Following last year’s circular letter of 4 March 2013 and its addendum of 13 June 2013 (please refer to our Aberdeen e-alerts 2013-3, 2013-9 and 2014-2) with respect to reclaims of withholding tax (“WHT”) filed by non-resident investment companies, Belgian tax authorities (“BTA”) are currently issuing provisional positive decisions to a number of investment companies, including Luxembourg SICAVs.
By their circular letter of 4 March 2013, BTA officially reacted to the decision of the Court of Justice of the European Union (“CJEU”) in the case Commission vs. Belgium (C-387/11).
Specific conditions and guidelines have been set out for pending and future tax reclaims relating to WHT suffered on dividends distributed in the time from 12 June 2003 to 31 December 2012. Furthermore, the circular letter announced legislative changes effective as from 2013, which have meanwhile been implemented and which effectively put an end to the discrimination between Belgian-resident investment companies and non-resident investment companies as of assessment year 2014 (= financial years ending on 31 December 2013 or later).
In early 2014, the BTA started processing WHT reclaims filed with respect to years prior to 2013, where a discrimination existed.
Unduly paid WHT to be refunded
Belgian tax authorities have recently started issuing provisional decisions entailing the refund of Belgian WHT to, inter alia, Luxembourg SICAVs with UCITS status.
However, in accordance with the administrative guidance, refunds will be granted only based on the application of a 5-year limitation period (calculated as of 1 January of the year in which WHT was remitted to Belgian tax authorities). Where a refund claim covered more than the aforementioned period and therefore is partially rejected, a refund might only be obtained by means of court litigation. Please note that the outcome of such litigation is uncertain, as the statute of limitation period for WHT levied before 2011 involves a number of still open issues.
When the BTA send provisional decisions that reject part of the claim due to the statute of limitation period, they ask the claimant for a partial waiver.
We expect that the refunded amounts will be increased by interest for late payment. Nevertheless, the responsibility for the interest calculation and their granting lies within a division of the BTA separate from the one deciding of reimbursements and is therefore not currently addressed in the provisional decisions.
We believe that the recent developments are a very positive sign for non-resident UCITS corporate funds willing to file WHT reclaims against WHT levied in Belgium. Pursuant to the BTA view, claims filed in 2014 can cover WHT of years 2010 through 2012, and claims filed in 2015 can cover WHT of years 2011 and 2012.
In addition, we would like to remind you that Luxembourg investment funds should be able to file WHT reclaims against Belgian annual tax, based on Belgian case law of the Brussels court of first instance and the 1970 Belgium-Luxembourg income and capital tax treaty. Belgian tax authorities have appealed the court of first instance’s decisions. Apparently, the Brussels appeal court, before which the cases are now pending, considers, apart from tax treaty law, also a close of analysis of EU law issues necessary, such as the (in-)compatibility of Belgian annual tax with primary European law (inter alia fundamental freedoms) and with secondary law (capital duty directive; UCITS directive).
For further information, please do not hesitate to contact us.
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