The European Commission has referred Belgium to the European Court of Justice for its discriminatory taxation of foreign dividends. Under Belgian tax law, private investors receiving domestic dividends pay a final tax, withheld by the company, of normally 25 per cent. However, dividends paid by a foreign company to Belgian residents are first subject to a withholding tax of up to 15 per cent in the source State, and then, without the application of a foreign tax credit, are further subject to a Belgian income tax at a rate of 25 per cent. As a result, inbound dividends received by individuals are taxed more heavily than domestic dividends. The Commission considers that this difference in treatment is contrary to the principles of freedom of establishment and the free movement of capital.