Luxembourg SICAVs (collective investment vehicles) may have refund opportunities for Belgian annual tax and withholding tax, following a late 2018 decision of a Belgian court.
In Belgium, foreign collective investment vehicles that publicly distribute shares or units are subject to the Belgian annual tax once they are registered with the Belgian Financial Services and Markets Authority (FSMA). This annual tax—which has some similarities to the Luxembourg subscription tax (taxe d’abonnement)—is currently levied at a rate of 0.0925% on the fund’s “net outstanding amounts placed in Belgium.”
In November 2018, the Court of Appeal in Brussels found that the Belgian annual tax was not applicable to a Luxembourg SICAV because Belgium does not have taxing rights on the Luxembourg SICAV’s wealth under the Belgium-Luxembourg income tax treaty. Furthermore, the decision confirmed that a Luxembourg SICAV qualifies as a person within the definition of the income tax treaty—thus, opening the doors for potential withholding tax refund claims based on the treaty provisions.
Luxembourg SICAVs therefore may have opportunities for refunds of the Belgian annual tax based on the income tax treaty provision. In addition, the court’s decision supports the argument that Luxembourg SICAVs are in a position to seek refunds of withholding tax up to the rate of withholding tax provided by the income tax treaty (requiring a case-by-case analysis).
Read a 2019 report prepared by the KPMG member firm in Luxembourg
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