On 10 and 11 March 2016, the final Royal Decrees regarding the revised list of tax havens that apply for the so-called dividends received deduction (‘DRD’) and the reporting obligation for payments (to tax havens) have been published in the Belgian Official Gazette.
The Royal Decrees did not make any changes to the lists included in the two draft Royal Decrees that were published on 27 November 2015. In this respect we can refer to our previous communication.
1. Dividends received deduction (Royal Decree of 10 March 2016)
In the context of the DRD system, Belgian companies or branches can exempt 95% of dividends received from qualifying shareholdings for Belgian Corporate Income tax (‘CIT’) purposes, if certain conditions are met. Amongst others dividends do not qualify if received from a company that:
is not subject to Belgian CIT or a similar foreign tax (first category); or
is established in a country of which the common tax system is substantially more advantageous than in Belgium (second category).
In this respect, Belgian tax law provides a list of countries that are deemed to have a substantially more advantageous common tax system (second category) because the statutory nominal or effective tax rate is lower than 15%. Nevertheless, it is possible for the tax payer to provide counter evidence that a country is not a tax haven.
Driven by the passed changes in the tax environment of listed countries, there are currently 31 countries on the so-called black list, instead of 51 countries (for a detailed overview of the list, we refer to the text published in the Belgian Official Gazette).
2. Reporting obligation for payments (Royal Decree of 11 March 2016)
Companies subject to Belgian corporate income tax (residents/non-residents) have to report all (direct and indirect) payments in excess of EUR 100.000 made to recipients established in countries:
with no or low taxation, i.e. the nominal standard tax rate is lower than 10% (Belgian list); or
that, during the whole taxable period in which the relevant payment has been made, do not substantially or effectively apply the OECD exchange of information standard (OECD list).
Based on the final Royal Decree, the Marshall Islands, Uzbekistan, Pitcairn Islands, Somalia and Turkmenistan were added to the list and Andorra, Maldives and Moldova were deleted. As a result, there are currently 30 countries on the list. For details of the countries in scope, we refer to the text published in the Belgian Official Gazette.
The above-mentioned Royal Decrees are applicable to dividends distributed/attributed and all payments made to recipients as from 1 January 2016. For companies that end their accounting period before 1 April 2016, an exception is made whereby the old list is still applicable.