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(b) INTEREST

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

note

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.

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