Belgium : Does an annual tax on collective investment undertakings fall within the scope of A rticle 2?
(2024) Tax Treaty Case Law around the Globe 2023 — ISBN: [9783714303933], p. 360, published
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- Abstract
- The two decisions of the Belgian Court of Cassation1 that will be analysed and commented on in the present contribution are of particular interest as they address the inclusion of special taxes on financial institutions in the material scope of Article 2 OECD MC. The (preliminary) question of whether a tax in dispute is covered or not by Article 2 of the applicable DTC will, among other issues, determine the application of said DTC. An answer to this question will therefore strongly influence the allocation of the taxing powers of each contracting state. A positive answer (i.e.. application of a DTC to the net asset tax (NAT)) to the previous question will compel the contracting states to comply with the distributive rules of the applicable DTC. Conversely, a negative answer (no application of the DTC to the NAT) will leave the existing taxing powers of the contracting states “untouched”2. Both decisions of the court of cassation relate to the same tax, specifically an annual tax on collective investment undertakings registered with the Belgian Financial Services and Markets Authority (formerly, the Belgian Banking, Finance and Insurance Commission) and are covered by the directives (i) 2009/65/EC of the European Parliament and of the Council of 13 July 2009 “on the coordination of laws, regulations and administrative provisions relating toundertakings for collective investment in transferable securities (UCITS)”3 and (ii) 2011/61/EU of the European Parliament and of the Council of 8 June 2011 “on Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010 (AIFM Directive).”4 Said annual tax, generally referred to as the ‘Net Asset Tax’ (shortly, ‘NAT’), was originally embodied in Article 161, 3° of the Book IIbis of the Inheritance Tax Code and is due on the basis of the total of the net outstanding amounts in Belgium as on 31 December of the previous year (rate: 0,0925%)5. Since 1 January 2020, this tax is embodied in Article 201/20 of the Code on Miscellaneous Duties and Taxes (CMDT). The CMDT does not define the criterion “net outstanding amounts in Belgium”6, however, that was introduced by a law of 22 December 2003 that also extended the scope of application of the NAT to foreign UCITS (originally, the tax in question was restricted to Belgian UCITS). The two decisions of the Belgian Court of Cassation are interesting because they partly diverge on the same legal issue, specifically the question of whether the NAT in dispute can be regarded as a “wealth tax” and therefore enters into the material scope of the applicable DTCs, distinctly those between Belgium and Luxembourg7 and between Belgium and the Netherlands8. Two – apparently – opposite legal outcomes were reached that can be only partially attributed to the difference in wording between the two DTCs.
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Citations
Traversa, E., & Zeyen, G. (2024). Belgium : Does an annual tax on collective investment undertakings fall within the scope of A rticle 2? In Kofler, G., Lang, M. et alii (eds.), (ed.), Tax Treaty Case Law around the Globe 2023 (p. p. 360). Linde Verlag. https://hdl.handle.net/2078.5/213178