Withholding tax measures
Last update: 13 May 2013 - 16:00 CET
As from 1 January 2013, the default withholding tax rate for interest, dividends and royalties, as well as for movable income taxable as miscellaneous income, is 25%, except for:
- Liquidation boni (10%) - Note however that the Budget 2013 Control agreement provides for an increase to 25% (more info)
- Dividends from residential real estate investment companies (15%) – see next heading;
- Interest from so-called Leterme government bond (15%);
- Interest from regulated savings deposits in excess of the tax-exempt amount (15%);
- Royalties resulting from authors’ and neighboring rights (“auteursrechten en naburige rechten” / “droits d’auteurs et droits voisins”), as well as from legal and compulsory licenses (“wettelijke en verplichte licenties” / “licenses légales et obligatoires”) (15%).
For royalties resulting from authors' and neighboring rights (‘auteursrechten en naburige rechten’ / ‘droits d’auteurs et droits voisins’), the 15% withholding tax rate only applies to the portion of the income not exceeding an index-tied threshold of EUR 37,500 (EUR 54,890 for tax year 2013) on a yearly basis. Income exceeding this threshold is subject to the 25% default rate and may qualify as professional income, subject to ordinary personal income tax rates, further to Article 37 ITC (depending on whether or not income should be deemed to have a professional character). For withholding tax purposes, the index-tied threshold of EUR 37,500, (EUR 54,890 for tax year 2013) will have to be applied per debtor.
The “liberatory” character of the withholding tax is reinstated as from 1 January 2013. By way of derogation, the following income would however still needs to be reported:
- Income from mortgage receivables on Belgian real estate or ships and boats registered at the Antwerp mortgage registry (excluding income from mortgage bonds);
- Income from lease, use or concession of movable income (Art. 17, §1, 3° ITC);
- Income from life-time or temporary annuities (Art. 17, §1, 4° ITC);
- Income from authors’ and neighbouring rights as well as from legal and compulsory licenses (Art. 17, §1, 5° ITC);
- Income from contracts granting a right of use on built real estate (Art. 19, §1, 1st indent, 2° ITC);
- Income mentioned in Art. 21, 5°, 6° and 10° ITC to the extent it exceeds the relevant thresholds and no withholding tax has been levied on the excess portion.
The central contact point within the tax authorities will not be activated and hence debtors of income caught by the 4% surcharge will be deemed to never have had the obligation to notify interest and dividends to the contact point.
The 4% surcharge is, as a result of the increase of the default withholding tax rate to 25%, also abolished as from 1 January 2013. For 2012 however the 4% surcharge rules will apply and this has the following practical consequences:
- For tax year 2013 taxpayers need in principle to mention all movable income caught by Art. 17, §1 ITC and all movable miscellaneous income caught by Art. 90, 5°, 6°, 7° and 11° ITC in their personal tax return.
- By way of derogation, this reporting obligation does not apply in case of (1) liquidation boni and interest from Leterme government bond, which have been subject to respectively 10% and 15% withholding tax, (2) interest and dividends subject to 21% withholding tax for which the 4% surcharge has been levied, and (3) movable income which has been subject to 21% or 25% withholding tax provided that the total amount of movable income received by the taxpayer in 2012 cannot give rise to the 4% surcharge. If the taxpayer is not required to report, he will have to complete a declaration in his tax return, confirming that he has not earned any movable income on which the 4% surcharge is due.
- If the 4% surcharge has been withheld at source but eventually appears not due (e.g. threshold not reached), the taxpayer should claim back this 4% surcharge through his tax return for tax year 2013 – this implies reporting all movable income caught by the 4% surcharge
The Government expects to collect EUR 361 Million with this measure in 2013 as well as in 2014.
So-called “residential” real estate investment companies (“vastgoedbevaks/sicafis”) are subject to a “liberatory” 15% withholding tax as of 1 January 2013. The exemption contained in Article 106, §8 RD/ITC has been abolished as of the same date.
The conditions to qualify as a “residential” real estate investment company would be adapted in view of the EU requirements, i.e. the minimum threshold for residential investments is increased from 60% to 80% and the perimeter is extended to the entire European Economic Area. The legislation no longer refers to companies investing “directly or indirectly” but only to those investing “directly” in qualifying real estate.
The income from “other” real estate investment companies (not meeting the 80% threshold and/or investing in offices, commercial or logistic real estate) remains subject to 25% withholding tax.
By way of transitional measure, the new 80% investment requirement does not apply. Instead, the 60%-requirement continues to apply for dividends paid or attributed in 2013 and 2014 by companies benefitting from the current withholding tax exemption (Art. 106, §8 RD/ITC) as it existed per 31 December 2012.
The Government expects to collect EUR 5 Million EUR additional revenues in 2013 as well as in 2014 with the measures relating to the taxation of residential real estate investment companies.
Alignment of Belgian withholding tax exemptions with recent decisions of the European Court of Justice
A proposal would be deposited to the Council of Ministers in order to “solve” the situation created following the ECJ decisions C-387/11 dated 25 October 2012 (Commission v Belgium - withholding tax for foreign investment companies) and C-384/11 dated 12 July 2012 (Tate & Lyle v Belgium - dividend withholding tax for foreign investors).