The tax authorities are all the time searching for their piece of your
tax pie. However issues get sophisticated when your revenue crosses
borders. Fortuitously, Belgium has double taxation treaties
(DTTs) with over 150 international locations.
However how do they work, and when do they apply? Effectively, your (or
your organization’s) tax residency standing performs a significant position.
This is what it’s good to learn about double taxation treaties
in Belgium.
What’s a Double Taxation Treaty?
A double taxation treaty (DTT) is an settlement signed
between two contracting international locations to stop double taxation on the
similar revenue of a person or firm.
It is also generally known as a:
Double taxation settlement (DTA)
Double taxation conference (DTC)
Double taxation avoidance settlement (DTAA)
In a DTT, the 2 international locations agree on which ones can tax
company revenue, dividends, curiosity, rental revenue,
salaries, pensions, royalties, and extra. A DTT additionally has
provisions for tax aid when double taxation arises.
Whereas double taxation treaties in Belgium are modeled after the
OECD’s Mannequin Taxation Conference in Revenue and Capital, none of
them is strictly the identical.
Every treaty has distinctive rules on taxing revenue and capital
of people and authorized entities.
Belgium’s conventions for the avoidance of double taxation
serve different functions, too. They assist restrict tax evasion,
cease tax discrimination, and encourage international funding.
Additionally they enable for info interchanges between international locations.
Which Nations Have Double Taxation Treaties With
Belgium?
Belgium has double taxation treaties with international locations throughout the
globe. This is a fast breakdown by geographic location
in accordance with the Belgian MyMinfin (Tax-on-Net) web site:
EU Nations
The next European Union member states have double taxation
avoidance agreements with Belgium:
Austria
Bulgaria
Czech Republic
Cyprus
Germany
Denmark
Estonia
Finland
Greece
France
Hungary
Eire
Italy
Latvia
Lithuania
Luxembourg,
Malta
The Netherlands
Poland
Portugal
Romania
The UK
Slovenia
Slovakia
Sweden
Spain
Non-EU Nations
Belgium has double taxation agreements with these non-EU
international locations:
Albania
Belarus
Bosnia-Herzegovina
Croatia
Georgia
Iceland
Kosovo
Macedonia
Moldova
Norway
Serbia
Montenegro
The Republic of San Marino
Switzerland
Ukraine
African Nations
Belgium has double taxation conventions with the next
international locations in Africa:
Algeria
Bahrain
Egypt
Gabon
Ghana
Ivory Coast
Mauritius
Morocco
Nigeria
The Republic of the Congo
Rwanda
Senegal
Seychelles
South Africa
Tunisia
Asian and Eurasian Nations
These international locations in Asia have double taxation avoidance
agreements with Belgium:
Armenia
Azerbaijan
Bangladesh
China
Hong Kong
India
Israel
Indonesia
Japan
Kazakhstan
Kyrgyzstan
Kuwait
Malaysia
Mongolia
Pakistan
The Philippines
Taiwan
Tajikistan
Thailand
Turkey
Turkmenistan
Russia
Singapore
South Korea
Sri Lanka
The United Arab Emirates
Uzbekistan
Vietnam
South American Nations
The next South American international locations have double taxation
conventions with Belgium:
Argentina
Brazi
Chile
Ecuador
Mexico
Uruguay
Venezuela
North American Nations
Belgium has double taxation treaties with the US and
Canada.
Oceanic Nations
Belgium has additionally signed double taxation agreements with
Australia and New Zealand.
When Does a Double Taxation Treaty Apply in Belgium?
Belgium’s double taxation treaties solely apply when a
particular person or authorized entity is taken into account a tax resident by way of
each international locations’ legal guidelines. These agreements have particular
guidelines to find out how taxes are levied on revenue derived from
explicit sources.
Belgium’s double taxation avoidance agreements usually
outline and make clear widespread points, corresponding to:
Taxes: The place a DTT with Belgium applies to company,
particular person, non-resident, and authorized entity revenue
tax.
Tax residency: How tax legal responsibility is decided
in accordance with a person or authorized entity’s residence.
Revenue: The kinds of incomes topic to the treaty in
query, corresponding to revenue derived from immovable property, pensions,
director’s charges, enterprise earnings, and others.
Dividends: A DTT might enable for the dividends
paid by a resident firm in nation A to a resident firm in
nation B to be taxed within the latter nation, the place such dividends
are successfully obtained.
Tax fee limits: The relevant tax fee
limits within the case of dividend revenue (such at the least
withholding tax fee).
For the aim of a double taxation treaty with Belgium,
a distinction exists between the revenue tax of a authorized
entity and company revenue tax.
The previous applies to authorities and public associations,
non-profit organizations, and different sure establishments and
associations. In the meantime, international traders in Belgium are involved
with the latter.
Belgium’s Conference for the Avoidance of Double Taxation
applies to all taxes agreed upon in a selected treaty and any
an identical taxes which may be imposed after signing.
Belgium’s Tax Residency Guidelines
Earlier than we dive deeper into Belgium’s DTTs, here is a
transient abstract of Belgium’s tax residency guidelines.
As a resident taxpayer, you are taxed in your worldwide
revenue.
As a non-resident for tax functions, you are solely taxed on
your Belgium-sourced revenue. Overseas revenue is exempt from taxation
however continues to be used to calculate the marginal tax fee relevant to
your taxable (Belgian-sourced) revenue.
Should you can show that your principal domicile or middle of your
financial pursuits stays situated overseas, you could be thought-about a
non-resident for tax functions.
Exempted revenue from the next international locations continues to be
topic to communal taxes in Belgium:
Bahrain
China
Congo
France
Germany (employment revenue solely)
The Netherlands
Rwanda
San Marino
Singapore
Taiwan
The UK
Tax Residency in Belgium as an Particular person
As a person, you are thought-about a Belgian tax resident
in case your domicile or seat of wealth is established in
Belgium.
Your domicile is outlined as your efficient and enduring
place of residence, together with the place your loved ones lives and
the place your private contacts are maintained.
Your seat of wealth is outlined because the place the place your
private property is managed or the place your major enterprise
actions are situated. (The place the place your property and
property are located aren’t essentially thought-about your
“seat of wealth” for tax residency functions.)
Should you’re registered within the inhabitants register, you are
thought-about a Belgian resident and presumed to be a resident
taxpayer.
Tax Residency in Belgium as a Firm
An organization is outlined below Belgian tax regulation as an
establishment, company, company physique, or affiliation
partaking in enterprise or profit-making exercise and that has a authorized
character.
An organization is taken into account a resident of Belgium for tax functions
if:
Its registered workplace is in Belgium
Its principal place of multinational is in Belgium
Its seat of administration is in Belgium
You will get extra detailed details on Belgium’s tax residency
guidelines right here.
DTTs and Tax Residency in Belgium
In circumstances the place a person or firm is taken into account a
resident in each Belgium and the opposite contracting state, particular
DTT guidelines apply. This is how tax residency is then
decided for functions of the relevant double taxation
treaty:
The Particular person Tax Resident for DTT Functions
A person is deemed to be a resident solely within the state or
nation the place they’ve a everlasting residence accessible.
A everlasting house is outlined as any sort of
dwelling, whether or not rented, bought, or in any other case occupied, that
the person retains for everlasting use (versus occasional
use).
“Everlasting” is the key phrase right here. The
permanence of the house reasonably than the character of its tenancy,
possession, or measurement is related (even a rented furnished
bed room can qualify as a everlasting residence).
Nevertheless, the person should have steady (and never
occasional) entry to the house. As an illustration, should you personal a
home however lease it out to an unrelated occasion throughout the relevant
interval, it is not accessible to you completely. The home
is not in your possession, and there is no risk of
staying there.
What when you have a “everlasting residence” accessible
to you in each Belgium and the opposite contracting
state?
In such a case, you will be deemed a resident of the state
the place the middle of your important pursuits lies. This consists of
private and financial elements like:
Household and social relations
Occupations
Cultural, political, or different actions
Your place of job or the place you administer your
property
The above listing is not exhaustive, and your
circumstances are thought-about as an entire. After all, your
private acts nonetheless obtain particular consideration.
What occurs if you do not have a everlasting residence
accessible to you in both nation or your middle of important curiosity
cannot be decided?
On this occasion, you will be deemed a resident within the state
the place you’ve got a “ordinary abode.”
A ordinary abode is not outlined by onerous and quick
standards like a set variety of days however reasonably based mostly on frequency,
regularity, and length of your keep.
When you have a ordinary abode in each or neither of the
contracting states, you then’ll be thought-about a
resident of the state wherein you are
nationwide.
In every other circumstances, the related authorities of each states should
decide your residency by mutual settlement.
Should you do not wish to be thought-about a Belgian
resident for tax functions, it’s essential to show to the
authorities that your keep in Belgium is short-term. Listed below are some
potential examples:
Your associate or partner lives overseas
You personal actual property overseas
You’ve got a international life insurance coverage coverage or social safety
scheme
The Authorized Entity Tax Resident for DTT Functions
A authorized entity is outlined as an individual apart from an
particular person.
If a authorized entity is a resident of each Belgium and the
different contracting state, then it is deemed a resident of the
state the place its efficient administration takes place.
The competent authorities should settle the matter by mutual
settlement in circumstances the place this cannot be decided.
Registration alone is not ample. The tax authorities
take into account different related elements to decide a authorized
entity’s place of efficient administration, corresponding to:
The place key business and administration choices essential for the
entity’s enterprise conduct are made
The place the entity’s headquarters are situated
The place senior-level every day administration takes place
The place the board of administrators (or equal physique) maintain
conferences
The place the CEO and different senior executives conduct their
actions
Which nation’s legal guidelines govern the entity’s authorized
standing
The place accounting information are stored
Can a authorized entity have multiple place of administration? Sure.
Nevertheless, it may have just one place of efficient
administration at any given time.
That is why all related details and circumstances are examined
to find out the place efficient administration of a authorized entity takes
place.
Such a spot of efficient administration should still be
refuted by the tax authorities after cautious consideration
of all elements. That is notably true for subsidiary corporations
searching for to assert treaty advantages of 1 state however:
Have a guardian firm with residency within the different contracting
state
Are established in tax havens
Profit from dangerous preferential tax regimes
Therefore, the guardian firm’s place of efficient administration is
additionally taken under consideration.
Keep in mind, the guidelines supplied in Belgium’s double
taxation treaties do not create taxes. They merely
decide which nation is legally allowed to levy taxes on a
resident’s revenue.
If a DTT provides a rustic the appropriate to impose an revenue tax on
the resident, however that nation’s tax legal guidelines do not present for
such a tax, the resident cannot and will not be taxed on that
revenue.
Get Your Taxes Proper the First Time and Keep away from Double Taxation
in Belgium
Double taxation treaties are nuanced agreements. They require an
in-depth understanding of each signatory international locations’ tax
legal guidelines, residency guidelines, and authorized frameworks.
If you wish to keep away from double taxation in Belgium and
profit absolutely from a DTT, it is best to get skilled
recommendation from worldwide and Belgian tax specialists. You’ll be able to
study extra right here.
Sources:
The content material of this text is meant to supply a normal
information to the subject material. Specialist recommendation ought to be sought
about your particular circumstances.
