Belgian withholding tax on interest income paid to foreign investment companies: exemption enlarged

Written by Olivier Hermand 2 October 2015


Following an infringement procedure initiated by the European Commission several years ago, Belgium has finally amended its regulation regarding the perception of withholding tax on Belgian-source interest on debt claims and debt securities made or allocated to investment companies established abroad in another Member state of the European Economic Area.

Belgian and foreign investment companies receiving Belgian-source interest on debt claims and debt securities are treated differently from a tax perspective. While a withholding tax exemption applies on such income received by Belgian investment companies (resulting in the absence of taxation in their hands due to the specific income tax regime provided for in Art. 185 ITC92), foreign investment companies are not always exempted on that income (the Belgian withholding tax levied being a final tax in their hands).

Following an infringement procedure initiated by the European Commission several years ago, Belgium has removed this difference in treatment by amending articles 116 and 118 of the Royal Decree implementing the ITC92 (Royal Decree of 27 September 2015, Official Gazette of 1 October 2015).

In a nutshell, foreign investment companies established in a Member state of the European Economic Area will henceforth benefit from the same withholding tax exemption on interest payments as Belgian investment companies.

The Royal Decree is applicable as from 1st December 2015.

The text of the Royal Decree (including the Report to the King and Council of State’s report) can be read here: French / Dutch