European Commission asks Belgium to amend dividend taxation rules

The European Commission on March 26 made a formal request to Belgium to amend dividend taxation rules to comply with the parent-subsidiary directive.

The Belgian law does not allow income from financial instruments that have been sold, given as security, or lent with respect to the parties to agreements on in rem securities or loans in cross-border situations to be deducted from taxable income.

According to the Commission, the law is contrary to the EU Parent-Subsidiary Directive, which provides for the non-taxation of profits received by the parent company from a subsidiary established in another Member State.

The Belgian authorities have two months within which to notify the Commission of the measures they have taken to apply the Directive correctly, or the Commission may take Belgium to the Eurpoean Court of Justice over the matter.

See:

• Release