BRUSSELS: The European Commission has asked Belgium to bring its rules on the taxation of dividends into line with the Parent-Subsidy Directive.
The Directive, adopted in 2011, aims to ensure that profits made by multinationals are not taxed twice. To achieve this, European Union (EU) member states must exempt from taxation any profits that parent companies receive from their subsidiaries established in other member states.
At present, Belgian tax rules do not allow income from financial instruments that have been sold, given as security, or lent with respect to the parties to agreements on in rem securities or loans in cross-border situations to be deducted from taxable income.
The Commission said that it considers these provisions to be contrary to the Parent-Subsidy Directive. It has sent Belgium a reasoned opinion, requesting that the country amend its legislation.
The Belgian authorities have two months to notify the Commission of the steps that have been taken to comply. Failure to do so could result in Belgium being referred to the European Court of Justice.
