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I. NATIONAL HOLDING COMPANY CONTROLLING ONE OR MORE FOREIGN SUBSIDIARY

Holding companies, like companies with their head office or principal administrative establishment in Belgium and separate establishments abroad, have to keep accounts of the income they derive from both Belgian and foreign sources. Dividends and interest paid in Belgium are liable to deduction of personal property income tax at the source at full or reduced rate, according as the income is of Belgian or foreign origin. In the case of foreign income paid abroad, the holding company has to declare it and pay personal property income tax on it at reduced rate.

Since such income, both Belgian and foreign, must not be taxed twice, the profits of these companies corresponding to the net dividends they receive may be used to build up or add to their reserves, or may be distributed to the shareholders of the company, without payment of any further tax.

The same rule applies to debenture interest and coupons on bonds or to other interests. If this income has paid personal property income tax, its net amount is not liable to further tax when included among profits placed to reserve or distributed.

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