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Belgium; Norway

1 January 2014

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Treaty between Belgium and Norway – Consequences of the introduction of a withholding tax in Norway on (public) pensions clarified

Since 2010, pension income related to services rendered in the public sector is in Norway subject to a withholding tax of 15%. This rate is reduced if at least 90% of the net (pension) income of a non-resident is subject to tax in Norway. In that case, the non-resident may opt for ordinary taxation in Norway instead of the withholding tax. This means that he is entitled to the full deductions and allowances, which results in a reduced tax rate.
Article 19, paragraph 2(a) of the Belgium - Norway Income and Capital Tax Treaty (1988) (as amended through 2009) states that: "Any pension paid by, or out of funds created by, a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State. Where such pension is not subject to tax in that State, the pension may be taxed in the other Contracting State".
Therefore, the Belgian tax authorities have issued a circular letter on 26 November 2011 (Ci.R.9.Noorwegen/602.544, AAFisc 48/2013) acknowledging the principle that Norway is authorized to tax governmental pension payments.
The circular letter clarifies that a Belgian resident, who wishes to benefit from a reduced rate, because at least 90% of his or her net pension income is subject to tax in Norway, should contact the Norwegian tax authorities.

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