• Service: Tax, International Corporate Tax, Global Compliance Management Services
  • Type: Regulatory update
  • Date: 10/26/2012

Belgium - Taxing dividend, interest income of non-resident investment companies 

October 26:   The Court of Justice of the European Union (CJEU) issued a judgment finding the Belgian taxation of dividend and interest income from the capital of non-resident investment companies, having no permanent establishment in Belgium, constitutes an unjustified restriction on the freedom of establishment and the free movement of capital under the EU treaty. Commission v. Belgium, C-387/11 (25 October 2012)

Read the judgment: Commission v. Belgium


Belgian tax rules impose a withholding tax on dividend and interest payments made to resident and to non-resident investment companies.

However, the dividend or interest income is exempt from corporation tax when paid to Belgian resident investment companies. Moreover, any withholding tax liability with respect to this dividend / interest income can be offset against the corporation tax liability of Belgian resident investment companies, and any excess amount is subject to refund.

The ability to offset withholding tax against corporation tax or to obtain a refund of withholding tax is not available for non-resident investment companies that do not have a permanent establishment in Belgium.

The CJEU concluded that these rules infringed both the freedom of establishment free movement of capital under the EU treaty. The court rejected Belgium’s claim that the different tax treatment was justified on the grounds of its authority to tax, on claims for effective fiscal supervision, and on the assertion that the different tax treatment could be neutralized by the application of income tax treaties.

Read an October 2012 report [PDF 51 KB] prepared by KPMG’s EU Tax Centre: CJEU decision in Commission v. Belgium case