Belgium: Ahead of Tax - Belgium adopted a new far-reaching Controlled Foreign Companies regime (Webinar)

What are the rules and how will they impact you?

In brief

At the end of last year, the Belgian Parliament adopted a new Program law, which includes new rules on the controlled foreign company (CFC) regime in Belgium applicable as of tax assessment year 2024.

In this webinar, we briefly explain the new rules, how they will impact you, and what the remaining uncertainties are.


Contents

Key takeaways

Belgium originally implemented Model B (the transactional approach) of the CFC rules under the EU anti-tax avoidance directive (ATAD) but this reform entails a shift to an entirely different model, i.e., Model A (an entity approach), with far-reaching consequences. Whereas the former CFC regime was not of particular concern provided that the foreign entity was duly remunerated under TP rules, the scope of application of the new CFC model is very broad and can target any controlled foreign entity which is not subject to at least half the taxation that would have been applied if it were a Belgian entity.

This triggers various uncertainties, for example when the CFC is subject to certain tax rules which are internationally recognized, but implemented differently or subject to different conditions than in Belgium. Furthermore, even though the CFC profit to be included is limited to the passive income of the CFC, the definition of such income is very broad and includes amongst others rental income and income from financial and operational lease, income from asset management, and financial activities in general and income from distribution of products and services if the entity adds little economic value.

As a result, we foresee that situations may be caught which were not originally targeted by the EU ATAD. Furthermore, a specific CFC reporting obligation has been introduced into Belgian law which, depending on how it is to be interpreted, could go further than expected as well.

Speakers: Alain Huyghe, Julie Permeke, Philippe Lion

Do not hesitate to reach out to us if you would like to obtain a recording of this webinar.

Related webinars

Belgium: Ahead of Tax - Belgium boosts its fiscal investment deduction (Webinar)

Belgium: Ahead of Tax - Corporate income tax and Transfer pricing (Webinar)

Belgium: Ahead of Tax - VAT, customs and trade (Webinar)

Belgium: Ahead of Tax - Employee benefits and compensation (Webinar)

Belgium: Ahead of Tax - Belgium adopted a new far-reaching Controlled Foreign Companies regime (Webinar)

Belgium: Ahead of Tax - Overview of new Belgian tax measures in the pipeline

Belgium: Ahead of Tax - Tax challenges in light of the "new way of working" (Webinar)

Belgium: Ahead of Tax - Transfer pricing and financial transactions - the current state and developments from a Belgian perspective (Webinar)

Belgium: Ahead of Tax - VAT updates in Belgium in 2023 and beyond (Webinar)

Belgium: Ahead of Tax - Unshelling the adapted ATAD 3 Proposal (Webinar)

Belgium: Ahead of Tax - Beneficial ownership: impact on Belgian audit practices and litigation since the Danish cases (Webinar)

Belgium: Ahead of Tax - Where Direct and Indirect Tax interplay (Webinar)

Belgium: Ahead of Tax - The new expat regime (Webinar)

Belgium: Ahead of Tax - Recent cases on leveraged equity refinancing. What is still possible in this context? (Webinar)


Copyright © 2024 Baker & McKenzie. All rights reserved. Ownership: This documentation and content (Content) is a proprietary resource owned exclusively by Baker McKenzie (meaning Baker & McKenzie International and its member firms). The Content is protected under international copyright conventions. Use of this Content does not of itself create a contractual relationship, nor any attorney/client relationship, between Baker McKenzie and any person. Non-reliance and exclusion: All Content is for informational purposes only and may not reflect the most current legal and regulatory developments. All summaries of the laws, regulations and practice are subject to change. The Content is not offered as legal or professional advice for any specific matter. It is not intended to be a substitute for reference to (and compliance with) the detailed provisions of applicable laws, rules, regulations or forms. Legal advice should always be sought before taking any action or refraining from taking any action based on any Content. Baker McKenzie and the editors and the contributing authors do not guarantee the accuracy of the Content and expressly disclaim any and all liability to any person in respect of the consequences of anything done or permitted to be done or omitted to be done wholly or partly in reliance upon the whole or any part of the Content. The Content may contain links to external websites and external websites may link to the Content. Baker McKenzie is not responsible for the content or operation of any such external sites and disclaims all liability, howsoever occurring, in respect of the content or operation of any such external websites. Attorney Advertising: This Content may qualify as “Attorney Advertising” requiring notice in some jurisdictions. To the extent that this Content may qualify as Attorney Advertising, PRIOR RESULTS DO NOT GUARANTEE A SIMILAR OUTCOME. Reproduction: Reproduction of reasonable portions of the Content is permitted provided that (i) such reproductions are made available free of charge and for non-commercial purposes, (ii) such reproductions are properly attributed to Baker McKenzie, (iii) the portion of the Content being reproduced is not altered or made available in a manner that modifies the Content or presents the Content being reproduced in a false light and (iv) notice is made to the disclaimers included on the Content. The permission to re-copy does not allow for incorporation of any substantial portion of the Content in any work or publication, whether in hard copy, electronic or any other form or for commercial purposes.