Belgium: Decision on the “fairness tax" | KPMG Global
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Belgium: Constitutional Court’s decision on the “fairness tax"

Belgium: Decision on the “fairness tax"

The Belgian Constitutional Court issued a decision that “cancels” provisions of the law that introduced the “fairness tax.”


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The fairness tax (introduced in July 2013) is a separate tax of 5.15% imposed on the distribution of profits, if the distributing company has benefitted in the year, in relation to which the distribution occurs, from the use of notional interest deduction and/or tax losses carryforwards. The fairness tax is applicable both to domestic companies and to Belgian permanent establishments of foreign companies.

In May 2017, the Court of Justice of the European Union (CJEU) concluded that the fairness tax breached article 4 of the Parent-Subsidiary Directive. Specifically, the CJEU found the fact that dividends received by a Belgian company from its subsidiary in another EU Member State were to be included in the taxable base of the fairness tax upon redistribution by the Belgian company in a later year violated article 4 of the Parent-Subsidiary Directive. 

Still, the CJEU left it to the Constitutional Court (the referring court) to decide whether the fairness tax constitutes an infringement of the freedom of establishment for a foreign company with a Belgian permanent establishment. Read TaxNewsFlash-Europe

Court’s findings

The Belgian Constitutional Court issued a judgment that cancels the provisions of the July 2013 law that introduced the fairness tax. However, the court upheld the consequences of the law for assessment years 2014 to 2018 (with an exception for the provisions that are in breach of the Parent-Subsidiary Directive on redistributed dividends).

KPMG observation

In practice, the effect of this judgment means that the fairness tax can correctly be applied on dividends distributed for assessment years 2014 until 2018, inclusive. Nevertheless, “redistributed” dividends that are in scope of article 4 of the Parent-Subsidiary Directive would be excluded from the taxable basis of the fairness tax.


Read a March 2018 report prepared by the KPMG member firm in Belgium

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