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(h) INCOME FROM CARRYING ON A BUSINESS OR INDUSTRY THROUGH

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.

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