Belgian Net Asset Tax compatible with EU law


The Court of Justice of the European Union (CJEU) ruled on 26 May 2016 that the Belgian Net Asset Tax (NAT) as applicable to foreign investment funds, is compatible with EU law.

The CJEU’s decision in Case 48/15 (SPF Finances v. ING International SA) is rendered in the framework of a request for a preliminary ruling from the Court of Appeal of Brussels on the compatibility of the NAT as applicable to non-Belgian undertakings for collective investments (UCIs) marketing their units in Belgium.

The CJEU decided that levying the NAT on non-Belgian UCIs is not precluded by the following EU provisions:

  • EU fundamental freedoms (in particular the free movement of capital),
  • Directive 69/335/EEC of 17 July 1969 concerning indirect taxes on the raising of capital, and
  • Directive 85/611/EEC of 20 December 1985 (UCITS Directive).

On the other hand, the CJEU also decided that the specifically harsh sanction provided in the NAT legislation, namely the prohibition of non-Belgian UCIs from continuing to market their units in Belgium when they fail to submit their tax declarations or pay the tax in a timely manner, constitutes a discrimination precluded by the freedom to provide services. As the Act of 18 December 2015 (Belgian Official Gazette of 28 December 2015) has already abolished this sanction (which had never been applied anyway), the outcome of the CJEU case should not have any practical consequences.

Notwithstanding the fact that the Belgian NAT legislation is in accordance with EU Law, the Court of Appeal of Brussels still has to decide on the question whether the Belgian NAT infringes the provision of the Belgium-Luxembourg double tax treaty (DTT). As a reminder, the Court of First Instance ruled in 2011 that the Belgium-Luxembourg DTT indeed prevents Belgium from levying ‘wealth tax’ (such as the Belgian NAT) on Luxembourg UCIs. The Court of Appeal will have the final say on this matter.

For more insights, here are the decision (28 May) and the AG’s opinion (21 January).

Key takeaways

  • Awaiting the final outcome by the Court of Appeal of Brussels, Luxembourg and other foreign UCIs (established in DTT countries) can still envisage safeguarding their rights for recovering the NAT.
  • Foreign UCIs marketing their units in Belgium but not complying with annual NAT reporting and payment, should take action to regularise their situation.