This case stands out from the crowd of withholding taxes seemingly summarily struck down by the ECJ recently. As a decision of the 4 th Chamber (with judges who were on the bench for Denkavit and Amurta) it would be unlikely that the Court had intended to change tack though.
Belgium is permitted to maintain a regime where an interest payment to a 48% parent company resident in Luxembourg is subject to withholding tax whereas no withholding tax would be levied had it been Belgian resident. The distinction from the previous withholding tax cases appears to be that Luxembourg gave credit for Belgian withholding tax against the liability to tax upon the interest receipt in Luxembourg. The system was not comparable to the taxation of interest payments to residents as some different system was required to reflect the fact that in the cross border context the right to tax had been split between the two states. There was also no cashflow difference as Belgium imposed advance corporation tax on the payment of interest to resident lenders.
In the very simplest of cases, ignoring different tax rates, perhaps it might be said that there was no difference between provisions which imposed one level of corporation tax domestically while imposing the same aggregate charge cross border, just split between the two states concerned. However as soon as you introduce common commercial realities the differences become obvious. If the lender itself borrowed the funds from a third party, the net interest income would be reduced by the interest expense decreasing the domestic lender’s tax liability but the cross border lender would still incur withholding tax on the gross amount of interest. No further information is known of the circumstances of the case which may only have been presented to the court on the simplest example.