20 May 2014
On 23 April 2014, officials from Belgium and Norway signed a new income tax treaty. Once in force and effect, the new treaty will replace the current treaty signed in April 1988 and its amending protocol signed in September 2009.
The treaty applies to the following Belgian taxes:
The treaty applies to the following Norwegian taxes:
The treaty varies from the current OECD model and the current treaty between the two countries with the inclusion of provisions for a service permanent establishment (PE).
In general, a service PE will be deemed constituted when an enterprise from one country furnishes services in the other country through one or more individuals present in that other country for an aggregate period of 183 days or more in a 12 month period when for the same or connected project, or when 50% or more of the enterprise's gross revenue from business activities in such period(s) is derived from those services.
Under the treaty, Norway uses the credit method to eliminate double taxation while Belgium generally uses the exemption method.
A protocol to the treaty, signed the same date as the treaty, includes a limitation on benefits provision whereby the benefits of the treaty will not be applicable for income paid or derived in connection with an artificial arrangement.
The treaty will enter into force once the ratification instruments are exchanged and apply from 1 January of the year following the date of its entry into force. The 1988 treaty and 2009 protocol will terminate and cease to be effective from the date the new treaty goes into effect.
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