Finance Minister questioned on the application of the “catch- all” provision

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Effective 1 January 2013, the law of 13 December 2012 introduced a “catch-all” provision in the Belgian Income Tax Code (article 228, §3 ITC 1992) which aims at imposing Belgian taxation on a range of payments made to non-residents. The Finance Minister has recently acknowledged that the actual scope of the provision may be much broader than originally intended by the Government, and has become aware of the potential negative economic impact on enterprises active abroad. During recent parliamentary sessions, he indicated that the application of the law can, however, not be suspended in anticipation of a possible amendment of the law in the future. A task force has been set up within his cabinet to look into solutions, including a ‘de minimis’ rule (House, CRIV 53 PLEN 175, p. 38-45; CRIV 53 COM 888, p. 6-11).


The measure provides for the taxation of certain income of non-residents (not listed in the first and second paragraph of article 228 ITC 1992) when:

  • There is an expense incurred by a Belgian tax resident or a Belgian establishment;
  • The expense relates to income that is taxable in accordance with the the Belgian Income Tax Code; and
  • The income is paid to a non-resident from a country
    • with which Belgium does not have a double tax treaty and the beneficiary does not prove that the income is or will effectively be taxed in his state of residence, or
    • with which Belgium has a double tax treaty that grants taxing power on that income to Belgium.

The income is subject to a withholding tax of 33% to be levied by the debtor of the income on the gross income after a lump sum deduction of 50% (applicable to income paid or granted as from 1 March 2013). As a result, the effective tax burden amounts to 16.5% (except when the applicable double tax treaty imposes a lower tax). In principle, the withholding tax constitutes a final tax but the taxpayer may opt to have the income globalized (by filing a tax return eventually).

Difficulties encountered to apply the provision

Several aspects of the provision trigger difficulties in practice, amongst other its scope of application and the proof of effective taxation in the state of residence of the beneficiary.

Scope of application

The text of the Explanatory Memorandum and the examples given therein indicate that the provision is meant to allow taxation of Belgian-source payments for services rendered by non-residents only. The examples in the Explanatory Memorandum mainly seem to target payments for technical services to countries such as Brazil and India. In a literal reading of the text of the provision, however, the scope is not limited to payments for services, but extends to all payments not listed in article 228, §§ 1 and 2 ITC 1992. Thus, it cannot excluded that the provision also applies e.g. to payments for goods.

Proof of effective taxation (payments to non-treaty countries)

For payments to non-treaty countries, it is unclear how proof can be delivered that the income will effectively be taxed in the state of residence at the level of the beneficiary. According to the Finance Minister, his cabinet is drafting a form specific for this purpose.

Clarifications to be issued

Up until now, no political agreement could be reached to amend the text of the law in view of aligning it with the initial objectives set forth in the Explanatory Memorandum by the Government.

The Finance Minister plans to issue administrative guidelines to accommodate the law to the extent possible within the boundaries of the current text of the provision. As for the reporting of the income, he confirms that no specific box has been foreseen in the electronic withholding tax return, but that the payments must be reported in the form 281.30 (in a general section). The notification to the debtors of the income relating to this form for tax year 2014 (dated 3 February 2014) does not contain any additional guidelines. No sanctions should be expected by taxpayers that have not complied for income year 2013 as a result of the lack of timely information in this regard.


The scope of the measure currently remains unclear. In certain cases, further analysis may lead to the conclusion that taxpayers will have to report a broader range of payments than originally thought. Additional administrative guidelines should still be made available as regards the notification of effective taxation of the income to the debtors of the income.

EY Tax Consultants will follow-up on the matter carefully and inform as clarifications become available. Do not hesitate to get in touch with the contact persons listed here or with your regular contact at EY Tax Consultants for assistance in this matter.