Belgium has concluded bilateral Conventions for the avoidance of double taxation with the Grand-Duchy of Luxemburg, France and Italy. Ratifications have so far been exchanged with the Grand-Duchy and Italy.

The texts of these Conventions are not uniform, for the fiscal systems of the four contracting States are in certain respects so different that no one solution could be found wholly acceptable to each of them.

Nevertheless, the provisions are substantially the same as far as concerns liability to tax on income from land and buildings, the taxation of the income of industrial, mining, commercial or agricultural enterprises, income from labour, fees of directors and auditors of share companies, public and private pensions and annuities.

The taxation of income from securities is not dealt with in the Convention with the Grand-Duchy of Luxemburg owing to fundamental differences in the fiscal treatment of such income by the two countries. It was omitted from the Convention with Italy because the interests affected are of very secondary importance. On the other hand, the question has been amply treated in the and private Convention with France.


The Conventions define fiscal domicile as follows: The fiscal domicile of individuals is the place where they normally reside — that is, where they have a permanent home. Companies and partnerships having a separate legal entity are domiciled for fiscal purposes in the place where they have their real head office; the fiscal domicile of other legal entities is their real centre of direction or management.

From the standpoint of Belgian law, therefore, the conception that determines the fiscal domicile of individuals is residence (see page 49); in the case of companies and partnerships with a separate legal entity, the determining factor is their real head office, which is usually synonymous with the principal establishment as laid down by Belgian fiscal law. The real centre of direction or management, constituting the fiscal domicile of other legal entities, likewise coincides with the principal establishment as understood by Belgian jurisprudence.

From this point of view, the Conventions do not introduce any essentially new principle into co-ordinated Belgian law.



In principle, the Belgian tax on income from personal property is collected from dividends at the source at the full or reduced rate according to their Belgian or foreign origin.

The Conventions with France and Italy provide that income from shares and similar forms of participation shall be taxable in the country where the real head office is situated.1


As an exception, however, to this rule, the Franco-Belgian Convention prescribes that income from securities (public debentures, shares or other certificates issued by companies, bonds or other loan scrip) is liable to impersonal tax in the State where the beneficiary has his fiscal domicile, to be collected according to the laws of that country. In this case, however, the State will deduct from this tax the tax already paid on the same income in the other country.

In view of the present incidence of taxation in France and Belgium, it was agreed that this provision should be applied as follows:

As regards Belgium, and in so far as the general tax rate on income from foreign securities does not exceed 12 per cent,1 this tax will not be payable on income from French securities accruing to persons having their fiscal domicile in Belgium. Should the general rate exceed 12 per cent, it will be reduced by 12 per cent in respect of these securities. As regards France, the general rate of the tax on income from foreign securities will be reduced by 12 per cent in the case of Belgian securities.


Further, French share companies having their fiscal domicile in France and a permanent establishment in Belgium may, when making their annual return in Belgium, apply to be treated like Belgian share companies; in this case, the tax on dividends is assessed on a fraction of the Belgian profits equal to the ratio between the distributed profits of the company and its total profits, provided, however, that the sum assessable to the taxes on professional and personal property income does not exceed the total Belgian profits.

A French company which asks for this treatment will have to pay: (i) the tax on income from personal property at the full rate applying to share income on the portion of Belgian profits determined by the above-mentioned ratio; (ii) professional tax at the ordinary rates on the remainder of those profits, whereas, at present, the whole of the taxable profits earned in Belgium are liable to professional tax at 10 per cent.

At the same time, the total income liable to personal property and professional income taxes may not exceed the Belgian profits.


Under ordinary law, personal property income tax is payable in Belgium, by deduction at source or on an annual return, in respect of all interest paid or received by a person who has his domicile or residence in Belgium.

The Conventions concluded with France and Italy depart from this principle when they lay down that income of this kind is taxable in the country where the person owing the income is situated; no attention is thus paid to the domicile of the recipient.

If, however, the debtor has permanent establishments in both countries and if one of these establishments contracts a loan or receives a deposit in the strict course of its business, the tax is collected by the State in which the establishment is situated.


Under the Conventions, copyright royalties are taxable in the country where the beneficiary has his fiscal domicile.

Consequently, professional tax can no longer be collected in respect of copyright royalties paid in Belgium to persons whose fiscal domicile is in the Grand-Duchy, France or Italy.


Contrary to the rule of Belgian fiscal law, whereby income from real estate received abroad by a person domiciled or resident in Belgium is liable to personal property tax, the Conventions concluded with the Grand-Duchy of Luxemburg, France and Italy provide that the income from real property, or the property itself, is taxable only in the State where the property is situated.


Normally, remuneration paid in Belgium, including the fees of directors of share companies, is subject to deduction of professional tax at source; further, remuneration received abroad by a person domiciled or resident in Belgium is liable to professional tax on the basis of an annual declaration. The tax, however — which is fixed by the Belgian commune where the taxpayer is domiciled or resident — is computed at a reduced rate if the income is earned and taxed abroad.

The Conventions lay it down as a rule that the fees of company directors and of others discharging similar functions are taxable in the State in which the enterprise has its real head office.

The various payments to salaried workers and wage-earners are taxed in the country in which the taxpayer is working.

The salaries of the public servants of one country who exercise their functions in the other are taxed only in the country which pays them.

Finally, public and private pensions are taxed in the country which owes this income, annuities in the country in which the recipient has his fiscal domicile.

Accordingly, tax will in future be collected, in respect of the income mentioned above, by one State only: in the case of directors, etc., of share companies, by the country in which the enterprise has its real head office; in the case of salaried workers and wage-earners, by the country where they do their work; in the case of public servants, by the country which pays them; in the case of pensions, by the country which owes them and, in the case of annuities, by the country in which the recipient has his fiscal domicile.


National Enterprises operating abroad

According to Belgian law, a national enterprise which has establishments abroad is liable to tax in respect of all its Belgian and foreign profits, but profits earned and taxed abroad are taxed in Belgium at a reduced rate.

Under the Conventions, industrial, mining, commercial and agricultural enterprises are taxable in each State only in proportion to the income earned by permanent establishments therein.

This is a modification of the Belgian regime, since it exempts from tax in Belgium profits realised in the Grand-Duchy, France and Italy by Belgium enterprises which have establishments in those countries.

Foreign Enterprises deriving Income from Belgian Sources

It was explained on page 56 that a foreign enterprise is taxable in Belgium if it has any kind of “establishment” in that country, the term “establishment” being interpreted in a very wide sense to cover anything between a centre of operations and some recognised public representation by authorised agents.

The Convention concluded by Belgium with the Grand-Duchy of Luxemburg restricts the term to somewhat narrower limits. By permanent establishment are to be understood centres of effective management, branches, factories, workshops, agencies, shops, offices and depôts. The fact that an enterprise established in one of the two contracting States maintains business relations with the other country through a really independent agent or company (broker, commission agent, subsidiary, etc.), does not imply that the enterprise has a permanent establishment in the latter country.

Subject to this same reservation, the Conventions concluded with France and Italy define the term “permanent establishment” so as to include purchase and sales offices and any other fixed installation of a productive character. On the other hand, the Convention with France provides that offices which merely buy goods to supply them to one or more selling or processing establishments of the enterprise in the other country shall not be taxable — subject, of course, to reciprocity.


The question of complementary tax did not arise in connection with the Grand-Duchy of Luxemburg, which has no such separate impost. Nor was it dealt with in the Franco-Belgian Convention.

The Convention with Italy, however, lays down that a taxpayer is liable to complementary tax only in the country where he has his fiscal domicile.

If a person domiciled in Italy has a second residence in Belgium, he is fiscally domiciled in both countries, and the Convention provides that in that event he would be liable to complementary tax in Belgium in proportion to the length of his visits to that country, whereas, under Belgian law as it now stands, personal tax would be due for the whole year.