In the income tax treaty between Belgium and France (1964), one measure concerning dividends from France provides they will be subject, at source, to a maximum tax of 15%, and Belgium may, in turn, subject these dividends to the Belgian tax regime.
The tax treaty also provides that Belgium will eliminate the double taxation resulting from this treatment by application of a fixed portion of foreign tax (quotité forfaitaire d’impôt étranger—QFIE), under the conditions set by Belgian tax law with a minimum set at 15% of the net amount of the dividend. In 1988, the QFIE was repealed for Belgian tax residents (natural persons).
Nevertheless, questions about application of the QFIE continued, with several courts finding that taxpayers were entitled to application of the QFIE at a rate of 15% as provided for under the Belgium-France income tax treaty. The Belgian tax administration eventually appealed the issue to the Belgian high court which issued its decision holding that the provision in the income tax treaty requires Belgium to grant Belgian tax residents application of the QFIE regime. Accordingly, the high court held that it could not give effect to a rule of Belgian domestic law that would deprive taxpayers the right to apply the QFIE.
Read a November 2020 report (French) prepared by the KPMG member firm in Belgium
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