Belgian private investors welcome the ruling of the Belgian Supreme Court dated 16 June 2017 allowing them to significantly reduce the tax burden of their French sourced dividends: up to 12.7%.


The treaty for the avoidance of double taxation concluded between Belgium and France on 10 March 1964 provides in Article 19.A.1. that « […] The tax due in Belgium on the income, after deduction of French tax […] will be reduced on the one hand, by the movable prepayment levied at the normal rate and, on the other by the lump-sum amount of foreign tax which may be deducted under the conditions laid down in Belgian law; however, that lump-sum amount may not be less than 15% of the amount of the income after deduction of the French tax ».

Accordingly, Belgium must grant a foreign tax credit with respect to dividends received by Belgian individuals from French companies that have effectively been taxed in France. It must however only do so accordingly to the conditions provided for by Belgian legislation.

The law of 7 December 1988 abolished the tax credit for private individuals. Since then, the Belgian tax administration systematically refuses to grant a foreign tax credit on the basis of this treaty provision.

This position of the tax administration was followed by the case-law.

Summary of the ruling of 16 June 2017 of the Belgian Supreme Court

In the case at hand, the taxpayers had received French source dividends. In accordance with the French – Belgian tax treaty, these dividends were first subject to French withholding tax at the rate of 15%, before being subject to Belgian withholding tax or distinct taxation at a rate of 25% (30% today) on the net amount (after French withholding tax).

The taxpayers relied on Article 19.A.1. of the treaty and claimed a foreign tax credit of 15% on the net amount.

The tax administration, followed by the Ghent Court of Appeal, refused the tax credit to the taxpayers invoking the fact that internal Belgian tax law does no longer allow to benefit from a tax credit for foreign withholding tax on dividends.

Contrary to the jurisprudence established so far, the Belgian Supreme Court decided otherwise. The Court found the taxpayers’ case to be correct, invoking the supremacy of the international treaties concluded by Belgium over Belgian domestic legislation.

According to the Court, the absence of a tax credit in Belgian domestic law can therefore not be invoked to legitimately refuse the benefit of the minimum foreign tax credit provided in the treaty.

Consequences of the judgment of 16 June 2017

This ruling marks a rupture in the current case-law.

It will still be for the Antwerp Court of Appeal, to which the case is referred to, to issue a new arrest in this case.

In the event of a favorable arrest of the Antwerp Court of Appeal, private investors and non-profit legal entities will be pleased to be able to benefit from a tax credit of 15% on the net amount of dividends received from French companies in the future. This way, they will be able to recover up to 12.7% of the gross amount of these dividends (i.e. 15% of 85%).

If these taxpayers wish to benefit from this decision as from this year (income year 2016), they will have to declare their French source dividends and then file a complaint against the enrolled tax (in the absence of a suitable declaration form).

For the past, taxpayers could consider filing a request for an ex offico relief to recover up to 5 years of overpaid taxes.

Finally, we recall that the French – Belgian double tax treaty has been in process of renegotiation for several years, so that it will most certainly be amended.