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The combination of French retenue à la source (withholding tax) and Belgian précompte mobilier (withholding tax on moveable property) on French dividends left Belgian residents with a tax burden of over 40%. After several years of legal wrangling, the Belgian tax authorities are complying with the ruling handed down by Belgium’s highest court (the Cour de cassation) on 15 October 2020. Tax on French dividends will now be limited to 27.75% (or even 25.88%).
Belgian taxpayers in receipt of French dividends have previously been subject to double taxation, in that they were required to pay both the French withholding tax and the Belgian withholding tax on moveable property in full.
This is set to change, however, as the Belgian tax authorities have decided to comply with the ruling handed down by the court on 15 October 2020. Accordingly, Belgian taxpayers receiving French dividends will be able to offset a proportion of their French withholding tax against their tax bill in Belgium. The tax rate on French dividends will therefore fall from 40% to 27.75% (or even 25.88%) for dividends paid in or after 2019.
Belgian residents receiving French dividends were subject to double taxation: the French withholding tax of 15% and then the Belgian withholding tax on moveable property of 30% (on what is known as the montant net frontière (net border amount), i.e. the gross dividend minus French withholding tax).
|Gross dividend||100 EUR|
|Net border amount after French withholding tax||85 EUR|
(15% of the dividend received)
|After Belgian withholding tax on moveable property||59,50 EUR|
(30 % of the net border amount)
|-> i.e. an overall tax rate of||40,5 %|
Article 19 of the tax treaty signed by Belgium and France stipulates that Belgian tax on French dividends must be reduced by the flat-rate foreign tax credit (quotité forfaitaire d’impôt étranger) deductible under the conditions laid down by Belgian law, at a minimum rate of 15% of the amount remaining after deduction of the French withholding tax.
|Gross dividend||100 EUR|
|After tax||72,25 EUR|
|-> i.e. an overall tax rate of||27,75 %|
Practical steps you can take to receive a reimbursement on dividends received in 2020
Belgian banks will not be able to apply the flat-rate foreign tax credit to the Belgian withholding tax themselves. Instead, taxpayers will be responsible for reclaiming any overpayments. A section has already been included in the Belgian tax return for this purpose (section VII, point F).
How to receive a reimbursement for previous years
It is possible to file a claim relating to French dividends received in 2019 with the tax authorities, provided that the tax assessment notice (avertissement-extrait de rôle, AER) for the 2020 tax year has been sent within six months.
Once this six-month period has elapsed, or to reclaim tax on dividends received previously, Belgian taxpayers who have overpaid (i.e. whose withholding tax on moveable property has been too high) can secure a repayment by filing a request for ex officio tax relief.
Such requests can be filed at any time in the five years following 1 January of the year in which the dividend was paid. Hence, it is still possible to file requests relating to dividends received from 2017 onwards (via a Belgian bank) or from 2016 onwards (via a foreign bank). Requests relating to any other years are prohibited.
What will happen in future?
The double tax treaty between Belgium and France has been renegotiated and under the new version it will no longer be possible to apply the flat-rate foreign tax credit to French-sourced dividends. This option will therefore only be available for a limited period.
Situation as at mid-February 2021.
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