background image

Belgian court requests preliminary ruling from ECJ on limitation of waiver of withholding tax to interest allocated to resident companies — Orbitax Tax News & Alerts

On 13 June 2007, the Court of Appeal of Liège (Cour d'appel de Liège) requested a preliminary ruling from the European Court of Justice (ECJ) on the compatibility with EC law of the Belgian tax provisions that limit the waiver of withholding tax exclusively to interest allocated to resident companies (Case C-282/07, Belgian State v. Truck Center SA). Specifically, the Court referred the following question to the ECJ:

"Do Art. 105(iii)(b) and Art. 107(2)(ix) of the Royal Decree implementing the Income Tax Code 1992 adopted pursuant to Art. 266 of the Income Tax Code 1992, read in conjunction with Art. 23 of the Belgium-Luxembourg Tax Treaty, infringe Art. 73 (now Art. 56) of the Treaty establishing the European Community, providing for free movement of capital, in that, by limiting the waiver in respect of withholding tax provided for in Art. 107(2)(ix) exclusively to interest allocated to resident companies, they have, in particular, first, the effect of discouraging resident companies from borrowing capital from companies established in another Member State and, second, they constitute for companies established in another Member State an obstacle to investing capital, by way of loans, in companies having their seat in Belgium?"