Belgium - Switzerland Double Tax Treaty

Updated on Wednesday 15th February 2017

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Belgium has a wide network of treaties for the prevention of double taxation with over 80 countries. Following the OECD model tax treaty, Belgium and Switzerland first entered into a double taxation treaty in 1978. Since then there have been a number of amendments made. Our attorneys in Belgium will be able to advise you on the latest position under the Belgium - Switzerland Double Tax Treaty.

Avoidance of Double Taxation on Income and Capital for Belgium and Switzerland

According to the Belgium - Switzerland Double Tax Treaty, double taxation can be avoided for Belgian individual and corporate income taxes, the corporate tax, income tax on non-residents, solidarity contribution, Swiss federal, cantonal and municipalities income tax (earned income, property income, business income, capital gains and other income) and capital tax (movable and immovable property, business assets, capital and reserves and other elements of capital). Our law firm in Belgium can help you on any tax issues in this country.

Wavier or Reduction of Withholding Tax in Belgium

The current withholding tax of 27% is applicable on dividends, interests and royalties distributed by a Belgian resident company to a nonresident, unless the rate is reduced under one of Belgium’s tax treaties. Under the Belgium - Switzerland Double Tax Treaty, different degree of reduction in withholding tax is available for dividends and interest paid to Swiss company by a Belgian company and no withholding tax is levied on royalties paid to foreign beneficiaries. For further details on withholding tax exemption, please get in touch with our Belgian lawyers.

Procedural Matters

To obtain benefits on tax levied by Belgian tax authorities under the treaty, a nonresident must demonstrate that it is resident in Switzerland, generally by providing an attestation of the Swiss tax authorities.

To apply for a reduced treaty rate at source and for the refund of withholding taxes that have been unduly levied, the applicant must use specific forms issued by the Belgian tax authorities. In brief, the payer of income would first apply the domestic withholding tax, after which the nonresident can request the repayment of the excess withholding tax from the Belgian tax authorities.

The application and interpretation of the rules of the Belgium - Switzerland Double Tax Treaty can be quite complex. We recommend that you ask for the help of our Belgian law firm before making any decision based on the treaty.

Recent Amendments

Switzerland and Belgium signed a DTA Protocol on April 10, 2014, which:

• Includes an administrative assistance clause in accordance with the international standard on the exchange of information in connection with tax fraud and tax evasion.
• Grants tax exemptions in the source state for pension funds.
• Improved tax arrangements for interest on inter-company loans and dividends paid to certain companies which aim to promote investments and economic exchange between the two countries.

In 2016, Belgium and Switzerland have concluded an agreement to amend to their tax treaty (ratification of the amendment is still pending). When the amendment comes into force, withholding tax exemption can be applied to dividends paid to a Swiss company as from 1 January 2017, provided that:

• The parent company holds/will hold at least 10% a participation of the subsidiary’s capital for at least 1 year;
• The Belgian company and the Swiss company both have a legal form according to the annex to the EU Parent-Subsidiary Directive;
• The subsidiary is a tax resident of Belgium and the parent is a tax resident of Switzerland; and
• Both companies are subject to corporate tax or to a similar tax and do not enjoy a tax regime diverging from the common tax regime.

Currently, withholding tax on dividends paid to a Swiss company could only be exempted if the following conditions are met:

• The parent company holds at least 25% of a direct participation in the capital of the subsidiary for at least 2 years;
• The subsidiary is a tax resident of Belgium and the parent is a tax resident of Switzerland;
• Both companies pay corporate tax without being exempt;
• Both companies are limited companies.

For more information on the Belgium - Switzerland Double Tax Treaty and other taxation matters in Belgium, please feel free to contact our law firm in Belgium.