ÀÖÓ㣨Leyu£©ÌåÓý¹ÙÍø

In its well-considered judgments the Court decides that Belgian annual tax is incompatible with the DTT concluded between Belgium and Luxembourg and ordered the Belgian State to refund the amounts to the claimant SICAV, increased with interest at a rate of 7% p.a.

After a very detailed examination of the arguments and documents raised by the parties, the Court confirms that the calculation method and the objective characteristics of the ‘Belgian annual tax on collective investment vehicles� demonstrate that Belgian annual tax is a “tax on capital� within the scope of the DTT and taxation is exclusively allocated to the state of residence of the taxpayer, i.e. Luxembourg.

The Court states in clear terms that a Luxembourg SICAV, which is liable to Luxembourg taxe d ‘abonnement qualifies as Luxembourg “resident� for treaty purposes and may thus invoke the DTT.

Interestingly enough, the Court added in the context of treaty entitlement that the claiming Luxembourg SICAV had also suffered a definitive burden of Luxembourg dividend withholding taxes on certain Luxembourg-source dividends and was therefore not to be qualified as “fully exempted� from Luxembourg corporate income tax (“impôt sur le revenu")

Finally, the Court explicitly rejects the argument of the Belgian State that the DTT exclusion concerning the (former) 1929 Holdings regime covers also Luxembourg SICAVs.

The Belgian state has the possibility to seek revision of the judgments by the Belgian Supreme Court.

In response to these successful judgments, we believe that Luxembourg SICAVs that have been subject to ‘Belgian annual tax on collective investment vehicles� should take measures by duly filing claims for tax refund.

Note that these claims need to be filed within the time limitation period of five years. A refund for tax paid in 2015 (assessment year 2015, based on net assets per 31.12.2014) may be filed at the latest by the end of 2019. Refund interest (7% p.a.) will start to run only as soon as a refund claim is duly lodged.

Beyond the Appeal Court’s decisions concerning a Luxembourg SICAV, we believe that the court’s reasoning implies also the entitlement of Luxembourg FCPs to claim a tax refund.

Collective investment vehicles of other jurisdictions than Luxembourg might exceptionally benefit from the positive development, depending on the bilateral treaty with Belgium and the fund’s tax treatment in its residence state (case-by-case analysis required). Also EU/EEA law might provide some protection, although several arguments were rejected by the Court of Justice of the European Union (C-48/15).

ÀÖÓ㣨Leyu£©ÌåÓý¹ÙÍø Tax Advisers, Belgium in cooperation with the associated Belgian law firm K law have gained rich experience with administrative and judicial reclaims of Belgian annual tax on collective investment vehicles. Do not hesitate to contact us.