Brussels, 19 May 2011
Taxation: Commission requests Belgium to amend discriminatory tax provisions on donations of shares
The European Commission has formally requested Belgium to amend its discriminatory tax legislation on donations of shares to comply with its obligations under the European Economic Area (EEA) Agreement. The legislation in question treats less favourably donations of shares of companies in the industrial, commercial, craft and agricultural sectors as well as liberal professions, if their seat of effective management is located in Norway, Iceland or Liechtenstein as compared to donations of shares of equivalent companies based in EU Member States. The Commission does not see any possible justification for these restrictions. The Commission's requests take the form of two reasoned opinions (second step of EU infringement proceedings), one concerning the legislation applicable in Wallonia and the other one concerning the legislation applicable in Brussels. The Commission considers that Walloon tax provisions are in breach of EEA Agreement rules on the free movement of capital (Article 40) while the Brussels tax legislation is incompatible with EEA Agreement rules on the freedom of establishment (Article 31). If Belgium does not notify the Commission within two months of measures taken to comply with its EEA obligations, the Commission may refer these two cases to the EU's Court of Justice.
Under Walloon tax law, donation of shares of companies are subject to a higher tax rate if their seat of effective management is located in an EEA country outside the EU (such as Norway, Iceland or Lichtenstein) as compared to donations of shares of companies whose seat of effective management is located in the EU. Such provisions could discourage EU investors from donating shares of companies based in Norway, Iceland or Lichtenstein. The Commission considers that these rules are restrictive and that Belgium has therefore failed to fulfil its obligations under EEA Agreement rules on the free movement of capital.
In addition, Brussels region tax legislation provides for a higher tax (normal tax rate plus interest) if the seat of effective management of the company is transferred to an EEA country outside the EU within 5 years following the date of the donation. The Commission is of the opinion that this represents a restriction on the transfer of the company's seat to an EEA country as provided for in Article 31 of the EEA Agreement.
For the press releases issued on infringement proceedings in the area of taxation or customs see:
For more information on EU infringement procedures, see MEMO/11/312.
For the most up-to-date general information on the infringement proceedings initiated against Member States, see: