News item | 21-06-2023 | 15:03
On 21 June, State Secretary Van Rij, the Belgian Minister of Finance Van Peteghem and the Flemish Minister of Finance Van Diependaele signed the new tax treaty between the Netherlands and Belgium in Brussels. This new treaty replaces the current treaty from 2001. The new tax treaty is important to prevent double taxation, combat abuse and it offers a solution to some current bottlenecks under the current treaty, including for teachers, professors and athletes and artists.
State Secretary Van Rij: “The signing of this new treaty is a great milestone that underlines the importance of a good relationship with neighboring Belgium. We will continue to work in the future to continuously improve the mutual agreements in the field of taxation.”
Removed bottlenecks
Among other things, the new treaty removes bottlenecks that existed for teachers, professors and for athletes and artists who perform across the border. Under the amended treaty, teachers and professors working across the border in principle pay tax in the country where they work. This creates more equality and they pay tax more often in the same country where they owe their social security contributions. They are thus treated in the same way as other employees, unlike under the current treaty. Administrative burdens are avoided for athletes and artists, because under the new treaty (unlike the current treaty) they do not owe any tax in the other country for short-term activities across the border. They then pay tax on the relevant income in the country where they live.
Anti-abuse provisions and tax on profits
The new tax treaty also contains provisions to tackle tax avoidance through abuse of the treaty. For example, the treaty contains provisions to allow profit tax to be levied in the country where activities are carried out earlier than under the current treaty. These provisions come from the international BEPS project against tax avoidance (Base Erosion and Profit Shifting).
Emigrated director-major shareholders
The new treaty also contains two adjustments for director-major shareholders with their own BV who have emigrated to Belgium. For example, under the new treaty it will be possible for the Netherlands to tax dividends up to ten years after emigration, even if the BV has moved to Belgium. In addition, the treaty stipulates that under the new treaty Belgium will not levy any tax on the sale of the shares or on the liquidation of the BV if a Dutch tax claim is still outstanding. This must then be a claim about the increase in value of the shares of the director-major shareholder that arose during the period that this shareholder was a resident of the Netherlands.
Follow-up
The Netherlands and Belgium are still discussing the situation of frontier workers who work from home. It has been decided not to allow the signing of this treaty to wait until these talks have been completed.
Before the treaty enters into force, the relevant parliaments in both countries still have to give their approval to this treaty. To this end, the Netherlands and Belgium are also preparing a joint explanatory note to the treaty. In the Netherlands, as usual, the treaty is first submitted to the Council of State for advice and then presented to Parliament.