Double taxation of foreign dividends – Published FAQ is still holding out on applying foreign tax credit


Last year PwC Legal already covered Belgian (tax) residents’ right to mitigate double taxation of foreign dividends, especially French-source dividends (see Newsflashes of 9 June and 15 December, 2020). Now we bring you the latest updates.

In summary, while certain double taxation treaties concluded by Belgium with some countries, in particular France, make it possible to mitigate double taxation of foreign-sourced dividends by means of a foreign tax credit (‘FTC’ ‘QFIE’ or ‘FBB’), the Belgian tax authorities have long refused to take this into account on the grounds that foreign tax credit had been abolished in Belgian domestic law.

In recent years, Belgian case-law has ruled in favour of taxpayers in the vast majority of cases, including the Court of Cassation, for the first time on 16 June 2017. According to the Court, Belgium is required to grant a minimum tax credit for dividends of French origin.

On 20 January 2021, the Minister of Finance responded to a parliamentary question on the application of the FTC stating that the tax authorities will comply with the recent judgement of the Court of Cassation (of 15 October 2020).

Yet, a new parliamentary question of 11 February 2021, answered on 16 March 2021 by the Minister of Finance and confirmed by a Circular (FAQ) 2021/C/49 of 28 May 2021 reshuffled the cards. The Circular acknowledges the precedence of the Tax Treaty over domestic legislation to apply the FTC to individuals. However, the FAQ seems to limit the scope of the positive case-law:

  • A taxpayer who, because of the definitive character of the withholding tax levied in Belgium on their foreign dividends, chooses not to include them in their tax return, cannot benefit from the application of the FTC.
  • The fact that the tax authorities comply with the decision of the Court of Cassation of 15 October 2020 does not give rise to a right to ex-officio tax relief. The only way to obtain an FTC is by submitting a tax claim.
  • Once these conditions are met, the FTC can be imputed for dividends, but also for interest earned on French bonds, funds or other bank accounts.
  • The extension of the administrative position to non-French sourced income from movable property is only possible if the tax treaty between that country or countries and Belgium is drafted in a manner strictly similar to the Belgian-French treaty.


As we expect that in most of the cases (i) the individual has not reported the dividends in their personal income tax return or, in case of reporting, (ii) the term to file a tax claim has lapsed, very few taxpayers will be able to apply for the FTC based on the current FAQ.

Indeed, the current position of the Minister and the tax authorities is that the allocation of the FTC can only be claimed by filing a tax claim, i.e. when a tax assessment notice is less than 6 months old, and only when the income from the movable property in question has been included in the Belgian tax return.

This new/clarified position is questionable in many respects. First of all because there are well-founded arguments which favour the idea of obtaining an FTC via ex-officio tax relief for the (French) movable income earned in 2017 and later. Second, because the tax authorities’ position regarding  income that was not included in the taxpayer’s Belgian tax return was rejected by the Court of Appeal of Ghent on 15 December 2020.

What’s next?

Although the responses of the Minister and his administration would seem to suggest the contrary, there are, in our opinion, strong arguments to defend Belgian taxpayers’ right to request the application of the FTC, either by submitting a tax claim if the 6-month period for doing so has not yet elapsed, or by submitting a reasoned request for ex-officio tax relief, regardless of whether the income from the movable property in question has been included in their Belgian tax return or not.

In future, in order to avoid such pitfalls, Belgian taxpayers who receive French-sourced income from movable property via a Belgian bank are advised to comply with the circular of 28 May 2021 and to report the amount (including the Belgian withholding tax of 30%) in their tax return.

Finally, it should be noted that the Belgian-French treaty has been renegotiated and once it enters into force Belgium will no longer be required to grant a tax credit on French-sourced income from movable property. The question of the application of the FTC will then no longer arise, at least for the Belgian-French treaty.

If you have any further questions, please do not hesitate to contact Christiaan Moeskops (PwC), Véronique De Brabanter (PwC Legal), Bart Van den Bussche (PwC) or your regular PwC Legal/PwC contact person