background image

Belgian Legislation Published including Repeal of Patent Box Regime and New Condition for Reduced Dividends Tax Rate — Orbitax Tax News & Alerts

On 11 August 2016, Belgium published the recently approved bill on various urgent tax measures in the Official Gazette. In addition to the repeal of the country's patent box regime effective 1 Jul 2016 ({News-2016-07-21/A/2- previous coverage}), the bill also introduces a new condition for the 1.6995% withholding tax rate on dividends paid to qualifying non-resident companies. For the reduced rate to apply, the new condition requires that a non-resident company be subject to tax.

The reduced rate is a result of a 2012 decision of the Court of Justice of the EU that Belgium infringed the free movement of capital by providing a participation exemption (95%) for residents that have a participation in company of less than 10% with a value of at least EUR 2.5 million, but not for non-residents ({News-2016-01-15/A/6- previous coverage}).

The new subject-to-tax condition applies from 11 August 2016.