Context

A new treaty for the avoidance of double taxation on income was signed between Belgium and the Netherlands on 5 June 2001 (see our tax Newsletter n° 10 of October 2001 at
http://www.pwcglobal.com/be/eng/main/tax_newsletter/edition10/pwc_taxnewsletter10.pdf ).

With respect to earned income, articles 15 and 16 of this new treaty, dealing with the treatment of employment income and director’s income respectively, have been subject to material amendments. One of the main amendments lies in the abolition of the frontier worker system. Frontier workers will no longer be taxed in their country of residence but in the country where the employment is carried out.

News

This new treaty was planned to enter into force on January 1, 2003. It was recently mentioned in the financial press that it is becoming more and more likely that its entry into force will be postponed to January 1, 2004.

Appreciation

The amendments made to these articles may thus materially alter the tax situation of people (especially but not only frontier workers) having their tax residence in one of the two states and earning income in the other state. If the entry into force of the new treaty is indeed postponed by a year, they will evidently continue their current income tax situation for one more year. It is however not yet completely certain that the target date of 1 January 2003 will not be met.

Source

De Financieel Economische Tijd 18 July 2002