Brussels, 20 November 2013
Taxation: Commission brings a case before the Court of Justice in respect of two discriminatory provisions in Belgian law
The Commission has decided to bring an action before the Court of Justice of the European Union concerning the manner in which Belgium taxes, on the one hand, certain income of foreign cooperative societies and those pursuing a social objective and, on the other hand, certain interest paid to foreign companies.
Authorised cooperative societies and those pursuing a social objective
Belgium grants an exemption from withholding tax on the first tranche of dividends paid by cooperative societies and for the first tranche of dividends (or interest) allocated or attributed by societies pursuing a social objective. This first tranche is exempt only in the case of cooperatives established under Belgian law and societies pursuing a social objective which are authorised in Belgium.
This discriminatory taxation discourages investment in foreign cooperative societies and in foreign societies pursuing a social objective. This constitutes an unjustified restriction on the free movement of capital as established by Article 63 of the Treaty on the Functioning of the European Union (TFEU) and by Article 40 of the Agreement on the European Economic Area (EEA).
Belgian legislation charges withholding tax on interest from debt-claims not represented by securities and paid to foreign investment companies, and on interest relating to securities deposited or registered in an account with financial institutions established outside Belgium.
On the other hand, the same interest paid to Belgian investment companies or relating to securities deposited or registered with financial institutions established in Belgium is exempt.
This rule could discourage cross-border investment.
These are unjustified restrictions on the freedom to provide services and on the free movement of capital as established by Articles 56 and 63 of the Treaty on the Functioning of the European Union (TFEU) and Articles 36 and 40 of the Agreement on the European Economic Area (EEA) respectively.
Regarding the income of authorised cooperative societies and of those pursuing a social objective, the Commission sent a reasoned opinion to Belgium in October 2012 (MEMO/12/794), formally requesting the Belgian authorities to amend the relevant provisions.
With regard to the interest paid, the Commission sent a reasoned opinion to Belgium in February 2013 (MEMO/13/122), formally requesting the Belgian authorities to amend the relevant provisions.
In both cases, the Commission has decided to refer the matter to the Court of Justice, given the absence of a response from the Belgian authorities.
For the press releases issued on infringement procedures in the taxation or customs area see: http://ec.europa.eu/taxation_customs/common/infringements/infringement_cases/index_en.htm
For the latest general information on infringement measures against Member States see:
On the November infringement package decisions: MEMO/13/1005
On the general infringement procedure: MEMO/12/12