Belgium: Clarifications on taxation of cross-border provision of services
10 September 2014
Posted by: Author: Smits Axel
Authors: Smits Axel and Janssens Pascal (PwC Belgium)
23, 2014, a note has been published, providing more clarity on the recently introduced Belgian catch-all provision for cross-border services.
Based on this provision, Belgian companies are
required to retain payroll tax on payments made to non-residents located in a
jurisdiction with which Belgium has
concluded a double tax treaty (‘DTT’) (so-called ‘tax havens’), or
a DTT which contains a specific provision that gives Belgium taxing powers as
regards certain services, e.g. technical assistance.
DTT applies, Belgian companies are not required to withhold this payroll tax,
provided the non-resident is able to demonstrate that this income is
effectively taxed (i.e. included in the tax base) in its own state of
residence. If a DTT applies and provides for a reduced rate, the payroll tax
due is limited to the rate of the DTT.
note explains that, notwithstanding the broad wording of the law, only payments
for services are in scope. Furthermore, the Belgian Tax Authorities introduced
a minimum threshold, i.e. no payroll tax should be retained on the first
tranche of 38,000 euros (EUR) per non-resident, per year and per Belgian
debtor. Finally, the note provides a template certificate to be provided to the
non-resident’s tax authorities for getting the confirmation that the income is
included in the payee’s taxable basis in order to be eligible for the above
This note clarifies some aspects of the catch-all
provision regarding the taxation of services provided by non-residents to
Belgian companies. In particular, more clarification has been provided on the
qualifying services, the relevant amounts and the necessary certificate. We
recommend that clients review existing service agreements with vendors to see
what vendors are based in countries that could be affected by this payroll tax
requirement and to assess the impact of the clarified procedural aspects.
This article first appeared on pwc.com.