Under the agreements signed between Switzerland and the EU, Switzerland has full access to benefits similar to … This income is taxable at the normal CIT rate in Belgium (i.e. This means that if a company owns 25% or more shares in another company that pays dividends, no withholding tax or corporate tax has to be paid on the portion of the profit that goes to the owning company as a dividend. Corporate Tax on Dividend Income Received This page was last updated on 10 Apr 2019. Basically, the exclusion rules apply to the following: While this is a summary of the exclusion rules, numerous exceptions to these exclusion rules exist and need to be analysed on a case-by-case basis. As a result, the DRD will be denied whenever the dividends originate from legal acts or a whole of legal acts that are artificial (i.e. Foreign Dividend Tax Issues. Undistributed income of subsidiaries, whether or not they are foreign, are subject to Belgian income tax in the hands of the Belgian corporate shareholder if certain conditions are met (see Controlled foreign companies [CFCs] in the Group taxation section). If the interim dividend distributed is higher than the amount of the dividend subsequently decided by the shareholders' meeting for that financial year, the difference is considered as an advance on the dividend of the succeeding periods. Companies that distribute dividends who are associated with a legal act or a set of legal acts of which the tax administration has demonstrated that this act or set of acts is artificial and was set up with the main objective (or one of the main objectives) to claim the deduction on dividends (envisaged by the DRD law), to waive from the collection of WHTs on this type of income, or to claim any other advantage of Directive 2011/96/EU in another member state of the EU. When a treaty is not in force, the usual withholding tax on dividends can be 5% (or 0% in some cases) and the withholding tax in interest and royalties is 10%. We use cookies to enhance your site experience, analyze site performance and customize content and advertisements. This behooves a question whether such level of taxation is fair for the risk taker/wealth creator amongst the Indian resident, who is so very important for the well-being and growth of the society. Keeping these cookies enables us to improve our website. In most cases, this is a maximum rate of 15% of the gross dividend, but it can differ a bit from treaty to treaty. Yes, even if your foreign dividends have already been taxed abroad, they are to be reported and they will be taxed all over again in Belgium. People receive dividend allowance annually and pay tax on dividend income above their dividend allowance. If you do not inform your foreign bank or tax office abroad that you are a Belgian tax resident, the dividend income is normally subject to the standard ‘domestic rate’ in the source country. For the remainder of the 95% to be considered an exemption, the shareholding needs to be in a percentage of at least 10% of the share capital at the beginning of the calendar year (meaning that the … Offshore companies, which are companies receiving income (other than dividend income) that originates outside their country of tax residency and in these countries such income is subject to a separate taxation system that deviates substantially from the common taxation system. Companies incorporated in Belgium have the obligation to withhold the investment income tax rate of 30% from these dividends. This exemption allows taxpayers to reclaim the 30% WHT previously withheld on no more than €800.00 of Belgian dividend income. This means the total effective rate of tax for most companies is 29.58%. dividends and interest. This website uses cookies so that we can provide you with the best user experience possible. The tax payable is the same regardless of whether the shareholder chooses to be paid in cash or in shares (where the Bank offers this option). PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. The tax on bonds increased from 0.09 to 0.12%. The net dividend of €85.00 will then be reported and subject to a 30% tax in Belgium (85 – 30% = €59.50). Intermediary holding companies, which are companies (with the exception of investment companies) that redistribute dividend-received income, which on the basis of regulations mentioned under the items above would not qualify for the DRD for at least 90% of its amount in case of direct holding. Dividends received by French resident taxpayers are subject to a flat tax at the rate of 12.8%, plus the additional social security levy at the rate of 17.2%, i.e an overall taxation of 30%. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful. The taxation condition is based on seven ‘exclusion’ rules and certain exceptions to these rules. If tax is withheld at source on the gross dividend, the net amount (after the foreign WHT of – for example – 15% is withheld) must then be reported in Belgium in your resident tax return. Marketing cookies may be set by our advertising partners to collect information about your browsing habits. Under this rule, dividends received by the parent company will no longer be tax exempt whenever the distributed profit is tax deductible in the jurisdiction of the subsidiary (e.g. Yes, 5:1 debt-to-equity ratio for interest paid to tax-privileged recipients or to group companies (applicable as from July 1, 2012) and 1:1 ratio for interest paid to directors (individuals) or to shareholders (individuals). For a second interim dividend in the year, not earlier than 3 months after the first interim dividend. By demonstrating that you are a Belgian tax resident (e.g. Please enable Strictly Necessary Cookies first so that we can save your preferences! The gains … by submitting a tax residency certificate), you can invoke the DTT benefit and claim the lower ‘preferential rate’. A dividend is a payment made to a corporation’s shareholders from corporate after-tax profits. In Belgium there is a tax of 30% on dividends, known as "roerende voorheffing" (in Dutch) or "précompte mobilier" (in French). For foreign dividends, in most cases, no Belgian WHT was deducted at source. Companies having PEs that benefit globally from a taxation system notably more advantageous than the Belgian non-resident corporate taxation system. In most countries, such dividend payments are subject to dividend tax. The situation may be different if the shareholder has the choice between a cash or stock dividend. By continuing to browse our site (by scrolling or clicking), you agree to the use of these cookies. Finance, treasury, or investment companies (as defined by the tax legislation) that, although are subject in their country of tax residency to a corporate tax similar to that of Belgium as mentioned in the item above, nevertheless benefit from a tax regime that deviates from common law. The tax rate amounts to 25% if either the subject-to-tax condition, the one-year holding period, or the participation condition is not met. Further, a general anti-abuse rule (GAAR) has been introduced into Belgian legislation. Of the countries that do levy a dividend tax, Slovakia has the lowest tax rate, at 7 percent. In this newsletter we clarify which companies qualify for a refund and how they should proceed. In Brazil, dividends are tax-exempt. Dividend income earned by a private individual is normally subject to a 30% domestic tax rate. The DRD is subject to a (i) minimum participation condition and (ii) taxation condition. According to a press release from the Belgian Ministry of Finance issued last June, withholding tax (WHT) on dividends paid by Belgian REITs active in ‘healthcare property’ will benefit again from the reduced rate of 15% instead of the regular 27% applicable to most dividends and … On 1 January 2016, the stock market tax was 0.27%, and on 1 January 2018, the tax on shares increased from 0.27 to 0.35%. Belgium introduced a new limitation on deductible interest at the highest of EUR 3 million or 30% of EBITDA. For any amount withheld above this 15%, the beneficiary will need to ask for a tax refund in the source country (the aforementioned difference between the ‘domestic rate’ and the ‘preferential rate’). Euronav dividends are subject to withholding tax. A Belgian real estate investment trust or foreign regulated investment trust that benefits from a substantially more advantageous tax regime than the Belgian tax regime. 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