These Belgian investment companies have fiscal incentives to keep their assets in Belgium. The European Commission has ordered Belgium to put an end to this breach of fundamental freedoms
The European Commission considers that a royal decree of 10 April 1995 breaches the European provisions on free movement of capital and freedom to provide services.
The decree in question exempts shareholders residing in Belgium from paying taxes on their dividends if the SICAF, an investment company with fixed capital, invests at least 60% of its assets in real estate situated in Belgium.
Two aspects of this provision are problematic under European law. First, the exemption is only applicable to shareholders who reside in Belgium. Second, it discourages Belgian investment funds from investing abroad.
Therefore, the Commission asked Belgium to modify its legislation in order to put an end to this infringement of fundamental freedoms. The request takes the form of a reasoned opinion which is the second step of an infringement procedure. If Belgium does not act accordingly, the case could be brought before the Court of Justice of the European Union.