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Digital Services Tax Digital Services Tax

A previous parliamentary proposal to introduce an interim Digital Services Tax (DST) in Belgium was put back on the agenda of the Finance Committee of the Federal Parliament last month.

The revival of the DST discussion in Belgium should be put in the context of the OECD’s ongoing efforts to arrive at a consensus-based solution for the tax challenges of the digitalized economy (AKA “BEPS 2.0”). In June 2020, the OECD’s Secretary-General, Mr. Angel Gurría, stated that a solution is long overdue and all members should remain engaged to reach a global solution by year-end. He also indicated that in the absence of a multilateral solution, more countries will take unilateral measures which may lead to heightened trade tensions.        

While the OECD aims at achieving a multilateral solution, national governments have taken their own initiatives and continue to do so. Also in Belgium, a DST is perceived by some as an effective measure to raise additional tax revenue and compensate for revenue shortfall from other taxes in the wake of the Covid-19 crisis. 

Parliamentary developments

The proposal for an interim DST was initially introduced in Belgium by small political parties in January 2019, but was revoked before the general elections in May 2019. The proposal was reintroduced by the same parties in July 2019, but was never discussed in the Federal Parliament until recently, when a slightly amended version of the initial proposal was put back on the agenda of the Finance Committee of the Federal Parliament. The amendments were made based on the advice of the Supreme Administrative Court of May 2020, concluding that the initial DST proposal could lead to state aid and possibly also interfere with the principle of equality in the Belgian constitution.

The DST Proposal

The proposal is largely aligned with the former proposal of a 2018 Directive of the European Commission to introduce an interim DST in the EU. This complemented the proposal for a broader reform of the European corporate tax rules for digital activities, but EU Member States failed to agree on both proposals.

Under the parliamentary proposal, a tax would be levied at a rate of 3% on enterprises that generate revenue from the following main activities:

  • Selling advertising space on a digital platform targeted at its users;
  • Selling user data generated from user-activities on a digital platform; and
  • Digital intermediation services to users of a digital platform by facilitating the exchange of supplies of goods or services between those users.


The proposal would foresee national and global thresholds, and would only apply if:

  • the total amount of worldwide revenue received by the entity for the relevant financial year exceeds EUR 750 000 000; and
  • the total amount of revenue derived from digital activities acquired by the entity during the financial year in Belgium exceeds EUR 5 000 000; and
  • until a DST is enacted at EU or OECD level. 

Future developments

As a caretaker government is still in place in Belgium since the elections last year, the members of Parliament are free to take legislative initiatives and form majorities to pass legislation, including on this proposal. Whether the current proposal will have sufficient support to be adopted when put to a vote is yet to be seen. However, from several articles published in Belgian media outlets recently, it would appear that support for the proposal among Members of Parliament is growing.

Speaking in the Belgian Parliament at the end of June, Mr. Pascal Saint-Amans, Director of the OECD’s Centre for Tax Policy, advocated a multilateral and consensus-based solution for the taxation of digital companies. It is moreover uncertain if the revenue of such a DST would actually be worth the effort for the government to administer and collect it. For the companies that need to pay it, the additional cost of a DST may also be reflected in their pricing, increasing prices for customers. On top of that, the U.S.A. have started proceedings against countries that have already introduced a DST - such as France - on the basis of WTO principles, as well as reviewing possible retaliatory measures.

With the summer recess of Parliament looming, further debate on the proposal for a Belgian DST may very well be transferred to the autumn of this year. By then, we may even have a full government to handle the DST question in a broader policy and economic context. Progress made in negotiations at OECD level may also be further ahead and influence the discussions in the Belgian Parliament. That being said, it could just as well be that the proposal is voted on next week.

Either way, our National Holiday on 21 July marks the formal start of the summer break in Belgium, so we will not be kept in suspense long.

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