Recent case law creates uncertainty regarding statute of limitations for Belgian WHT reclaims

Context

Belgian tax law and double tax treaties concluded by Belgium provide for a number of withholding tax (WHT) exemptions and reduced rates for movable income (including dividends, interest and royalties).

Exemptions and reduced rates can in principle be claimed either at source or through a refund claim procedure. In practice, non-resident investors in Belgian securities are often not able to obtain relief-at-source and therefore need to file refund claims with the Belgian tax authorities.

Refund claims must be filed within five years as from January 1^st of the year during which the income was attributed or paid. The claims are in principle filed following an administrative procedure and legal judicial actions can be initiated if the administration delays or denies the refund.

Recent case law of the Belgian highest courts have created uncertainty on whether the five-year statute of limitations applies only to filing a refund request with the tax administration or also to initiating a judicial action.

Recent Jurisprudence Shift

Two major court decisions seems to have reshaped the above interpretation. Although the given court decisions led to a positive outcome in the specific cases at hand, they could potentially have adverse consequences in other files, more specifically vis-à-vis non-resident taxpayers:

• Court of Cassation (21 Dec 2023): Ruled that the five-year period under Article 368 of the Belgian Income Tax Code provides a statute of limitation for initiating legal actions to obtain a refund of unduly levied WHT, not just for the filing of administrative claims. In this respect, the Court stated, in contradiction with previous case law issued by the same Court in 2018, that taxpayers may initiate such lawsuits without having to first exhaust administrative remedies.
• Constitutional Court (13 Mar 2025): Confirmed this view, stating that if no formal tax assessment exists, taxpayers can immediately file a lawsuit within five years without first submitting a claim to the tax administration.

Potential impact

Whilst the above case law was issued in a different context, the above interpretation introduces legal uncertainty and potential risks for non-resident taxpayers reclaiming excess Belgian WHT under double tax treaties (or relevant domestic tax laws).

More specifically, non-residents who file timely administrative refund claims with the administration but do not also initiate a lawsuit within five-year period may face finding themselves outside the statute of limitation if the administration delays its decision or responds negatively after the deadline.

Although practitioners consider that the two above case law may be based on an incorrect interpretation of Belgian tax law, awaiting legislative clarifications, taxpayers may now feel compelled to file lawsuits pre-emptively before the five-year deadline, even if they have already submitted an administrative refund claim to the Belgian tax authorities. This could lead to:

• Increased litigation.
• Administrative and judicial overload.
• Higher costs and complexity for all parties.

Recommended Actions

• For all pending administrative claims, taxpayers (and intermediaries involved) should review and monitor the five-year statute of limitations period. Where any claim is nearing the end of the five-year period and no response has been obtained from the tax authorities (or in case a negative response was received), taxpayers should assess the need to initiate legal proceedings before the end of this period to prevent any discussions regarding the statute of limitations.
• For all past income events in respect of which no administrative claims were submitted yet, taxpayers could potentially consider initiating legal proceedings directly, without first submitting an administrative claim, depending on the amount of time left before the expiration of the five-year period. However, not submitting an administrative claim before legal proceedings could still also be challenged by the tax authorities based on sound arguments.  If only an administrative claim is filed, the five-year period should continue to be monitored.
• Going forward, taxpayers (and intermediaries offering such services) may need to reconsider their current process and timelines for the filing of WHT administrative refund claims in order to file such claims earlier following the income event (and hereby maximize chances to obtain a decision before the end of the five-year period). A new process should moreover be set up to monitor the expiration of the five-year period and to assess the need to initiate lawsuits pre-emptively.

How can EY assist?

We are available to provide further information on the aforementioned case law and to assess the potential implications for pending and future WHT refund claims, including regarding arguments which can be opposed to the interpretation made by courts in these case law. EY can also assist with the preparation and submission of administrative claims and with initiating legal proceedings.