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2. Apportionment of Expenses of Real Centre of Management to Branch

Interest Charges

Jurisprudence has decided that, in the case of Belgian enterprises which earn profits abroad, interest charges are ascribed to the head office. The only exception is when the debt has been contracted abroad on behalf of establishments situated abroad.

Applying this jurisprudence, the revenue authorities consider that the interest payable on a general debt of a foreign enterprise is ascribed to the real centre of management, unless it is clearly established in law that the debt was contracted in Belgium by the Belgian establishment for its own requirements; in the latter case, the interest is liable to personal property income tax in Belgium.

General Overhead

As regards foreigners operating in Belgium, the only general overhead or administrative expenses which may be deducted are expenses of this kind incurred by the Belgian establishments (Article 27, paragraph 4, of co-ordinated laws).

Deductible expenses — subject to what was said above about interest charges — do not include interest or premiums paid by these establishments to bond-holders, or fees paid to directors and auditors out of profits earned in Belgium.

If there is any doubt as to the accuracy of general overhead or administrative expenses as shown in the accounts, details are asked for.

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