Belgium: New tax exemption restrictions on Belgian dividends

Effective

1 January 2013

only foreign pension funds are entitled to exemption from Belgian withholding tax on dividends.

Background

Until 31 December 2012, non-resident investors were exempt from the Belgian withholding tax on dividends as long as the beneficial owner was:

• A supranational or international organisation of which Belgium is a member (for example, NATO); or
• A foreign pension fund; or
• A non-resident;

that is:

• Not engaged in a commercial activity; and
• Tax-exempt in its country of residence; and
• Exempt (according to Belgian domestic law) from Belgian withholding tax on its income.

Impact on customers

As of 1 January 2013, due to the amendment of the Royal Decree executing the Belgian Income Tax Code article 106 paragraph 2 and paragraph 4, only the following entities are entitled to the tax exemption on Belgian dividends:

• Supranational entities whose exemption results from international tax law; and
• Foreign entities qualifying as pension funds and fulfilling the above conditions.

Note: Dividends paid before 1 January 2013 to exempt foreign entities that are not pension funds are not impacted by this new restriction.

Non-residents that do not qualify as pension funds will be entitled to the benefit granted by the applicable tax treaty on the Belgian dividends paid after 1 January 2013.

Further information

The modalities of the implementation of the amended Royal Decree are under review with our local depository. We will continue to monitor the situation and will provide more information about the implementation as it becomes available.

For further information, customers may contact the Clearstream Banking¹ Tax Help Desk on:

or Clearstream Banking Customer Service or their Relationship Officer.

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1. Clearstream Banking refers collectively to Clearstream Banking AG, registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in the Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500 (CBF) and Clearstream Banking, société anonyme, registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Register of Commerce and Companies under number B-9248 (CBL).