1. DEFINITION AND GENERAL PRINCIPLES
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
noteIf, 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.
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