Non-Belgian shareholders with a participation in a Belgian company with an acquisition value of at least €2.5m (but not reaching the 10 per cent participation threshold under the Parent–Subsidiary Directive) are now entitled to the Belgian participation exemption regime. 

In C-384/11 (Tate & Lyle Investments), the European Court of Justice (ECJ) ruled that the alternative €2.5m participation threshold in the Belgian participation exemption regime (that only applied to Belgian-resident companies) constituted a measure favouring resident companies since it was an alternative to the general participation threshold of 10 per cent that applies to resident as well as foreign companies. The withholding tax levied on dividend payments made to foreign companies also generally constitutes a final levy for those companies without a permanent establishment in Belgium.

In response to this decision, a withholding tax of 1,6995 per cent (5 per cent of the dividend will be subject to 33.99 per cent Belgian income tax) will be withheld on dividends paid by a Belgian company to a parent company that holds a participation with an acquisition value of at least €2.5m and that is established in the EEA or in a country with which Belgium has entered into a double tax treaty, provided this treaty or any other treaty allows for the exchange of information necessary to execute the national laws. This regime is also subject to the condition that the participation is held for at least one year without interruption and that the parent company cannot obtain a credit or reimbursement for Belgian withholding tax.

This measure applies to dividends attributed or paid as of 28 December 2015 (ie the publication date of the law in the Belgian State Gazette). This measure is mainly relevant for substantial participations in listed companies that do not amount to 10 per cent of the Belgian company’s share capital.