Profit repatriation for Belgian companies
Belgian companies can repatriate the profits
earned by their branches or subsidiaries
in a foreign country. Profit earned this way is usually subject to special tax rules and the tax treaties
between the two countries can also dictate how the repatriation will take place. Using the right strategy to repatriate profits
can be beneficial for Belgian companies
Tax exemptions in Belgium
Belgium is a popular choice for foreign investors
and among its many qualities, the country also offers a favorable regime for holding companies
. When entrepreneurs from countries that have signed tax treaties with Belgium
have holding companies or investments here, they can repatriate the European profits without paying dividend withholding tax and without a limitation on profits.
According to the Belgian taxation regime
, 95% of the dividends received by a Belgian company, whether from a domestic source or foreign source, is exempt from tax. The remaining 5% is subject to the normal tax rate. To qualify for the dividends reduction, a company must satisfy the following conditions:
- the shareholder must own at least 10% of the share capital of the payer company;
- the company distributing the dividends must pay corporate income tax on the profits out of which the distribution is made;
- the shareholder must have had full ownership of the qualifying shares for at least one uninterrupted year.
These conditions are known as the participation exemption.
Other provisions for taxes in Belgium
Although under the EU parent-subsidiary directive there is no withholding tax for dividends
paid to another company in Belgium or another EU country, a 1.69 withholding tax applies under certain conditions on dividends paid to a company established in an EEA member state that owns at least 10% of the Belgian company paying the dividends
. A default rate of 25% applies where no exemption or other reductions apply.