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Belgium-USA Double Tax Treaty

Belgium-USA Double Tax Treaty

Belgium and United States of America first signed a double taxation treaty in 1970 and the treaty was completely revised in 2007 based on the 2005 OECD model as well as on the most recent treaties signed by both parties with other countries, in particular the U.S. model tax treaty published in 2006.   In 2009, Belgium and United States of America signed two further documents relating to arbitration procedures referred to in the 2007 treaty, namely Memorandum of Understanding between the U.S. and Belgium and Arbitration Board Operating Guideline. For any U.S. foreign investor who wishes to open a company in Belgium, it is advisable to ascertain the tax implication in Belgium and his country. Our experts in company formation in Belgium will be able to advise you on the latest provisions on any international treaties for double taxation.

Avoidance of Double Taxation on Income and Capital in Belgium and USA

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

  • • concerning Belgium: individual and corporate income taxes, the income tax on legal entities, income tax on non-residents and the prepayments and the surcharges on these taxes and prepayments 
  • • concerning USA : the Federal income taxes imposed by the Internal Revenue Code and the Federal excise taxes imposed with respect to private foundations. 

Our experts offer a wide range of incorporation services, including company registration in Belgium and are ready to assist you in any taxation issues

Reduction of Withholding Tax in Belgium 

The current withholding tax rate applicable on dividends, interests and royalties distributed by a Belgian resident company to a nonresident is 27%, unless it is reduced under one of Belgium’s tax treaties.  

According to the Belgium – USA Double Tax Treaty, the withholding tax rate for dividends paid to a U.S. company by a Belgian company is reduced to 15% of the gross amount. A lower rate of 5% applies if the beneficial owner of the dividends is a US company that owns directly at least 10 percent of the voting stock of the Belgian company. A zero dividend withholding rate applies to dividends paid, if the U.S. company has owned 10 percent or more of the capital of the Belgian company for at least 12 months before the date on which the dividends are declared.  This 10 percent threshold is significantly lower than the threshold in other treaties concluded by the United States of America. For example, the U.S. treaties with Germany, the Netherlands, and Sweden all have an 80 percent threshold, while the treaty with Japan has a 50 percent threshold.  This makes Belgium an attractive place for investment. Our experts in Belgian company formation have experience in working with foreign investors and are committed to providing clients with quality services.

The withholding tax rate on interest paid to a U.S. company by a Belgian company is reduced to 15% of the gross amount.  However, tax is generally not required to be withheld on payments to a U.S. company for interest from Belgian banks, interest on registered government bonds and loans, and interest on registered corporate bonds. 

Regarding royalties, the rate of withholding tax on Belgian sourced royalties is in general levied at 15% on net amount.  

It should be noted that in all U.S. treaties, there is a saving clause which stipulates that the United States of America reserves the right to tax its residents and citizens notwithstanding any provisions of the convention to the contrary.  The U.S. taxation system is known for its complexity.  

We recommend that before making any decision based on Belgium – USA Double Tax Treaty, professional advice should be sought. Our consultants are experienced in handling taxation issues under various double tax treaties and are ready to assist you. For more information on the double tax treaties, please feel free to contact us.