The discussions on international double taxation of investment income, such as dividend income, earned by Belgian resident tax payers continues.
In Belgium, dividend income from Belgian or foreign sources is in most cases taxed at a fixed rate of 25%. In case dividends are earned abroad, there often also is a foreign income tax at source. This can in the end result in a high overall tax burden on such income.
This unequal treatment of foreign dividends versus locally earned dividends is going on for several years, and up to now tax payers did not manage to obtain any relief from the high taxation. It is quite remarkable to note that European case law does little to challenge the situation, which at first look is not very fair.
Several new court cases were initiated by individuals, who are living in Belgium and who are earning dividends in The Netherlands. These dividends were subject to withholding taxes in The Netherlands and the net dividend was subsequently also taxed in Belgium. Instead of challinging the Belgian tax authorities for levying Belgian taxes without granting any relief for the Dutch taxes paid, in the cases at hand the tax payers have objected against the Dutch withholding taxes.
This time the cases have met with more success as both the court of Breda and the court of ‘s-Hertogenbosch have granted a reduction of the Dutch withholding taxes on the basis that non residents of the Netherlands were paying higher taxes as compared to residents of the country. Although this does not fully solve the issue, at least it grants a certain relief from the high overal taxation.
The Dutch high court (Hoge Raad) is also looking at the problem and has decided to raise pre judicial questions with the EU Court of Justice. Maybe this will in the end lead to new insights and evolutions.