The European Commission has formally requested Belgium to change its tax provisions which result in a higher tax burden on dividends and interest paid to foreign investment funds compared with similar payments made to domestic investment funds.
Dividends distributed by Belgian companies to a Belgian investment fund are exempted from withholding tax under certain conditions, whereas dividends paid by their foreign counterparts are taxed at a 25% or 15% rate.
A Belgian investment fund meeting certain legal obligations related to its investments and investors is exempt from withholding tax on revenues deriving from money deposits performed in Belgium, whereas revenues of their foreign counterparts are taxed at 15% rate.
The Commission considers this treatment to be discriminatory and a restriction on the freedoms laid down in the Treaty of the European Union, since it results in a higher tax burden on dividends and interest paid to foreign investment funds compared with similar payments made to domestic investment funds.
The request takes the form of a reasoned opinion (second step of the infringement procedure provided for in Article 258 of the Treaty on the Functioning of the EU). If there is no satisfactory response to the reasoned opinion within two months, the Commission may decide to refer the matter to the Court of Justice of the European Union (Source : http://ec.europa.eu/community_law/index_fr.htm)