department) and on 30 and 31 October in Paris (worldwide meeting). We will return to this shortly in more detail.

 

Reporting obligation of foreign legal structures

Reporting obligation of foreign legal structures

The Program  Law of 30 July 2013 introduced the obligation to report foreign private legal structures in your annual income tax returns. This obligation applies as from assessment year 2014 (income of the year 2013).

 

Every Belgian resident needs to report all foreign legal structures of which he, his wife or his children (whom he has the legal enjoyment of the income) are the founder, the beneficiary or the potential beneficiary, in his annual tax return.

The so called “legal structures” are defined in the Belgian Income Tax Code as:

  • on the one hand structures  similar to the trusts ;
  • on the other hand foreign legal entities which are not subject to income taxes (entities in tax paradises) or which are subject to a significantly more favorable tax regime than the one in Belgium.

 

The second category of “legal structures” is specified in the Royal Decree of 19 march 2014. The Royal Decree contains a list of 69 private legal structures who are assumed not to be subject to any income tax or who are assumed to be subject to an income tax that is significantly more favorable than in Belgium. All entities on the list need to be reported. The new legislation only aims at private legal structures.

 

There are still some questions left since the legislator hasn’t been very clear. First of all it’s not clear whether the list is exhaustive or indicative. Most authors assume that it’s an exhaustive list. Secondly it’s not clear if the Belgian taxpayer can refute  the presumption by proving that the “legal structure” was subject to an income tax that is not significantly favorable. Most authors state that the list creates a conclusive presumption. The Belgian taxpayer is obligated to report the legal structures on the list anyway.

 

We can conclude that there are still many unanswered questions . We will have to wait until the legislator or the tax administration clarifies things.