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Tax News: Convention for avoidance of double taxation with Belgium

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The Convention between the Macedonian Government and the Belgian Government for the avoidance of double taxation with respect to taxes on income and on capital and the prevention of fiscal evasion (“the Convention”) shall have effect starting from 1 January 2018, according to a notice by the Ministry of Foreign Affairs published in the Official Gazette No. 151/17.

Provisions of the Convention for withholding tax

Amongst other issues, the Convention provides for potential benefits to non-resident taxpayers in the form of reduction or elimination of withholding tax (WHT) due in Macedonia on income from dividends, interest and royalties, whereby:

In regards to dividends

The Macedonian WHT rate can be reduced from 10% (the statutory rate) to 5% if the beneficial owner resident in Belgium is a company which holds directly at least 10% of the capital of the company paying the dividends.Dividends may be fully exempt from taxation in Macedonia if the beneficial owner of the dividends is a company which, at the moment of the payment of the dividends, holds, for an uninterrupted period of at least 12 months, directly or indirectly, at least 25% of the capital of the company paying the dividends.

In regards to interest

No WHT would be due in Macedonia on:

  • Interest paid in respect of a loan granted or a credit extended by an enterprise to another enterprise
  • Interest paid to the other Contracting State, to one of its political subdivisions or local authorities or a public entity of that State.

In regards to royalties

No reduction of Macedonian WHT on royalties is available under the Convention. Please note that the potential benefits are not applied automatically but are subject to approval by the Macedonian tax authorities.

Previous agreement

The Convention between the Socialist Federal Republic of Yugoslavia and the Kingdom of Belgium for the avoidance of double taxation of income and capital signed on 21 November 1980 shall cease to have effect in the relations between Macedonia and Belgium with respect to taxes for which the provisions of the new Convention shall apply.

 

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