Belgium: Dividend withholding tax exemption | KPMG Global
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Belgium: Dividend withholding tax exemption, Dutch UCITS under Parent-Subsidiary Directive

Belgium: Dividend withholding tax exemption

The Court of Justice of the European Union (CJEU) issued a judgment in a case concerning application of the EU Parent-Subsidiary Directive, and specifically a withholding tax imposed by Belgium on dividends paid by a Belgian subsidiary to its parent companies located in the Netherlands that were investment funds (Dutch UCITS).


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The CJEU found that neither of the Dutch UCITS entities qualified as a “company of a Member State” for purposes of the Parent-Subsidiary Directive because, while subject to corporate income tax, the UCITS entities were effectively not taxed and, therefore, the Directive did not preclude Belgium from withholding tax on the dividends. 

The case is: Belgische Staat v. Comm. VA Wereldhave Belgium, C-448/15 (8 March 2017)

KPMG observation

The practical implications of this case may focus on the terms “subject to tax versus actually liable to pay tax” discussion and how the Parent-Subsidiary Directive applies. The judgment can be viewed as clarifying which companies fall within the scope of the Directive, and also confirms that dividend distributions to Dutch UCITS (formally “subject to” a corporate income tax, but under the redistribution requirement stipulated by Dutch law) are actually not liable to pay corporate income tax in their country of residence, and thus fall outside the scope of the Directive.


Read a March 2017 report prepared by KPMG’s EU Tax Centre

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