A Royal Decree of 21 December 2006 expands the withholding tax exemption under the EU Parent-Subsidiary Directive to all qualifying corporate parent companies that are tax resident in a country with which Belgium has concluded a tax treaty. This extension of the EU Parent-Subsidiary provides for a tax efficient exit.
The exemption is further subject to the same minimum threshold requirements as in case of an EU parent:
- in case of a foreign non-EU parent company, the company should have a form comparable to the forms listed in the annex to the Directive;
- the parent company must not be a dual resident;
- the parent company is subject to corporate income tax without the option to be exempt; and
- the parent company holds at least 10% (for dividends attributed or made payable as from 1 January 2009) of the share capital of the Belgian subsidiary during at least 12 months.
Effective 1 January 2017, the above-mentioned withholding tax exemption will not be available if it is established that the transactions are artificial legal acts entered into for the primary purpose of obtaining the benefit and not for valid business reasons that reflect economic reality.