If an individual not domiciled or resident in Belgium, or a foreign company whose principal establishment is not situated in Belgium, controls or possesses in the country one or more establishments, such establishments are, for purposes of applying the co-ordinated laws on income taxes, deemed to be foreign enterprises.

In principle, a foreign enterprise is liable to schedular taxes only if it has in Belgium one or more establishments dependent upon it. The tax is levied on the total profits from all operations conducted by or through these establishments (Article 27, paragraph 4), the tax on income from land and buildings being imposed only on income from real property situated in Belgium.

I. (a) If income is earned by a foreign enterprise operating in Belgium, but belonging to an individual, the whole of the profits realised in the country from all operations conducted by or through the Belgian establishments is liable to tax, which is collected from the owner of the enterprise.

(b) and (c) The same applies when income is earned by a foreign enterprise belonging to a legal entity (partnership or company). Only the profits earned by or through Belgian establishments are subject to tax, which is collected from the company or partnership.

On the other hand, if the foreign firm is represented in Belgium by a partnership or company in such a way that the latter in law and in fact directs or conducts operations only on behalf of the said firm, the latter is regarded as having an establishment in the country.1


If, however, the partnership or company deals in its own name with Belgian customers, selling to or buying from them goods or articles produced by or delivered to the foreign firm, the Belgian company or partnership is regarded as an independent organisation and the Belgian revenue authorities disregard any activities of the foreign firm.

This provision does not, of course, cover cases of fraud or collusion.

II. It follows from the above principles that, if income is earned by a foreign company or partnership having no establishment in Belgium, the company or partnership is not taxable in Belgium on income earned there.

If the enterprise has establishments in Belgium, if does not matter whether income is earned there or not; the foreign enterprise is in any case liable in respect of the total profit resulting from all operations conducted by or through those establishments,2 whatever results the general balance-sheet may show.




By virtue of its impersonal character, the tax on income from personal property is imposed on dividends at the source, as and when they are received in Belgium and irrespective of the status or nationality of the person presenting the coupons and whether the latter are of Belgian or foreign origin.

Thus in the case of dividends paid by Belgian share companies, tax at 22 per cent1 is deducted at the source by the body which owes the income, and the beneficiary, whether Belgian or foreign, an individual or a legal entity, and whether domiciled in the country or not, receives the income net.


As regards dividends paid by foreign share companies, whether their head office is in Belgium or not, tax at the reduced rate is withheld at the source by the body paying these dividends in Belgium, unless it is shown that the tax has already been deducted in Belgium by a previous intermediary (Article 23 of co-ordinated laws).

If this dividend is received directly abroad by an individual, company or partnership with a fiscal domicile in Belgium, the amount must be included in the tax declaration which the beneficiary has to make annually to the competent Controller of Taxes. In this case, tax at 6 per cent is levied in accordance with an assessment list and is collected direct from the beneficiary in Belgium (Article 20, paragraph 1, item 4, and Article 50, paragraph 2, of co-ordinated laws).


Two different cases must be considered:

(1) Interest which a foreign firm owes through its establishment in Belgium or to a creditor domiciled in Belgium.

If the foreign firm has an establishment in Belgium which pays the interest, the tax on income from personal property is paid at the full rate of 15 per cent by the debtor company, which, however, may recover the tax on the interest due. Exemption, however, is granted in respect of interest on deposits or debts of a professional character and if it is duly established that the said interest is entered in the accounts of the beneficiary establishments in Belgium.2


If the foreign firm has no establishment in Belgium, the recipient of the said interest, domiciled or resident in Belgium, must mention it in his annual declaration (see (a) above) with a view to its assessment to tax at 6 per cent.1

(2) Interest which a Belgian firm owes to a foreign firm.

In this case, tax at 15 per cent1 is collected by deduction at the time of paying the interest and subject to the right to withhold the tax from the taxable income.

A special regime, however, applies to mortgage interest. Interest from mortgages on real estate situated in Belgium is exempt from tax up to the amount of the cadastral income from such property.



If the patent is simply licensed, personal property tax is deducted at the source by the Belgian debtor at the time of paying the royalty for the licence.

If the patent is not conceded, but operated by a foreign enterprise direct, the profits from its use are treated as professional income and are liable to professional tax on the basis of an annual declaration by the recipient of such income.

Professional tax is applied to subsequent profits from the sale or surrender of a patent when the recipient of the income is domiciled for fiscal purposes in Belgium. The principle of this, however, has been questioned and jurisprudence has not given a definite ruling on the matter.


These are regarded as professional income and taxed as such. The royalties are received either direct by authors or through special non-commercial associations (sociétés civiles) having no legal entity.

In 1928 the revenue authorities entered into negotiations with these companies and it was agreed that professional tax should be collected by them at the time of distributing royalties to authors or their assigns, whatever the nationality of the recipients. For purposes of simplicity, and in order to avoid adjusting the tax to the situation of the innumerable recipients of these royalties, it was decided that the tax should be at a uniform rate of 1 ½ per cent.

It is paid into the State Treasury at the end of each quarter.

As regards beneficiaries who are neither domiciled nor resident in Belgium, this payment is regarded as final.

Recipients, however, who are domiciled or resident in Belgium are treated like other taxpayers and must include in their annual declaration the amount they have received in royalties. In order to comply with the fiscal requirements, the persons or companies that collect and distribute royalties forward to the revenue authorities at the beginning of the year individual forms for the authors on whose behalf they have paid royalties during the previous year, with the Christian name, surname and domicile of each author and the total amount of royalties paid and tax withheld. On the strength of these forms, the authorities are able to adjust the fiscal position of all those who have to make the annual return. The latter, it should be added, must contain not only royalties paid in Belgium, but those received from abroad.

Royalties received by authors direct without the intermediary of any distributing organisation must, of course, also be included in the annual declaration.1


Other Income from Personal Property

Personal property tax is payable by deduction at source on income from leases and concessions of all personal property.

If the letting of property is in the nature of a business, professional tax is due on the annual profits from these operations.


The tax, assessed on cadastral income, is levied upon the income from all real estate in Belgium. A foreign enterprise, whether or not it has a Belgian office or business centre where the income is received, is liable to this tax in respect of any real estate it possesses in Belgium.

Income from real estate abroad which is paid in Belgium is liable to personal property tax (note 2, page 50). Accordingly, income of this kind received by the Belgian establishment of a foreign enterprise (company, partnership or individual), is liable to this tax (at 6 per cent);1 the tax is collected on the basis of the annual return of income.


Mining royalties were abolished in 1925.

On the other hand, a special 10 per cent tax1 is levied upon the lease of hunting and fishing rights and is payable by the lessees or recipients of such income, provided that the latter amounts to at least 100 francs. The tax is deducted at the source.


Purchase and Sale of Real and Personal Property

A foreign enterprise — individual, partnership or company — which has no domicile or establishment in Belgium, but from time to time realises a profit from the purchase and sale of real estate in Belgium, is not taxable on this score. Nor is an individual foreigner who, being domiciled or resident in Belgium, occasionally sells property at a profit. On the other hand, the revenue authorities regard as professional income liable to professional tax on industrial and commercial income any profit of this kind realised in Belgium by a foreign company having an establishment in the country. The reason for this is that, in the case of companies, all operations, even when only occasional, are considered professional.

Purchase and Sale of Securities

The profit obtained by an individual from the sale of a security bought some time before at a lower price is not regarded as income. On the other hand, profits from speculative transactions by professional speculators, such as stockbrokers, are so regarded.2


In the case, therefore, of stockbrokers and other dealers in stocks and bonds, no difficulty can arise; all profits from transactions of any kind in securities invested in their commercial enterprise must be included in their accounts and figure in the balance-sheet, whether they are cash transactions, dealings for settlement or contango operations.

On the other hand, transactions effected by stockbrokers or dealers in stocks and bonds on their own private account are only taxable if they are contango operations or dealings for a settlement, these being clearly speculative transactions.

Since any appreciation of the assets of a company is regarded as profit, the tax is payable on all profits—including profits from the purchase and sale, occasional or otherwise, of securities—realised by or through the Belgian establishment of a foreign company.


Remuneration of this kind paid in Belgium by a foreign enterprise is liable to deduction of professional tax at the source at the official rates. The tax, however, may be remitted on payments to persons whose work on behalf of the Belgian establishment is done entirely abroad. But any expenses of this kind are excluded from the Belgian accounts, the law allowing of no deductions from general overhead or administrative costs except expenses of this kind incurred in the Belgian establishments themselves (Article 27, paragraph 4).


The case of income from a trust is not provided for by the law, and the revenue authorities have not as yet been called upon to apply the rules to these bodies.

In any case, a distinction must be made according to the nature of the corpus of the trust. If it is real estate, tax will be collected on the income from real estate situated in Belgium; if it is securities or debts, the income therefrom will be liable to tax and deducted at the time the income is paid or, in the case of income paid abroad, in virtue of a declaration. When such income is distributed by the trustee to the beneficiary, it will be regarded as having already been taxed, under Article 52 of the co-ordinated laws, and no further tax will be levied.


Since a foreign enterprise is taxable in Belgium if it has any kind of establishment in the country, there can be no doubt as to the liability of a foreign firm operating in Belgium under the conditions referred to under paragraphs (4) and (5) above.

As explained in Part I, on page 56, the word “establishment” must be understood in a wide sense to include head office, branch, agency, or any public and known representation by authorised agents.

Accordingly, the following have been regarded as establishments of a foreign company: an office employed exclusively in purchasing material and engaging staff for head offices in other countries and in settling the cost of orders and payment of salaries in Belgium; a local agency of a foreign railway company engaged in selling coupons, subscription books and circular tickets for journeys involving use of the company’s lines; a warehouse for the storage of goods, and a forwarding office possessed in Belgium by a foreign company. Similarly, a foreign firm with subsidiaries in Belgium was deemed to have an establishment in that country when it kept on the premises of those subsidiaries a stock of goods which the company itself insured against fire. A foreign firm is further taxable in Belgium if it has a fixed agent there, whether a depositary or not, who deals on behalf of his principal. Finally, a foreign company is held to have an establishment in Belgium if its name appears on the stationery which its agent uses for his correspondence, or in the form of advertisements, a plate or sign, or in any other manner.

The rules applicable to commission agents and brokers, commercial travellers or agents with power of attorney (paragraphs (1) to (3) above) depend essentially upon the circumstances of the case.

As a general rule, if the commission agent or broker simply takes orders and passes them on to the foreign firm, without intervening in any way in the transactions between the firm and its customers (delivery of goods, payment of invoices, judicial disputes, etc.), the revenue authorities consider that there is no Belgian establishment and the foreign firm is therefore not liable to tax on profits derived from the orders thus received. The commission agent or broker must not mention the firm he represents on his stationery or by any plate or sign at his premises.

The operations of a foreign commercial traveller in Belgium do not of themselves constitute an establishment justifying the taxation of the foreign firm. Subject, however, to exceptions provided for in international conventions, such traveller is liable to a minimum professional tax of 200 francs, which he has to pay before carrying on his business in Belgium (Article 27, paragraph 4, (3) and (4)).

On the other hand, an agent with a power of attorney which allows him to engage the name of the foreign enterprise, to participate in the delivery of goods and the collection of payments, to take judicial action on behalf of the enterprise, etc., is deemed to constitute a foreign establishment, the activities of which are assessable to tax.