Belgium: “Catch all” clause for withholding tax, non-residents providing services

Belgium: “Catch all” clause for withholding tax

The Belgian government approved a draft law that would modify the “catch all” clause that imposes a withholding tax on Belgium-sourced income of non-residents that would have been taxable if the income had been received by Belgian residents (in both treaty and non-treaty situations). The draft law has been sent to the Council of State for advice, with the new clause scheduled to be effective 1 July 2016.

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Under the draft, the scope of the “catch all” clause would be narrowed. The new “catch all” clause would only apply when the service provider has a direct or indirect “link of mutual dependence” with the service recipient—that is, a related-party standard. Regarding the interpretation of direct or indirect “link of mutual dependence,” the explanatory notes refer to article 26 of Belgian income tax law (i.e., abnormal and benevolent advantages) and stipulate that such “mutual dependence” could constitute both legal and economic control.

The draft law also explicitly confirms an administrative practice limiting the scope of the “catch all” clause to income that constitutes profits or benefits from the provision of services. However, a “de minimis regime”—under which wage withholding tax would apply only on the gross amount exceeding €38,000 per service provider, per year—would be withdrawn. The “catch all” clause would no longer apply to services provided to individuals who do not act within the framework of their professional activities.

New “catch all” clause

Following the new version of article 228, §3 of the Belgian income tax law, withholding tax at a rate of 16.5% would be required on profits and benefits that are not already considered to be taxable in Belgium under other provisions applicable to non-resident taxpayers, from services provided by a non-resident to:

  • An individual tax resident, within the framework of a professional activity producing profits or benefits
  • A taxpayer subject to corporate tax
  • A legal entity
  • A Belgian establishment 

And with whom the service provider has a direct or indirect “link of mutual dependence.” 

The “catch all” withholding tax would only apply to the extent that:

  • The income is taxable in Belgium according to a tax treaty, or
  • If no tax treaty exists, the taxpayer does not prove that the income has been “effectively taxed” in the beneficiary’s residence state.


Read a June 2016 report prepared by the KPMG member firm in Belgium.

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