Taxation: Commission refers Belgium to Court over discriminatory taxation of foreign investment companies
European Commission - IP/11/422 06/04/2011
Brussels, 6 April 2011
The European Commission has decided to refer Belgium to the EU's Court of Justice because of its discriminatory taxation of foreign investment companies. Such discrimination is in breach of EU Single Market rules on the free movement of capital and freedom of establishment. Indeed, Belgian investment companies do not pay tax on their Belgian interest and dividend income, while their foreign equivalents are taxed.
Under Belgian law, domestic investment companies do not in practice pay tax on their Belgian-sourced interest and dividend income as they get a refund for any Belgian withholding taxes paid on their Belgian-sourced interest and dividend income. However, foreign investment companies pay withholding taxes of 15 or 25 % on their Belgian-sourced interest and dividend income and cannot claim a refund.
In practice, this means that foreign investment companies pay a tax on Belgian-sourced income that Belgian investment companies do not.
The Commission considers that the Belgian provisions restrict the free movement of capital and the freedom of establishment in breach of Articles 49, 54 and 63 of the Treaty on the Functioning of the European Union and with the corresponding Articles 31, 34 and 40 of the European Economic Agreement.
The Commission sent a reasoned opinion to Belgium on 3 June 2010 (IP/10/663) requesting Belgium to put an end to such discriminatory taxation of foreign investment companies.
For press releases on infringement cases in the taxation or customs field see:
For the latest general information on infringement measures against Member States see:
For more information on EU infringement procedures, see MEMO/11/220