Belgian Authorities start processing Aberdeen claims
Following last year’s circular letter of 4 March 2013 and its amendment of 13 July 2013 (please refer to our Aberdeen e-alerts 2013-03 and 2013-09) with respect to withholding tax (WHT) reclaims filed by non-resident investment companies, Belgian Tax Authorities are now finally processing the tax claims.
In their circular letter of 4 March 2013, the Belgian Tax Authorities officially reacted to the infringement found by the Court of Justice of the European Union (CJEU) in the Commission vs. Belgium (C-387/11) case. Specific conditions and guidelines have been set out for pending and future tax reclaims relating to WHT suffered during years 2007-2012. Furthermore, the circular announced legislative changes effective as from 2013, which have meanwhile been implemented and have effectively put an end to the discrimination between Belgian-resident and non-resident investment companies.
The Belgian Tax Authorities have recently started processing the claims. In this regard, the oldest claims – filed in 2007 and 2008 – are being processed first.
The circular of 4 March 2013 clearly outlined the conditions under which non-resident investment companies can reclaim Belgian withholding taxes suffered.
However, the Belgian Tax Authorities have been sending out several requests for information, raising additional questions which are not covered in the circular letter.
Additional questions related to anti abuse provisions
Apart from the review of the conditions as commented in the circular letter, the Tax Authorities are also raising additional questions in order to determine if the dividends received qualify for a tax credit or refund.
The Tax Authorities are of the opinion that the following conditions should be satisfied:
- Full ownership criterion: the shares must have been held in full ownership at the moment of the allocation or of the payment of the dividends related to these shares. The consequence of the absence of this condition would be that no withholding tax shall be deducted and refunded. This provision thus excludes any usufruct or any form of trustee ownership or fiduciary transfer of the shares and it likewise excludes any form of coupon stripping;
- The payment of the dividends received cannot have resulted in a write-down or a capital loss on the shares.
The investment company claiming a refund of Belgian dividend WHT should demonstrate that the above conditions are fulfilled by any means of proof (except by oath). This could be done by providing, inter alia, a certificate of the custodian attesting that no coupon lending/stripping or other similar transaction was carried out in order to avoid Belgian WHT. In addition, important movements in stocks during the claim period should be identified and information in relation to the underlying reasons be gathered, as the Belgian Tax Authorities may request additional information.
Additional questions related to the certificate of residence
Furthermore, the Belgian Tax Authorities are also asking for a certificate to be signed by the tax authorities of the investment fund’s State of residence. More specifically, by means of this certificate, the Belgian Tax Authorities wish to confirm that the fund:
- has not used the Belgian withholding tax on movable property (or to obtain a related tax credit) on dividends of Belgian origin to in any way reduce the payable tax in its State of residence or obtain any kind of tax advantage in that state, and neither in the future will be able to use the Belgian tax for such purposes;
- has not received a refund of the Belgian withholding tax on movable property paid on these dividends in any form.
Additionally, a WHT schedule needs to be added (matching the schedule added at the moment of the filing of the claim), which also has to be certified by local tax authorities.
Should the local tax authorities be of the opinion that the certificate and the actions related to it constitute a disproportionate burden and thus refuse to sign the certificate, the Belgian Tax Authorities would accept a declaration by the claimant himself. In this event, the claimant may establish by any form of proof, except by oath, the legitimacy of the elements requested in the certificate. However, please note that the Belgian Tax Authorities request a copy of the correspondence from the local tax authorities by which it has communicated its refusal to complete and certify the certificate.
We suggest answering the questions of the Tax Authorities in order to come to an efficient administrative settlement of the claim while not jeopardizing the good will of the tax inspector.
We therefore advise to proactively gather documentation that could provide the Belgian Tax Authorities with the proof that the above mentioned conditions are satisfied. Indeed, the Belgian Tax Authorities foresee a deadline of one month to provide a response to their questions and in case no answer can be delivered in a timely manner, it cannot be excluded that the tax reclaim would be rejected.
For further information, please do not hesitate to contact us.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough