Belgium: Dividend tax reclaim procedure for non-resident investment companies
The Belgian Tax Authorities have published Circular Ci.RH.233/623.711, clarifying the tax reclaim process related to Belgian dividends paid between 1 January 2007 and 31 December 2012 to non-resident investment companies.
This information is further to our Taxflash LT12021, dated 27 November 2012.
Note: Concerning payments processed as of 1 January 2013, it is expected that Belgian legislation will be amended.
Background
On 25 October 2012, the Court of Justice of the European Union (CJEU) ruled that the difference of income taxation treatment between Belgian resident investment companies and non-resident investment companies with no permanent establishment in Belgium constitutes a restriction on the freedom of establishment and the free movement of capital, as stipulated in the Treaty on the Functioning of the European Union (EU) and the Agreement on the European Economic Area (EEA).
The Belgian Tax Authorities have published Circular Ci.RH.233/623.711 in order to address the equal treatment of domestic and foreign Undertakings for Collective Investment in Transferable Securities (UCITS).
Eligibility of beneficial owners
Non-resident investment companies, whether established in the EEA or in non-EEA countries, that have received, as final beneficial owners, Belgian-sourced dividend payments made between 1 January 2007 and 31 December 2012 are eligible to reclaim the tax amounts withheld at source.
Eligible non-resident investment companies are entitled to a refund as long as they can prove that they have been unable to credit the Belgian withholding tax or to obtain a refund in their country of residence.
Such refunds can be either full (if no reclaim has been processed to obtain the treaty rate) or (if the beneficial owner has already benefited from the treaty rate) at a rate that represents the difference between the maximum tax rate and the treaty rate.
Investment companies established in the EEA
Investment companies established in the EEA must qualify as “regulated” investment companies and be compliant with Directive 85/611/CEE of 20 December 1985 and Directive 2009/65/CE of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to UCITS. The compliance of an investment company with the above-mentioned directives can be certified by the supervisory authority of the financial markets on which it depends.
Investment companies established in non-EEA countries
Given the difficulties in establishing that a non-EEA investment company is comparable to an EEA “regulated” investment company, the Belgian Tax Authorities will only accept a reclaim application when they can confirm, from a juridical point of view, that the non-EEA investment company fulfils the same criteria as an EEA investment company.
Actions to be taken
The Belgian Tax Authorities have not clearly confirmed the administrative procedures and practical aspects of the reclaim process and Clearstream Banking1 cannot currently intervene. As soon as such details have been confirmed, we will inform customers accordingly.
In the meantime, non-resident investment companies that want to apply to the Belgian Tax Authorities for a reclaim of withholding tax should contact their tax advisor for further assistance.
Further information
For further information, customers may contact the Clearstream Banking Tax Help Desk on:
| Luxembourg | Frankfurt | |
| Email: | tax@clearstream.com | tax@clearstream.com |
| Telephone: | +352-243-32835 | +49-(0) 69-2 11-1 3821 |
| Fax: | +352-243-632835 | +49-(0) 69-2 11-61 3821 |
or Clearstream Banking Customer Service or their Relationship Officer.
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1. Clearstream Banking refers collectively to Clearstream Banking AG, registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in the Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500 (CBF) and Clearstream Banking, société anonyme, registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Register of Commerce and Companies under number B-9248 (CBL).
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