Circular letter on the practical aspects of dispute resolution under tax treaties

On 7 March 2018, the Belgian tax administration published an extensive circular letter 2018/C/27 on the rules for the settlement of disputes under tax treaties. The circular letter mainly provides practical guidance on the interaction between, on the one hand, the national remedies and procedural rules, and on the other hand, the applicable treaty provisions (the map-procedure and the arbitration procedure).

After an introduction to the concepts of juridical and economical double taxation, the notion of effectively tax and the specifics of deviating treaties, the circular letter provides for the main procedural rules (format, competent authority, terms) views and positions of the tax administration during the administrative (unilateral and bilateral) and (in some cases ongoing) judicial phase of an dispute in respect of the competence of Belgium to tax an item of income as the residence or source state.

Noteworthy is that the Belgian tax administration:

  • acknowledges that the map and arbitration procedure are additional remedies and that taxpayer can pursue both remedies simultaneously;
  • believes that a map or arbitration procedures, which as a rule takes place solely between tax administrations, is not subject to judicial control or public verification (open government);
  • will only implement a solution if it is accepted by the taxpayer and the taxpayer has waived its rights under any pending or further administrative or judicial procedure;
  • acknowledges that it is bound by a judicial decision; and
  • will try to avoid situation of double non-taxation.

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