1. Distributions to non-Belgian EC parent companies
Dividends paid by Belgian resident companies to non-Belgian parent companies resident within the EC are exempt from Belgian withholding tax if all of the following conditions are met:
(1) the parent company has held, at the moment that the dividend is declared, at least 25% of the capital of the subsidiary for an uninterrupted period of at least one year;
(2) the subsidiary and the parent company are subject to a corporate income tax listed in the Directive without the possibility of an option or of being exempt;
(3) the subsidiary and the parent company have one of the legal forms listed in the Annex to the Directive [for the Belgian subsidiary: a corporation ("societe anonyme"/"naamloze vennootschap"), a limited partnership with shares ("societe en commandite par actions"/" commanditaire vennootschap op aandelen"), a limited liability company ("societe privee a responsabilite limitee"/"besloten vennootschap met beperkte aansprakelijkheid"), or a public body that operates under private law;
(4) the subsidiary and the parent company are not considered to be resident in a non-EC member state pursuant to a double taxation treaty with a third country;
(5) the parent company delivers a certificate to the subsidiary stating that all conditions are fulfilled.
2. Distributions to Belgian parent companies
Dividends paid by Belgian resident companies to parent companies resident in Belgium are exempt from Belgian withholding tax provided that the subsidiary and the parent company are subject to Belgian corporate income tax and that the conditions (1) and (5) mentioned under 1. above are fulfilled. There is no requirement here that the subsidiary and parent company have the specific legal form mentioned in 1. (3) above.
3. Distributions to non-EC parent companies
The standard dividend withholding tax rate is currently 25.75 % (i.e. 25 % + 3 % surtax). As of January 1, 1996, the standard withholding tax rate will be 25%.
This standard rate is - subject to certain conditions - reduced to 13.39% (13% + 3% surtax). This reduced rate will be increased to 15% as of January 1, 1996. This reduced rate applies to dividends paid on common shares issued in a public offer after January 1st, 1994 or to dividends paid on common shares issued in a private offer provided the shares are either registered or are given in open deposit to a financial institution.
The Belgian dividend withholding tax is often reduced under a double income tax treaty, generally to 15%. However, for some of the major treaty partners, including the United States and Japan, the treaty rate for important shareholdings is reduced to 5%.
The content of this article is intended to provide general information on the subject matter. It is therefore not a substitute for specialist advice.
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