Co-authored with Geert de Neef and Anja Van De Velde, from Lydian

On 14 November, several decisions were issued by the Brussels' Tax Court of First Instance ("the Court") in which the Court confirmed the right of reimbursement of withholding tax ("WHT") to US investment funds. The decisions are the first of their kind and follow months of pleadings led by Taxand and our partner Lydian.


As of financial year 2013, the WHT levied on Belgian sourced dividends paid to Belgian regulated investment companies is no longer creditable, nor refundable. The amendment of the applicable legislation was made on 30 July 2013 and aimed at eliminating the existing discrimination between Belgian and foreign investment companies and therefore aligned the Belgian legislation with the EU case law and in particular with Art. 63 of the Treaty of the Functioning of the European Union.

As a result, for dividends received after 1 January 2013, there are no longer grounds for reclaims based on discrimination for foreign investment funds.

For the claims filed for years prior to 2013, the Belgian tax authorities issued Circular Letter Ci.RH.233/623.711 (AGFisc 11/2013), dated 4 March 4 2013. According to this Circular, a foreign investment company claiming a refund of WHT is required to prove that:

  • There is no possibility to use the Belgian WHT to reduce the payable tax in the state of residence of the foreign investment company (i.e. no credit available in its state of residence); or that
  • Due to a liquidation or negative result, it has not been able to use the WHT in its state of residence to reduce the payable tax and no possibility exists to carry forward this amount; or that
  • Due to an insufficient result or insufficient corporate income tax due (or a similar tax), it has not been able to fully use the WHT in the state of residence and no possibility exists to carry forward the remaining amount; or that
  • It has not received any reimbursement of the WHT in its state of residence.

Only the WHT or its part that has not been effectively used to reduce the tax payable or that has not been effectively reimbursed in its state of residence is eligible to be repaid in Belgium.

The Belgian tax authorities have drafted certificates to evidence the above-mentioned conditions and require them to be certified by the foreign tax authorities. In the US, since the Internal Revenue Service is not willing to sign such documents and the Belgian tax authorities would not accept the documents certified by the taxpayers themselves, the outstanding claims remained unsolved.

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