Rule of Tax Treatment Depends on The Location

The tax treatment of dividends paid to a Belgian holding company in the state of the source of these dividends depends on the location of the distributing company.

There are two hypotheses.

Company located in Belgium

The withholding tax is not levied on dividends receivable and whose beneficiaries are companies resident in Belgium for as long as the company receiving the dividends has held for a continuous period of at least one year, at the time of allocation dividend participation of at least 25% shareholding in the distributing company.

The exemption from withholding is applicable regardless of the legal form of society and is thus also the dividends received or accrued by companies that are not specifically covered by the Directive mother-daughter.

If these conditions are not met, the withholding tax will be withheld by the distributing company and charged by the company receiving the tax finally due or possibly refunded if the recipient does not display a holding company tax base.

Company located in a member state of the European Union

The EU Directive "parent-subsidiary" of July 23, 1990 had, under Article 5, the profits distributed by a subsidiary to its parent company established in another Member State is exempted from withholding tax in both the State of origin of the income in the Member State of the recipient company, provided that it holds a stake of at least 25% shareholding in its subsidiary. To extend the benefits of the latter, the new Council Directive 2003/123/EC of 22 December 2003, provides that the ownership threshold at which a company can be considered as a parent and the other as its subsidiary should be reduced gradually from 25% to 10% by 2009 (20% at the date of entry into force of the text, 15% in 2007 and 10% in 2009).