Withholding tax evasion and avoidance: new measures announced

Last Friday, the Belgian Council of Ministers approved a draft bill of law aimed at fighting several situations of Belgian WHT (Withholding Tax) evasion and avoidance. The purpose of the new rules is to tackle improper WHT exemptions or refunds and facilitate the recovery of WHT in such cases.

In a nutshell

In a communication published on his website, the Belgian Minister of Finance gives the broad lines of the measures contained in the draft bill of law.

  • Firstly, the beneficiary of the movable income (dividends, interest, etc.) would become liable for the WHT when it has benefited from either an unlawful WHT exemption (this was already applicable in case of misrepresentation) or an unlawful WHT refund. In particular, from a procedural perspective, it will now be possible for the Belgian tax administration to get the tax due from the beneficiary via a tax assessment (kohier/rôle) instead of going to civil courts.
  • Secondly, to avoid situations of double refunds, the granting of a WHT refund will be subject to the condition that the applicant was the legal owner of the securities concerned upon the date on which the holders of rights were identified for a given corporate action.
  • Finally, in order to benefit from a WHT exemption or refund with respect to shareholdings held for less than 60 days (called ‘short-term shareholdings’ by the Minister of Finance), Belgian and foreign pension funds will now have to evidence that there is no underlying artificial construction (reversal of the burden of proof). Practically speaking, the relief at source on short-term shareholdings is likely to get impaired.

Key takeaway

Details of these measures will be available when the bill of law becomes public. In any case, it can be expected that these measures will have an important impact on WHT relief at source and refunds. Not only for the taxpayers concerned but also for the movable income debtors and financial intermediaries (in their capacity of withholding agents).

With a broad experience and expertise on this matter, PwC can of course provide its assistance to assess the impact of these measures and, where required, identify potential action points.