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Belgium – UK Double Tax Treaty

Belgium – UK Double Tax Treaty

Belgium has a broad tax treaty network, under which relief from double taxation on different types of income earned in Belgium could be sought by foreign investors. Belgium and United Kingdom of Great Britain and Northern Ireland (UK) first signed a double taxation treaty in 1987. On December 24, 2012, a protocol entered into force amending the Belgium-UK double tax treaty. Our experts in company registration in Belgium offer a wide range of services to foreign investors and are able to guide you through different international tax treaties for the avoidance of double taxation.

Avoidance of double taxation in Belgium and UK

According to the Belgium – UK Double Tax Treatydouble taxation can be avoided:

• in Belgium for individual and corporate income taxes, the income tax on legal entities and income tax on non-residents, including the prepayments and the surcharges on these taxes and prepayments.

• in UK for income tax, corporation tax, capital gains tax and the petroleum revenue tax.

Our experts offer high quality services for every business need, including company formation in Belgium and tax issues. 

Reduction and exemption of withholding tax in Belgium

Under Belgian law, dividend and interests distributed by a Belgian resident company to a nonresident are generally subject to a 27% withholding tax.  With Belgium – UK Double Tax Treaty, withholding tax for these items of income may either be reduced or exempted. 

According to the Belgium – UK Double Tax Treaty, the general maximum withholding tax rate on dividends paid by a Belgium company is 10% and the withholding tax could be exempted if the UK beneficial owner of the dividends is:

• a company holding at least 10% of the shares capital of the Belgian company paying the dividends for a period of at least 12 months; or

• a pension regime.

Dividends paid by certain investment vehicles may be subject to a maximum dividend withholding tax rate of 15%.

Under the treaty, interest paid to a UK company by a Belgian company is subject to a maximum interest withholding tax rate of 10% but withholding tax exemption is available for the following types of interest:

• Interest paid under a loan of any nature granted by a company to another company;

• Interest paid to a pension regime;

• Interest paid to UK government, one of its political subdivisions or local authorities or to a public entity.

To claim exemption from withholding tax on interest and dividend income paid to a pension regime, the applicant must show that the money is paid to UK or Belgian qualifying pension schemes or other pension funds whose units are exclusively held by qualifying pension schemes. A Belgian qualifying pension scheme is an entity organized under the Belgian law which is regulated by the Belgian Financial Services and Markets Authority. A qualifying UK pension scheme needs to be registered under Part 4 of the Finance Act 2004. 

Unlike other treaties that Belgium has with other EU countries, claims made under the Belgium- UK double tax treaty for withholding tax reduction and exemption do not require the Belgian and the UK company to follow a certain legal form.  These latest changes to the tax treaty help remove some major tax burdens and administrative hassle from foreign investors and thus making Belgium a more attractive place for investment.  Our experts specialize in taxation matters and they are ready to assist foreign investors to open a Belgian company.

Given the complexity of international tax treaties, we recommend that professional help should be sought prior to taking any action under these treaties.  For more information on any international treaties and other Belgian company formation matters, please feel free to contact our team.