11 May 2018
The new income tax treaty between Belgium and Norway entered into force on 26 April 2018. The treaty, signed 23 April 2014, replaces the 1988 tax treaty between the two countries.
The treaty covers Belgian individual income tax, Corporate income tax, Income tax on legal entities, and Income tax on non-residents, and covers the following Norwegian taxes:
The treaty provides that a permanent establishment will be deemed constituted when an enterprise from one Contracting State performs services in the other State:
The following capital gains derived by a resident of one Contracting State may be taxed by the other State:
Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.
Article 20 (Offshore Activities) includes the provision that a permanent establishment will be deemed constituted if an enterprise resident in one Contracting State carries on offshore activities in the other State in connection with the exploration or exploitation of the seabed or subsoil or their natural resources situated in that other State, if such activities continue for a period or periods aggregating more than 30 days in any 12-month period. In determining whether the 30-day period is exceeded, substantially similar activities of an associated enterprise are considered.
Norway applies the credit method for the elimination of double taxation, while Belgium generally applies the exemption method. However, subject to the provisions of Belgian law, Belgium will apply the credit method for interest and royalty income and in certain cases for dividend income.
The beneficial provisions of Articles 10 (Dividends), 11 (Interest), 12 (Royalties), and 20 (Other Income) will not apply if the main purpose or one of the main purposes of any person concerned with the creation or assignment of the shares, debt-claims, or other rights in respect of which the income is paid was to take advantage of those Articles by means of that creation or assignment. The limitation is included in each of those Articles.
In addition, the final protocol signed with the treaty includes the provision that the benefits of the treaty will not apply for income paid or derived in connection with an artificial arrangement.
The new treaty applies from 1 January 2019. The 1988 treaty between the two countries as amended by the 2009 protocol ceases to be effective from the date the new treaty is effective.
We’re here to answer any questions you have about the Orbitax products and services.
We’re committed to providing high value, low cost tax research and management solutions.
Our Twitter account is where you can find latest information, news updates, offers and lots more.