The main changes to be expected in Belgium in the context of the implementation of the ATAD will be the following:
1. Interest limitation
Belgium currently has a relatively straightforward thin cap rule with a 5/1 debt/equity ratio (with specific netting rules for treasury centres). Belgium was the main opponent to the interest limitation rules laid down in the ATAD, which resulted in the extended deadline for the introduction of these rules. Nevertheless, there are now talks that Belgium might introduce new interest limitation rules in the upcoming corporate income tax reform. It is, however, not yet clear what these would look like. In any case, changes will be needed as of 2024 at the latest.
2. Exit taxation
Belgian tax law is not fully in line with the exit taxation rules of the ATAD. As to the taxable events, the transfer of assets from the headquarters of a Belgian company to its foreign PE is currently not considered to be a taxable realization of these assets (because the assets remain within the same legal entity). Belgium does also not yet allow for the deferred payment of exit taxes, but such rules are already included in pending legislation which has been drafted in response to the ECJ case law in this respect. So legislative changes are definitely expected in this field.
Belgian tax law already has a GAAR, the use and interpretation of which are somewhat limited by certain constitutional principles. Taking into account that the wording of the Belgian GAAR is somewhat similar to the ATAD GAAR, it is unclear whether the Belgian GAAR will need to be further amended. It will also be interesting to see how the ATAD GAAR, and the interpretation thereof by the ECJ, will interact with the Belgian constitutional principles referred to above.
While certain requirements of the Belgian dividends-received deduction regime (the equivalent of the participation exemption regime) target distributions made by certain of the types of companies aimed at in the proposed CFC rules, taxation under these rules does not kick in as long as the income of such companies remains undistributed (and the shares are not sold). But Belgium does not have any actual CFC rules at present, and such rules will thus need to be introduced. It is not yet certain how the introduction of such rules will interact with the aforementioned application of the dividends-received deduction regime.
5. Hybrid mismatches
Belgium does not have any specific rules tackling hybrid mismatches. The Belgian government is working on some new relevant rules in the framework of the transposition of the amendment to the Parent-Subsidiary Directive, but these have a different ambit than the ones of the ATAD.
It is unclear whether Belgium will need to adopt any specific legislation to cope with situations aimed at in Article 9 (1) of the ATAD. In practice it is indeed not obvious when, based on Belgian tax legislation and interpretation, Belgium would grant a deduction (in case of double deduction) other than in situations where the source of payment is in Belgium. So it remains to be seen whether the Belgian legislator will feel the need to adopt specific legislation to remedy situations aimed at under Article 9 (1) of the ATAD.
On the contrary, adjustments to some existing rules (or the introduction of new ones) will be needed to cope with situations aimed at in Article 9 (2) of the ATAD, but we have no knowledge of any concrete proposal as of yet.