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BELGIUM: Application of Belgian withholding taxes on payments to foreign companies not allowed under series of Belgian tax treaties

On 23 June 2004 the Belgian Lower Court of Brussels dealt with a case were a Belgian organiser of performances during 1992 to 1996 in Belgium had contracted foreign production companies (published in F.J.F. No. 2005/33). These foreign production companies were resident in France, Germany, Ireland, the Netherlands, Portugal and the United States. The Belgian tax authorities requested from the Belgian organiser of the performances information regarding payments of fees, lodging and production costs to these foreign-based companies. The tax authorities then withheld withholding tax on these payments to these companies (excluding payments which were not directly attributable to the artists). This claim was based on Article 228(2)(8) and 228(2) of the Belgian Income Tax Code; these provisions allow withholding of tax on payments to artists that perform in Belgium even if the fees are paid to another foreign company or individual. The Court of Brussels held that applicable tax treaties prevail over Belgian domestic legislation. The tax treaties that were concluded by Belgium with Germany, Ireland, the Netherlands (the then applicable 1970 treaty) and Portugal (before the amendment of the treaty in 1995) did not contain the 1977 addition to Article 17 of the OECD Model Convention concerning payments to third parties. Hence the Court of Brussels held that the relevant tax treaties prevented the application of the Belgian domestic legislation. The tax treaty concluded in 1964 between Belgium and France does not contain a provision regarding artists and sportsmen, but mentions inter alia artistic and sports activities in its article 7 concerning independent activities. Since the pertinent artist did not have a fixed base in Belgium, Belgium could not tax the payment relating to his performance in Belgium. Under the Belgian ? United States tax treaty, Belgium would only be allowed to tax income of artists if they reside more than 90 days in a tax year in Belgium or if the income exceeded USD 3,000. None of the conditions was fulfilled in this case and therefore the Belgian withholding tax could not be applied. In conclusion: the Court denied Belgian tax authorities to withhold tax on the payments to all foreign production companies. It should be noted that Belgian has concluded numerous tax treaties that do include a provision such as Article 17(2) of the 1977 and subsequent OECD Model Conventions. In the relations between Belgium and the Netherlands and Portugal a provision like Article 17(2) has in the meantime been implemented. For an overview of the Belgian tax treaties see: The International Guide to the Taxation of Sportsmen and Sportswomen, Chapter on Belgium, paragraph 2.1.2.
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Dr. Rijkele Betten

Consulting editor
Prof. Dr. Ian S. Blackshaw

Editorial board

Prof. Guglielmo Maisto
Maisto e Associati, Milano

Dr. Dick Molenaar
All Arts Tax Advisors, Rotterdam


Mr. Kevin Offer
Hardwick & Morris LLP, London

Mr. Mario Tenore
Maisto e Associati, Milano


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