Double Taxation Treaties in Belgium

Updated on Friday 08th May 2020

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A double taxation agreement is a treaty signed between two countries with the purpose of avoiding the international double taxation on the same type of income.

Like many other countries, Belgium has signed a number of double taxation treaties that allow for individuals to avoid being taxed twice on their income and foreign entities to be relieved from double corporate taxation.

Belgium's double taxations agreements (DTAs) have been redacted according to the Organization of Economic and Cooperation and Development (OECD) Model Tax Convention on Income and Capital.

Our team of lawyers in Belgium can assist foreign investors who are interested in knowing additional or specific information about a treaty signed with a certain other states. In this article, we present the purpose of the treaties, how they apply in Belgium and list part of the countries with which Belgium has signed these types of agreements.

The purposes of double taxation agreements in Belgium

The first and most obvious goal of Belgian double tax treaties is to eliminate or decrease international double taxation. Aside from this, double tax treaties are also enabled to stop tax discrimination and to limit tax evasion and frauds. Double tax treaties also allow interchange of information between Belgian tax authorities and tax authorities from other countries. Belgium has concluded 88 double taxation treaties which are also meant to encourage foreign investment.

Apart from the already signed treaties, Belgium has also signed new treaty protocols with different countries. Negotiations are underway with different other jurisdictions for the purpose of broadening the tax treaty network.

Foreign investors in Belgium who wish to be informed of the latest changes to existing treaties between Belgium and their country or origin can reach out to our attorneys in Belgium. We can provide complete tax counseling for investors from different countries.

Articles included in the double tax treaties

An agreement for the avoidance of double taxation and the prevention of fiscal evasion will include a number of articles that define the manner in which the tax authorities from each signatory state are allows to impose their tax rates. Below, we list some of the issues commonly clarified in this type of treaty:

- the taxes: for Belgium, the regular taxes to which the treaty applies are the corporate and the individual income tax, the income tax on non-residents and the income tax on legal entities.
- residence: the manner in which tax liability is determined according to the residence.
- permanent establishment: the types of establishments that, for the purpose of the treaty, are considered permanent ones in the other signatory state.
- income: the type of income that is subject to the treaty, such as business profits, income from immovable property, pensions, director’s fees, and others.
- tax rate limits: these can apply in case of dividends, for example, when the treaty agrees on a minimum withholding tax rate.

For the purpose of the treaty, a distinction is made between the corporate income tax and the income tax on legal entities. The latter applies to non-profit organizations, certain associations, and institutions as well as government and public associations. Foreign investors in Belgium will be concerned with the corporate tax, the one applicable to resident and non-resident companies (only on the profits derived from the country). The Convention for the Avoidance of Double Taxation applies to the taxes agreed upon in the document as well as any identical or similar taxes that may be imposed after the signature date of the treaty. Under the agreement, Belgium and the other signatory state are obliged to notify one another of any changes in their respective tax laws.

A double tax treaty may allow for the dividends paid by a company that is a resident of a contracting state to a resident company of the other state to be taxed in the other state, where the dividends are effectively received. The treaty can also set a maximum percentage for dividend taxation (a percentage of the gross amount of the dividend payment).

A permanent establishment in Belgium, as it is defined in most double tax agreements, can be one of the following:

• an office;
• a place of management;
• a branch;
• a factory or workshop;
• a mine, quarry, gas well, another place of extraction.

A construction site can also be included in this category but also in those cases in which it lasts more than twelve months.

Countries that have double tax treaties with Belgium

As mentioned above, Belgium has 88 double taxation avoidance treaties with countries all over the world. Some of these countries are:

- In the European Union: Austria, Germany, Denmark, Cyprus, Estonia, Finland, Greece, France, Ireland, Latvia, Lithuania, Malta, Luxembourg, Hungary, Poland, the United Kingdom, Czech Republic, Slovenia, Slovakia, Sweden, Italy, Bulgaria, Romania, Portugal, the Netherlands and Spain;
- Other countries in Europe are: Croatia, Iceland, Macedonia, Moldova, Norway, Serbia, Montenegro and Switzerland;
- In Africa: Algeria, Egypt, Gabon, Ghana, Morocco, Nigeria, Senegal, South Africa, and Tunisia;
- In Asia: China, India, Indonesia, Japan, Mongolia, Taiwan, Thailand, the UAE and Vietnam;
- In South America, Belgium has signed double tax treaties with Argentina, Brazil, Ecuador and Mexico, and in North America with Canada and the United States.

Belgium also has double tax treaties with Australia, New Zealand, Hong Kong and Russia.

Other economic agreements in Belgium

The Federal Public Services in Belgium is the main regulatory body when it comes to economic agreements. The Foreign Affairs department is in charge with the conclusion of economic agreements such as double tax treaties but also other agreements. Belgium has concluded social security agreements that are meant to watch over national and foreign employees and bilateral investment agreements (BITs) that are meant to draw and protect foreign investments.

Belgium is a country that offers a number of advantages for investors, starting with its favorable business policies and its position at the heart of Europe. The following statistics show the evolution of the number of companies incorporated in the country:

• at the end of 2017, there were 941,991 registered VAT payers in Belgium;
• the same statistic shows that the largest number of VAT taxpayers in the country are in the professional, scientific and technical activities, followed by companies in wholesale and retail trade;
• the company turnover in Belgium (except for companies in the agricultural and financial sectors) was approximately 328 billion euros during the first quarter of 2019.

Understanding the applicable taxation principles for resident and non-resident companies is important when setting up a company in Belgium. Foreign Investors can reach out to our lawyers in Belgium for detailed information about how a treaty applies in their case, especially for branches or subsidiaries.

If you want to set up a company and need details about the taxation system you can contact our Belgian law firm.