Brussels, 8 October 2009
The European Commission has formally requested Belgium to amend its tax legislation providing for more favourable taxation of bearer shares held at banks established in Belgium or dematerialised shares held in securities accounts in Belgium and of certain dividends distributed by Belgian investment companies compared with similar dividends distributed by investment companies established in other EEA countries. The Commission takes the view that these regulations are incompatible with the basic freedoms laid down in Articles 49 and 56 of the Treaty establishing the European Community (and in similar provisions of the Agreement on the European Economic Area). The Commission's request is in the form of a ‘reasoned opinion’, the second stage of the infringement procedure provided for in Article 226 of the EC Treaty. If Belgium does not reply satisfactorily to the reasoned opinion within two months, the Commission may refer the matter to the European Court of Justice.
Under Belgian legislation, share dividends/bearer shares that have, since their issue, been held in an open deposit with a Belgian bank subject to the control authority for the Belgian financial sector and share dividends or dematerialised shares held in securities accounts in Belgium are subject to a rate of 15%. However, dividends on bearer shares or dematerialised shares held under similar arrangements (open deposit or held in securities accounts ) with a financial institution established in another EEA country are subject to a rate of 25%.
In addition, dividends distributed by Belgian investment companies are subject to a withholding tax of 15%, while dividends distributed by equivalent investment companies in other EEA countries are subject to a withholding tax of 25%.
The Commission takes the view that these provisions are contrary to Articles 49 and 56 of the EC Treaty (and to the corresponding Articles of the Agreement on the European Economic Area), which establish the principles of the freedom to provide services and the free movement of capital. Accordingly, investors (Belgian or EEA residents) are encouraged either to invest in Belgian companies or investment funds or to use the services offered by Belgian undertakings so as to benefit from the more favourable tax rates.
The Commission has given this case reference No 2008/4084.
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