Court of Appeal of Ghent: no interest withholding tax exemption without certificate

Lieven Schoonjans 14 August 2014


In a recent – severe – judgement, the Court of Appeal of Ghent (18 March 2014) ruled that no interest withholding tax exemption can be claimed by lack of a properly dated certificate.

Under Belgian domestic tax law, interest payments in principle are subject to a 25% withholding tax.

However, based on the implementation of the Interest and Royalty Directive in Belgian tax law, a withholding tax exemption can be obtained, provided that certain conditions are met.

One of these conditions is that the debtor of interest is provided with a certificate, in which it is confirmed by the beneficiary of the interest that among others the participation condition is fulfilled (art. 117, §6bis, Royal Decree implementing the Belgian Income tax code).

Under domestic tax law, it is not explicitly mentioned when this certificate should be available.

In the case at hand, a certificate was available but the date on the certificate was a later date than the actual date of payment of interest.

The Court however referred to the Interest Royalty Directive in assessing on which date the certificate should be available and concluded that the certificate should be available at the latest on the date of payment of interest. In the case of a ‘late certificate’, no interest withholding tax exemption (or refund) can be claimed.

Some reflections:

  • Strict compliance with formalities becomes even more important in order not to jeopardise e.g. withholding tax exemptions. Up till now, the Belgian tax authorities have been very tolerant in this respect. It cannot be excluded that, following this recent court case, the approach of the Belgian tax authorities would become more severe.
  • It is not sure whether this Court decision would be adhered to by the Court of Cassation as the condition that the certificate should be available is not explicitly provided in Belgian domestic tax law. And the Court of Cassation is generally reluctant to accept that conditions are imposed if they  not explicitly laid down in the tax law.

For more information on the consequences of the Court case for your business, please do not hesitate to contact us.