Context

The so-called “emigration” clause (article 364bis Belgian Income Tax Code 1992) was held by the Brussels Court of Appeal on 15 February 2002 to be incompatible with the Belgian-French double taxation treaty. This position was confirmed by the Court of Cassation on 5 December 2003.

News

In reply to a parliamentary question (nr. 2739 – Mr. Carl Devlies) on 4 May 2004, the Belgian Minister of Finance has confirmed that the Belgian tax authorities will follow this court decision. In other words, in all cases where the power to tax a lump sum pension payment is granted to the state of residence according to the stipulations of the double taxation treaty, Belgium will no longer withhold professional withholding taxes at source based on article 364bis BITC92 on condition that the beneficiary provides a certificate of residence issued by the tax authorities of the state of residence.

The Minister of Finance further announced that, with regard to states other than France with whom Belgium has concluded a double taxation treaty, the Belgian tax authorities are working on a circular letter that will reflect this position.

Furthermore, major players on the Belgian insurance market would no longer apply article 364bis BITC92 if the power to tax the lump sum pension payment is solely granted to the state of residence.

Finally, article 364bis BITC92 is also one of the tax provisions challenged by the European Commission. Portugal, Spain, France and Belgium were sent a “reasoned opinion” on 17 December 2003 on this issue.