After a long juridical battle, the Belgian Ministry of Finance will accept the ruling of the Belgian Supreme Court/Court of Cassation which allows private individuals investing in French stocks on the stock market, to subtract a part of the French withholding taxes from the Belgian withholding taxes which are due on dividends received from those French stocks.
Until now, a private investor who would receive a French gross dividend of EUR 100,00 had to pay:
- 15% French withholding taxes (EUR 15,00), the net French dividend income is thus EUR 85,00;
- 30% Belgian withholding taxes (EUR 25,50) on the net French dividend income.
This would result in a net profit of EUR 59,50. Following this recent judgement, the Belgian tax administration will only levy 15% withholding taxes on the net French dividend income (thus after French taxes). In concreto this thus implies that on a dividend of EUR 100; an amount of EUR 15 (15%) French taxes will be levied and that Belgium will only levy an additional 15% Belgian withholding tax on the net French dividend income (EUR 85) resulting in an amount of EUR 12,75, which will lead to a net profit of EUR 72,25. In other words, the overall taxation on French dividends will thus be lower than the overall taxation of fully Belgian dividends which are subject to a tax rate of 30%.
Important to note is that Belgian investors can claim back the excessively paid withholding taxes from the past five years. PwC can of course assist in this respect.
The deduction of a part of the French withholding taxes is included in the double tax treaty between Belgium and France. Until now, the Ministry of Finance always resisted the application of the rule, despite several legal proceedings. A new double tax treaty between Belgium and France is in the making in which the deduction is not included, however this new pact is not to be expected before 2022.
In general, we would like to emphasize that the above only applies specifically to the Belgium-France double tax treaty and cannot be extrapolated to other tax treaties concluded by Belgium.
If you have any further questions, please do not hesitate to contact Sandrine Schaumont or Philip Maertens.