belgium tax guide 2011

8/2/2019 Belgium Tax Guide 2011

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BelgiumTax Guide

2011


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PKF Worldwide Tax Guide 2011 I

Foreword

foreword

For any business moving into new markets, a key deciding actor will be the targetcountrys tax regime. What is the corporate tax rate? Are there any incentives or

overseas businesses? Are there double tax treaties in place? How will oreign sourceincome be taxed?

Since 1994, the PKF network o independent member rms, administered by PKFInternational Limited, has produced the PKF Worldwide Tax Guide (WWTG) to provideinternational businesses with the answers to these key tax questions. This handyreerence guide provides clients and proessional practitioners with comprehensivetax and business inormation or 100 countries throughout the world.

As you will appreciate, the production o the WWTG is a huge team eort and I would

like to thank all the member rms o the PKF network who gave up their time tocontribute the vital inormation on their countrys taxes that orms the heart o thispublication. I would also like thank Richard Jones, PKF (UK) LLP, Kevin Reilly, PKF WittMares, and Rachel Yeo, PKF Melbourne or co-ordinating and checking the entriesrom within their regions.

The WWTG continues to expand refecting both the growth o the PKF network andthe strength o the tax capability oered by member rms throughout the world.

I hope that you nd that the combination o reerence to the WWTG plus assistancerom your local PKF member rm will provide you with the advice you need to makethe right decisions or your international business.

Jon HillsPKF (UK) LLPChairman, International Tax Committee o the PKF International network


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PKF Worldwide Tax Guide 2011II

important disclaimer

This publication should not be regarded as oering a complete explanation o thetaxation matters that are contained within this publication.

This publication has been sold or distributed on the express terms and understandingthat the publishers and the authors are not responsible or the results o any actionswhich are undertaken on the basis o the inormation which is contained within thispublication, nor or any error in, or omission rom, this publication.

The publishers and the authors expressly disclaim all and any liability and responsibilityto any person, entity or corporation who acts or ails to act as a consequence o anyreliance upon the whole or any part o the contents o this publication.

Accordingly no person, entity or corporation should act or rely upon any matter orinormation as contained or implied within this publication without rst obtainingadvice rom an appropriately qualied proessional person or rm o advisors, andensuring that such advice specically relates to their particular circumstances.

PKF International is a network o legally independent member rms administered byPKF International Limited (PKFI). Neither PKFI nor the member rms o the networkgenerally accept any responsibility or liability or the actions or inactions on the parto any individual member rm or rms.

Disclaimer


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PKF Worldwide Tax Guide 2011 III

Preface

preface

The PKF Worldwide Tax Guide 2011 (WWTG) has been prepared to provide anoverview o the taxation and business regulation regimes o 100 o the worlds most

signicant trading countries. In compiling this publication, member rms o thePKF network have sought to base their summaries on inormation current as o 30September 2010, while also noting imminent changes where necessary.

On a country-by-country basis, each summary addresses the major taxes applicableto business; how taxable income is determined; sundry other related taxationand business issues; and the countrys personal tax regime. The nal section oeach country summary sets out the Double Tax Treaty and Non-Treaty rates o taxwithholding relating to the payment o dividends, interest, royalties and other relatedpayments.

While the WWTG should not to be regarded as oering a complete explanation othe taxation issues in each country, we hope readers will use the publication as theirrst point o reerence and then use the services o their local PKF member rm toprovide specic inormation and advice.

In addition to the printed version o the WWTG, individual country taxation guides areavailable in PDF ormat which can be downloaded rom the PKF website at www.pk.com

Finally, PKF International Limited gladly welcomes any comments or thoughts readersmay wish to make in order to improve this publication or their needs. Please contactKevin F Reilly, PKF Witt Mares, 10304 Eaton Place, Suite 440, Fairax, Virginia 22030,USA by email to [email protected]

PKF INTERNATIONAL LIMITEDMARCH 2011

PKF INTERNATIONAL LIMITEDALL RIGHTS RESERVEDUSE APPROVED WITH ATTRIBUTION


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PKF Worldwide Tax Guide 2011IV

about pKf international limited

PKF International Limited (PKFI) administers a network o legally independent rms.The PKF network is the 10th largest global accountancy network with over 245

legally independent member and correspondent rms which have a combinedannual turnover o $2.4 billion. Located in 125 countries, the member rms o thePKF network share a commitment to providing clients with high quality, partner-ledservices tailored to meet each clients own specic requirements.

The membership base o the PKF network has grown steadily since it was ormedin 1969. Added to the sustained growth in the number o PKF member rms, thissolidity has provided the oundations or the global sharing o expertise, experienceand skills and the development o services that meet the evolving needs o all typeso client, rom the individual to the multi-national corporation.

Services provided by member rms include:

Assurance & AdvisoryInsolvency Corporate & PersonalFinancial PlanningTaxationCorporate FinanceForensic Accounting

Management ConsultancyHotel ConsultancyIT Consultancy

PKF member rms are organised into ve geographical regions covering Arica; LatinAmerica; Asia Pacic; Europe, the Middle East & India (EMEI); and North America &the Caribbean. Each region elects representatives to the board o PKF InternationalLimited, which administers the network. While the member rms remain separate andindependent, international tax, corporate nance, proessional standards, audit, hotelconsultancy and business development committees also work together to improvequality standards, develop initiatives and share knowledge across the network.

Please visit .pkf.com or more inormation.

Introduction


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PKF Worldwide Tax Guide 2011 V

S

tructure

structure of country descriptions

a. taXes payable

FEDERAL TAXES AND LEVIESCOMPANY TAXCAPITAL GAINS TAXBRANCH PROFITS TAXSALES TAX/VALUE ADDED TAXFRINGE BENEFITS TAXLOCAL TAXESOTHER TAXES

b. determination of taXable income

CAPITAL ALLOWANCESDEPRECIATIONSTOCK/INVENTORYCAPITAL GAINS AND LOSSESDIVIDENDSINTEREST DEDUCTIONSLOSSESFOREIGN SOURCED INCOME

INCENTIVES

c. foreiGn taX relief

d. corporate Groups

e. related party transactions

f. witHHoldinG taX

G. eXcHanGe control

H. personal taX

i. treaty and non-treaty witHHoldinG taX rates


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PKF Worldwide Tax Guide 2011VI

AAlgeria . . . . . . . . . . . . . . . . . 12 noonAngola . . . . . . . . . . . . . . . . . . . .1 pmArgentina . . . . . . . . . . . . . . . . . .9 amAustralia -

Melbourne . . . . . . . . . . . . . 10 pmSydney . . . . . . . . . . . . . . .10 pmAdelaide . . . . . . . . . . . . 9.30 pmPerth . . . . . . . . . . . . . . . . . .8 pm

Austria . . . . . . . . . . . . . . . . . . . .1 pm

BBahamas . . . . . . . . . . . . . . . . . . .7 amBahrain . . . . . . . . . . . . . . . . . . . .3 pmBelgium. . . . . . . . . . . . . . . . . . . .1 pmBelize . . . . . . . . . . . . . . . . . . . . .6 amBermuda . . . . . . . . . . . . . . . . . . .8 amBrazil. . . . . . . . . . . . . . . . . . . . . .7 am

British Virgin Islands . . . . . . . . . . .7 am

CCanada -

Toronto . . . . . . . . . . . . . . . .7 amWinnipeg . . . . . . . . . . . . . . . 6 amCalgary . . . . . . . . . . . . . . . .5 amVancouver . . . . . . . . . . . . . . 4 am

Cayman Islands . . . . . . . . . . . . . .7 amChile . . . . . . . . . . . . . . . . . . . . . .8 amChina - Beijing . . . . . . . . . . . . . .10 pmColombia . . . . . . . . . . . . . . . . . . .7 amCroatia . . . . . . . . . . . . . . . . . . . .1 pmCyprus . . . . . . . . . . . . . . . . . . . .2 pmCzech Republic . . . . . . . . . . . . . . 1 pm

DDenmark . . . . . . . . . . . . . . . . . . .1 pmDominican Republic . . . . . . . . . . .7 am

EEcuador . . . . . . . . . . . . . . . . . . . .7 amEgypt . . . . . . . . . . . . . . . . . . . . .2 pmEl Salvador . . . . . . . . . . . . . . . . . 6 amEstonia . . . . . . . . . . . . . . . . . . . .2 pm

FFiji . . . . . . . . . . . . . . . . .12 midnightFinland . . . . . . . . . . . . . . . . . . . .2 pmFrance. . . . . . . . . . . . . . . . . . . . .1 pm

GGambia (The) . . . . . . . . . . . . . 12 noonGermany . . . . . . . . . . . . . . . . . . .1 pmGhana . . . . . . . . . . . . . . . . . . 12 noonGreece . . . . . . . . . . . . . . . . . . . .2 pmGrenada . . . . . . . . . . . . . . . . . . .8 amGuatemala . . . . . . . . . . . . . . . . . . 6 am

Guernsey . . . . . . . . . . . . . . . . 12 noonGuyana . . . . . . . . . . . . . . . . . . . .8 am

HHong Kong . . . . . . . . . . . . . . . . .8 pmHungary . . . . . . . . . . . . . . . . . . .1 pm

IIndia . . . . . . . . . . . . . . . . . . . 5.30 pm

Indonesia. . . . . . . . . . . . . . . . . . .7 pmIreland . . . . . . . . . . . . . . . . . . 12 noon

Isle o Man . . . . . . . . . . . . . . 12 noonItaly . . . . . . . . . . . . . . . . . . . . . .1 pm

JJamaica . . . . . . . . . . . . . . . . . . .7 amJapan . . . . . . . . . . . . . . . . . . . . .9 pmJersey . . . . . . . . . . . . . . . . . . 12 noonJordan . . . . . . . . . . . . . . . . . . . .2 pm

KKazakhstan . . . . . . . . . . . . . . . . .5 pmKenya . . . . . . . . . . . . . . . . . . . . .3 pmKorea . . . . . . . . . . . . . . . . . . . . .9 pmKuwait . . . . . . . . . . . . . . . . . . . . .3 pm

LLatvia . . . . . . . . . . . . . . . . . . . . .2 pmLebanon . . . . . . . . . . . . . . . . . . .2 pm

Liberia . . . . . . . . . . . . . . . . . . 12 noonLibya . . . . . . . . . . . . . . . . . . . . . .2 pmLuxembourg . . . . . . . . . . . . . . . .1 pm

MMalaysia . . . . . . . . . . . . . . . . . . .8 pmMalta . . . . . . . . . . . . . . . . . . . . .1 pmMauritius . . . . . . . . . . . . . . . . . . .4 pmMexico . . . . . . . . . . . . . . . . . . . .6 amMorocco . . . . . . . . . . . . . . . . 12 noon

NNamibia. . . . . . . . . . . . . . . . . . . .2 pmNetherlands (The). . . . . . . . . . . . .1 pmNew Zealand . . . . . . . . . . .12 midnightNigeria . . . . . . . . . . . . . . . . . . . .1 pmNorway . . . . . . . . . . . . . . . . . . . .1 pm

O

Oman . . . . . . . . . . . . . . . . . . . . .4 pm

PPanama. . . . . . . . . . . . . . . . . . . .7 amPapua New Guinea. . . . . . . . . . .10 pmPhilippines . . . . . . . . . . . . . . . . . .8 pmPoland. . . . . . . . . . . . . . . . . . . . .1 pmPortugal . . . . . . . . . . . . . . . . . . .1 pmPuerto Rico . . . . . . . . . . . . . . . . . 8 am

QQatar. . . . . . . . . . . . . . . . . . . . . .8 am

RRomania . . . . . . . . . . . . . . . . . . .2 pmRussia -

Moscow/St Petersburg . . . . .3 pm

S

Serbia . . . . . . . . . . . . . . . . . . . . .1 pmSierra Leone . . . . . . . . . . . . . 12 noonSingapore . . . . . . . . . . . . . . . . . .7 pmSlovak Republic . . . . . . . . . . . . . .1 pmSlovenia . . . . . . . . . . . . . . . . . . .1 pmSouth Arica . . . . . . . . . . . . . . . . .2 pmSpain . . . . . . . . . . . . . . . . . . . . .1 pmSweden . . . . . . . . . . . . . . . . . . . .1 pmSwitzerland . . . . . . . . . . . . . . . . .1 pm

international time Zones

AT 12 NOON, GREENwICH MEAN TIME, THE STANDARD TIMEELSEwHERE IS:

TimeZones


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PKF Worldwide Tax Guide 2011 VII

TimeZones

TTaiwan . . . . . . . . . . . . . . . . . . . .8 pmThailand . . . . . . . . . . . . . . . . . . .7 pmTunisia . . . . . . . . . . . . . . . . . 12 noon

Turkey . . . . . . . . . . . . . . . . . . . . .2 pmTurks and Caicos Islands . . . . . . .7 am

UUganda . . . . . . . . . . . . . . . . . . . .2 pmUnited Arab Emirates . . . . . . . . . .4 pmUnited Kingdom . . . . . . .(GMT) 12 noonUnited States o America -

New York City . . . . . . . . . . . .7 amWashington, D.C. . . . . . . . . .7 am

Chicago . . . . . . . . . . . . . . . . 6 amHouston . . . . . . . . . . . . . . . . 6 amDenver . . . . . . . . . . . . . . . .5 amLos Angeles . . . . . . . . . . . . . 4 amSan Francisco . . . . . . . . . . .4 am

Uruguay . . . . . . . . . . . . . . . . . . .9 am

VVenezuela . . . . . . . . . . . . . . . . . . 8 am

Vietnam . . . . . . . . . . . . . . . . . . . .7 pm


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PKF Worldwide Tax Guide 2011 1

belGium

Currency: Euro Dial Code To: 32 Dial Code Out: 00(EUR)

Member Firm:City: Name: Contact Inormation:Antwerpen Marc Bastenie 3 235 66 66

[email protected]

Brussels Ria Verheyen 2 242 11 [email protected]

Hasselt Paul De Weerdt 1 122 72 45

[email protected]

Knokke Guy Flamand 5 063 11 [email protected]

a. taXes payable

FEDERAL TAxES AND LEVIESCOMPANy TAx

A resident company is liable to corporation tax on its worldwide prots. A companyis resident in Belgium i its registered oce or centre o management is situated inBelgium. The place o incorporation is irrelevant.

The basic rate o corporation tax is 33%, increased by a 3% surcharge (33.99%).

Reduced progressive rates apply only i the ollowing conditions are satised: thecompanydoesnotdistributedividendsduringtheyearthatexceed13%of

the paid-up capital at the start o the year theprotsofthecompanydonotexceedEUR322,500 thecompanypaysanannualtaxableincomeofatleastEUR36,000toatleast

one director thecompanydoesnotbelongtoagroupofcompanieswithanapproved

Belgian co-ordination centre thecompanyisnotaholdingcompany thecompanyisnot50%ormoreownedbyoneormorecompanies.

These reduced rates are as ollows:

Band of taable profit EUR Rate applicable to band (%)0 25,000 24.25 + 3% surcharge (24.98%)

25,001 90,000 31 + 3% surcharge (31.93%)

90,001 322,500 34.50 + 3% surcharge (35.54%)

The tax rate is the same whether prots are distributed or retained.

A non-resident company is liable to the non-residents tax or to the various withholdingtaxes levied on Belgian-sourced income or to both, instead o corporation tax. I a non-resident company has a permanent establishment in Belgium, it is liable to non-residentstax on prots attributable to the permanent establishment, plus any other business incomearising in Belgium and income rom Belgian real estate. Its Belgian-sourced dividends,interest and royalties, i any, will normally be subject to a nal withholding tax.

The rate o non-residents tax is 33% plus the 3% surcharge. Reduced rates applyunder certain conditions.

CAPITAL GAINS TAxCapital gains are normally treated as ordinary business income and are taxable at thenormal corporation tax rates. However, there are exceptions such as gains on sharesqualiying or the participation exemption.

BRANCH PROFITS TAxThere is no separate branch prots tax in Belgium. Trading prots and capital gains othe Belgian branch o a oreign company are calculated and taxed on the same basisas those o a Belgian resident company.

SALES TAx/VALUE ADDED TAx (VAT)VAT has to be charged by registered suppliers o goods and services in Belgium

Belgium


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PKF Worldwide Tax Guide 20112

unless those supplies are zero-rated, exempt or outside the scope o VAT. Ingeneral, the rate is 21%. For certain supplies a rate o 6% or 12% is applicable.

LOCAL TAxES

Several local taxes o varying rates apply or advertising, machinery, unimprovedreal estate, oce urniture, producing copies, and enterprises that pollute theenvironment. Unlike the individual income tax, there is no additional local tax as asurcharge on company income taxes.

OTHER TAxESREGISTRATION DUTyCertain legal transactions are subject to registration duties. Transactions that aresubject to proportional duties include sales o real estate situated in Belgium. Aregistration duty o 12.5% (10% in the Flemish Region) applies to the price or market

value o the real estate.

REAL ESTATE TAxOwners o real estate located in Belgium pay real estate taxes on the deemed rental valueo their property. The applicable rate depends on the location and use o the property.

b. determination of taXable income

The prot disclosed by a nancial statement is adjusted or disallowable expenditure,

exempt prots, special deductions and losses carried orward to arrive at taxableprot. The most important adjustments are described below.Investment allowance

Companies may claim an investment deduction amounting to a certain basicpercentage o the acquisition or investment value o certain xed assets.

For assessment year 2011, the ollowing rates apply: withrespecttoenergy-savinginvestments,investmentsinenvironmental

research and development and patents: 13.5% withrespecttoinvestmentsinsafetymeasuresbySMEs:20.5% withrespecttoinvestmentscontributingtowardsthere-utilisationofthe

packaging o beverages and industrial products: 3%.

I no, or insucient, taxable prot is realised in the year in which the company madethe investment, the allowable deduction can be carried orward indenitely.

DEPRECIATIONGenerally, all assets, tangible and intangible, new and used, owned by the company

or the purposes o its business, and whose value diminishes with time, aredepreciable. The straight-line depreciation method and the declining-balance methodare equally widely used. The declining-balance rate may not exceed twice thestraight-line rate. Also, or tax purposes, the declining-balance rate may not exceed40% o the investment value.

Declining-balance rate does not apply to: xedassetswhicharerentedtothirdparties motorcars,carsfordoubleuseandmini-vans,excepttaxis.

Depreciation periods and rates are normally set by agreement between the taxpayerand the tax authorities. However, or some assets, rates are set by administrativeinstructions (e.g. commercial buildings 3%, industrial buildings 5%, machinery andequipment 10% or 33% depending on the type).

STOCK INVENTORyStocks should be valued at the lower o acquisition cost or year-end market value.The acceptable methods o determining acquisition cost are actual cost, FIFO, LIFOand weighted average. The Revenue administration requires that the method chosen

is justied and applied consistently.

CAPITAL GAINS AND LOSSESCapital gains are treated as ordinary business income taxable at normal corporationtax rates. However, there are a ew exceptions: undercertainconditions,rolloverreliefisgrantedforgainsonxedassetsheld

or business purposes or more than ve years unrealisedgainsareexemptprovidedtheyarecreditedtoaspecicnon-

distributable reserve

realisedcapitalgainsonsharesareexemptfromtaxifdividendsonthesharesqualiy or the participation exemption.

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Capital losses are tax-deductible i they relate to xed assets used or business purposes.Unrealised capital losses on shares (booked devaluations) are not tax-deductible.

Realised capital losses on shares are generally not deductible. Capital losses realised on

the liquidation o a company are deductible up to the value o the capital actually paid-up.

DIVIDENDSDividends received by a company with a participation o at least 10% or aninvestment o at least EUR 2.5 million in the distributing company are 95%deductible rom the scal prots o the recipient i the shares have been held or anuninterrupted period o at least one year. For example, all dividends are rst includedin taxable income and then 95% o eligible dividends are deducted out again. Wherethe deduction exceeds realised prots, the unused portion can be carried orward.The remaining 5% is taxable at normal corporation tax rates as part o the overall

taxable prots o the company.

The 95% deduction is not available where the prots o the payer are subject to atax regime which is substantially more advantageous than the Belgian tax regime.This will be deemed to be the case i the eective tax rate suered by the companymaking the distribution is less than 15%. However, this criterion does not apply tocompanies established in the European Union.

INTEREST DEDUCTIONS

Interest on capital borrowed or business purposes is normally deductible. However,tax deduction will be disallowed to the extent that the interest rate exceeds themarket rate (taking into account the specic circumstances o the loan). Thisrestriction does not apply to interest paid to a Belgian bank or to another nancialinstitution nor to interest on publicly issued bonds. Moreover, a re-qualication rominterest into dividend may occur under certain conditions. A 1:1 debt/equity ratioapplies to loans granted by individual directors and shareholders to the company.

Interest paid to related non-resident persons or to residents in countries with aavourable tax regime may be disallowed, as described in the section on RelatedParty Transactions.

The total interest paid by a company to another company, where the unds are usedto make the loan benet directly or indirectly rom a special tax regime in the handso the lender, will constitute a non-deductible expense to the extent that the total loanexceeds seven times the sum o the paid-up capital and the taxed reserves.

NOTIONAL INTEREST DEDUCTION (NID)The notional interest deduction regime provides a tax deduction calculated as a

percentage o the qualiying equity o a Belgian company or branch. This qualiyingequity is multiplied by the monthly average interest rate or long-term Belgiangovernment bonds over the calendar year prior to the year or which the deductionis claimed. The deduction is granted annually and can be used to set o operationalor nancial income o any kind. Any excess amount o notional interest deduction isavailable or carry-orward (seven years).

For assessment year 2011, the percentage is 3.8% or large companies and 4.3%or small and medium-sized enterprises. For assessment year 2012 the percentagesremain the same.

PATENT INCOME DEDUCTION (PID)The patent income deduction regime provides a tax exemption o 80% or earnedpatent income. Consequently, only 20% o the patent income is taxable at the normalcorporate tax rate o 33.99%.

Although some neighbouring countries also have some incentives or intellectualproperty, Belgium has a avourable regime because: Patentincomerelatestoincomefromself-developedpatentsoradditional

protective certicates and patents or certicates acquired or licensed Thereisnocapontheamountofdeductionthatcanbeclaimed Adeemeddeductionofprotsappliesforpatentsthatareusedinproduction Theregimeisapplicabletopatentincomereceivedfromanyrelatedcompany

(inter-company transaction).

LOSSESLosses can be carried orward indenitely. However, this rule will no longer apply ithere is a change in the control o a company which cannot be justied by nancial

or economic reasons other than the recapture o losses.Losses cannot be carried back.

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Previous and current losses may not be set o against income rom abnormalor gratuitous advantages granted by enterprises that are related to the companyreceiving the benet.

FOREIGN SOURCE INCOMEThere are no provisions similar to the UKs controlled oreign company rules. Foreign-sourced income and capital gains are normally subject to Belgian corporate incometax, unless exempt by treaty provisions.

INCENTIVESThere are special tax regimes or oreign sales corporations, distribution centres, co-ordination centres and service centres. There are also exemptions rom real propertytax and accelerated depreciation.

c. foreiGn taX relief

For oreign dividends received by a Belgian company, a 95% exemption system isavailable under certain conditions. For oreign interest and royalties on which oreigntax has been levied, there is a xed oreign tax credit. In the case o interest, however,the tax credit is variable but subject to a maximum rate (15%). The tax credit is notreundable. The xed oreign tax credit will be limited to the amount o Belgian taxrelated to the net oreign income. In case o royalties, the tax credit is 15/85 o theroyalties net o oreign tax.

d. corporate Groups

Belgian tax law contains no special provisions or groups o companies. A Belgiancompany is always treated as an independent unit. Consolidated tax returns are notallowed.

e. related party transactions

A recapture o prots is imposed where two related companies enter intocommercial or nancial relations on non-arms length terms.

Interest, royalties and ees paid to a non-resident holding company or recipient in atax haven may be disallowed or tax purposes unless the transaction is genuine andnot excessive. Transers o certain assets to a non-resident company or recipient in atax haven may be disregarded or tax purposes unless the transaction is or legitimatebusiness purposes and consideration was received which is taxed in Belgium.

f. witHHoldinG taX

Belgian withholding tax on dividends is 25% or 15%. Full withholding tax exemptioncan be obtained or dividends paid by a Belgian resident company to a parentcompany resident in another EU Member State, subject to certain minimum holdingrequirements, in accordance with the Parent-Subsidiary Directive. Furthermore, anexemption rom withholding tax is granted on dividend distributions on substantialparticipations held by oreign companies that reside in a country which hasconcluded a bilateral tax treaty with Belgium.

Interest payments are subject to a withholding tax, although there are severalexemptions. The tax rate is also generally 25% or 15% (depending on whether or notthe loan is contracted beore or ater 1 March 1990). Under certain conditions,the tax does not apply to interest payments distributed to EU-resident companies.

Payments o royalties are normally subject to a withholding tax at the rate o15%. Tax treaties negotiated by Belgium generally exempt royalty payments romwithholding tax or reduce the withholding tax rate. In accordance with the EU Interestand Royalty Directive, royalty payments by a Belgian resident company to a relatedcompany in another EU Member State are, under certain conditions, exempt rom

withholding tax.

A 15% withholding tax applies to income rom the granting o cessions or licenceson copyrights and similar rights. I the income constitutes business income orproessional income, the 15% withholding tax only applies i the income does notexceed EUR 51,920 (tax year 2011). Otherwise, the income is taxed at the corporateincome tax rate o 33.99% or the progressive individual income tax rate.

The income received rom the granting o cessions or licences on copyrights is

reduced by a lump-sum cost deduction o:- 50% on income up to EUR 13,840- 25% on income between EUR 13,840 and EUR 27,690.

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G. eXcHanGe control

There are no exchange controls in Belgium.

H. personal taX

An individual resident in Belgium is liable to personal income tax on his worldwideincome and on certain capital gains. Special rules apply to oreign employeestemporarily resident in Belgium. An individual is regarded as resident only i hespends a certain period o time in Belgium and has his main home or his centre oeconomic interest in Belgium.

A non-resident individual is liable to tax on his Belgian-sourced income only.

Total taxable income is the aggregate o net income or prots arising rom anoccupation or business, real estate, personal property, and miscellaneous sources,reduced by deductions that may be set against total income.

The personal tax rates or the assessment year 2011 (i.e. on 2010 income) are:

Annual income (Euros) Ta rate(%)

0 to 7,900 25.00

7,900 to 11,240 30.00

11,240 to 18,730 40.00

18,730 to 34,330 45.00

Income above 34,330 50.00

Municipalities (local government areas) are entitled to levy an additional tax ontaxpayers resident in their area which generally varies rom 5% to 8% o income taxpayable, with a ew municipalities levying no additional tax at all.

Individual resident taxpayers have to report the existence o accounts with nancialinstitutions in oreign countries annually.

i. treaty and non-treaty witHHoldinG taX rates

Dividends(%)

(1) Interest(%)

(2)(4)

Roalties(%)

(3)(4)

Non-Treaty Countries: 25/15 15 15

Treaty Countries:

Albania 5/15 (5) 5 5

Algeria 15 15 5/15 (6)

Argentina 15/10 (5) 12 3/5/10/15 (8)

Armenia 15/5 (8) 0/10 (9) 8

Australia 15 10 10Austria 15 15 0/10 (11)

Azerbaijan 15/5/10 (11) 10/0 (13) 5/10 (14)

Bangladesh 15 15 10

Belarus 5/15 (5) 10 5

Bosnia-Herzegovina 10/15 15 10

Brazil 10/15 0/10/15 (15) 10/15/25 (16)

Bulgaria 10 10 5

Canada 15/5 (8) 10 0/10 (17)

Chile 15/0 15/5 10/5 (20)

China 10 10 10 (18)

Croatia 15/5 (8) 0/10 (19) 0

Cyprus 10/15 (5) 10 0

Czech Republic 5/15 (5) 10 10/5 (20)Denmark 15/0 (5) 10 0

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Dividends(%)

(1) Interest(%)

(2)(4)

Roalties(%)

(3)(4)

Ecuador 15 10 10

Egypt 15/20 (5) 15 15/25 (21)Estonia 5/15 (5) 10 5/10 (22)

Finland 5/15 (5) 10 5

France 10/15 (8) 15 0

Gabon 15/18 (23) 15 10

Georgia 5/15 (5) 10 5/10 (24)

Germany 15 15 0

Ghana 15/5 (8) 10 10

Greece 15/5 (5) 5/10 5

Hong Kong 5/15 (5) 10 5

Hungary 10 15 0

Iceland 5/15 10 0

India 15 10/15 (25) 20

Indonesia 15/10 (5) 10 10Ireland 15 15 0

Israel 15 15 0/10 (26)

Italy 15 15 5

Ivory Cost 15 16 10

Japan 5/15 (5) 10 10

Kazakhstan 15/5 (8) 10 10

Korea 15 10 10

Kyrgyzstan 15 15 0

Kuwait 10/0 (27) 0 10

Latvia 5/15 (5) 10 5/10 (27)

Lithuania 5/15 (5) 10 5/10 (32)

Luxembourg 10/15 (5) 0/15 (28) 0

Macedonia 15/ 15 10Malaysia 15 10 10

Malta 15 10 10

Mauritius 5/10 (8) 10 0

Mexico 5/15 (5) 15/10 10

Moldova 15 15 0

Mongolia 5/15 (8) 10 5

Montenegro 15/10 (5) 15 10

Morocco 10/6.5 (5) 10 10

Netherlands 5/15 10 0

New Zealand 15 10 10

Nigeria 15/12.5 (8) 12.5 12.5

Norway 5/15 (5) 15 0

Pakistan 15 15 0/15/20 (29)

Philippines 15/10 (8) 10 15

Poland 15/5 (30) 5 5

Portugal 15 15 10

Romania 5/15 (5) 10 5

Russia 10 10 0

Rwanda 15 10 10

San Marino 0/5/15 (31) 10 5

Belgium


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Dividends(%)

(1) Interest(%)

(2)(4)

Roalties(%)

(3)(4)

Senegal 15 15 10

Serbia 10/15 (5) 15 10Singapore 15/5 (8) 5 5 (32)

Slovak Republic 5/15 (5) 10 5

Slovenia 15/5 10 5

South Arica 5/15 (5) 10 0

Spain 15/0 (5) 10 5

Sri Lanka 15 10 10

Sweden 5/15 (5) 10 (9) 0

Switzerland 10/15 (5) 10 (9) 0

Taiwan 10 0/10 (33) 10

Tajikistan 15 15 0

Thailand 20/15 (5) 10/25 5/15

Tunisia 15/5 (9) 10 11

Turkey 15/20 (8) 15 10Turkmenistan 15 15 0

Ukraine 5/15 (5) 2/10 (39) 0/10

United Arab Emirates 5/10 (5) 5 5 (35)

United Kingdom 5/10 (5) 15 0

United States 5/15 (8) 0/15 (36) 0

Uzbekistan 5/15 (8) 10 5

Venezuela 5/15 (5) 0/10 (9) 5

Vietnam 5/10/15 (8) 10 5/10/15 (37)

1 Where both the recipient and the company paying the dividend are subject toBelgiums corporate income tax, the dividend is exempt rom withholding taxprovided a minimum o at least 20% shareholding which was or will be helduninterruptedly or a minimum period o one year. Where a Belgian subsidiarydistributes prots to an EU parent company, an exemption rom withholding tax

applies where:(i) the parent and the subsidiary have one o the legal orms described in the

EU Directive(ii) both are subject to corporate income tax(iii) a minimum o at least 20% shareholding which was, or will be, held

uninterruptedly or a minimum period o one year.2 The ollowing types o interest are not subject to withholding tax:

(i) interest paid by Belgian banks to oreign banks(ii) interest on commercial debts.

3 No withholding tax, or the lowest withholding tax rate, applies to copyrightroyalties (an exception is possible with respect to lm royalties).

4 Under most tax treaties, however, there is a provision that the normalwithholding tax rate applies in the case o excessive interest and royalties.

5 The lower rate generally applies i the recipient has a minimum holding o 25%o the share capital or voting power o the paying company (the treaty should bechecked to conrm the exact nature o the relationship required).

6 The 5% rate applies to literary, artistic, and scientic copyright royalties; the15% rate applies in all other cases.

7 The 3% rate applies to news royalties; the 5% to literary, artistic, and scientic

copyright royalties; the 10% rate applies to computer sotware, patent,trademark, and industrial, commercial, and scientic equipment royalties; andthe 15% rate applies in other cases.

8 A minimum holding o 10% is required.9 The 0% rate applies to the sale on credit o industrial, commercial, scientic

equipment, and capital goods, and interest on loans granted by bankingenterprises. The 10% rate applies in other cases.

10 The 10% rate applies i the recipient owns more than 50% o the capital o thedistributing company.

11 The rate is 5% i the Azerbaijani company (a) owns at least 30% o the capitalin the Belgian company and has invested at least US $500,000 in that companyor (b) has invested at least US $10 million in the Belgian company. The rate is

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10% i the Azerbaijani company owns at least 10% o the capital in the Belgiancompany and has invested at least US $75,000 in that company.

12 The zero rate applies to interest on commercial debt-claims, including debt-claims represented by commercial paper, resulting rom deerred payments or

goods, merchandise, or services supplies by an enterprise.13 The 5% rate applies to literary or artistic copyright royalties and the 10% rateapplies in other cases.

14 The 0% rate applies to government debt; the 10% rate applies to loans grantedor a minimum term o 7 years or the sale o capital goods, industrial andscientic complexes, and public works; the 15% rate applies in other cases.

15 The 10% rate applies to literary, artistic and scientic work copyright royalties;the 20% rate applies to trademark royalties; and the 15 percent rate applies inother cases.

16 A 0% rate applies to literary, dramatic, musical and artistic copyright royalties.

17 For industrial, commercial, and scientic equipment royalties, the 10% rate appliesto the adjusted amount o the royalties (60% o the gross amount o the royalties).

18 The 0% rate applies to commercial debt claims or goods, merchandise, andservices, loans guaranteed by a contracting stat to promote export, and loansgranted by banks. The 10% rate applies in other cases.

19 The 5% rate applies to industrial, commercial, and scientic equipmentroyalties; the 10% rate applies in other cases.

20 The 25% rate applies to trade marks and the 15% rate applies in other cases.21 The 5% rate applies to industrial, commercial, and scientic equipment

royalties; a 10% rate applies in other cases.22 The rate is 15% in Belgium and 18% in Gabon.23 A 5% rate applies i the benecial owner is an enterprise o the residence state;

a 10% rate applies in other cases.24 The 10% rate applies to interest paid on a loan granted by a bank, and he 15%

rate applies in other cases.25 The 0% rate applies to literary, dramatic, musical, artistic, and scientic work

royalties. The 10% rate applies in other cases.26 This rate applies to dividends paid to the Kuwaiti government or to a company

owned at least 25% by the Kuwaiti government.27 The 5% rate applies to industrial, commercial and scientic equipment royalties;

a 10% rate applies in other cases.28 To qualiy or the reduced withholding rate, the recipient must be a corporation

that owns a specied percentage or the voting power o the distributingcorporation.

29 The 20% rate applies to patent, trademark, and industrial, commercial, andscientic equipment royalties; the 15% rate applies to technical know-how andinormation royalties; and a 0% rate applies to literary, dramatic, musical andartistic copyright royalties).

30 The rate applies i the Polish company directly holds: (i) at least 25% o thecapital in the Belgian company; or (ii) at least 10% o the capital in the Belgiancompany and has invested at least EUR 500,000 in it.

31 The 0% rate applies where the company receiving the dividend holds directlyat least 25% o the capital o the company paying the dividends or anuninterrupted period o at least 12 months. The 5% rate applies where thecompany receiving the dividend holds directly at least 10% but less than 25%o the capital o the company paying the dividends or an uninterrupted periodo at least 12 months. The 15% rate applies in all other cases.

32 For industrial, commercial, and scientic equipment royalties, the 5% rate appliesto the adjusted amount o the royalties (60% o the gross amount o the royalties).

33 The 0% rate applies to interest paid on loans made between banks.34 The 2% rate applies to the sale on credit o industrial, commercial, and

scientic equipment; merchandise and services; and loans granted by anancial institution. The 10% rate applies in other cases.

35 The 0% rate applies i the benecial owner or the royalties is a nancialinstitution. The 5% rate applies in other cases.

36 The United States may impose a withholding tax rate o 15% on contingentinterest that not qualiy as portolio interest under United States. Belgium

may impose a withholding tax rate o 15% on interest that is determined byreerence to receipts, sales, income, prots or other cash fow o the debtor or arelated person, or to any change in the value o any property o the debtor to arelated person and interest included in a real estate investment conduit. The 0%rate applies in other cases.

37 The 5% rate applies to patent and industrial and scientic inormation royalties;a 10% rate applies to trademarks; and a 15% rate applies in other cases.

Belgium


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www pkf com$100

belgium tax guide 2011

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