Council of Ministers approves withholding tax and other measures

On 21 and 28 September 2018 the Council of Ministers approved two draft bills.

The first draft bill contains various provisions in respect of, among others, the registration, mortgage, and court fees, and inheritance tax.

The Council also provides a solution for the contradictory case law on the issue who the debtor is of the withholding tax in case the beneficiary is subject to the legal entities tax. In accordance with the latest decision of the Court of Cassation of 10 November 2017, the draft contains an interpretative clause, clarifying that the debtor is the beneficiary itself.

The second draft bill focuses on combating withholding tax evasion and avoidance and to facilitate the recovery of withholding tax in the event of an unjustified exemption or refund through three new measures:

  1. The beneficiary of the dividends, interests and royalties will become the debtor of the withholding tax when an unlawful exemption from withholding tax has been established or the withholding tax has been unduly refunded;
  2. The beneficiary must have the full ownership of the underlying securities on the day before the date of grant or payment of the dividends. This should prevent the possibility to recover the withholding tax on dividends twice;
  3. Belgian or foreign pension funds must have held the securities which produce dividends for at least 60 days in order to be eligible for a refund. A shorter period strengthens the suspicion that the securities are held in an artificial manner (i.e. its main purpose is the refund of the withholding tax).

The draft bills are submitted to the Council of State for advice.

Noteworthy is that, in the current election period,  the Minister of Finance stated that he is of the opinion that the current withholding tax rate of 30% is too high.

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