Belgian interest withholding tax exemptions

Belgian tax law allows for numerous interest withholding tax (WHT) exemptions, primarily to either attract foreign capital or to avoid creating tax hurdles in the Belgian financial market.

Important Belgian domestic interest WHT exemptions for non-residents:

• 0% WHT rate, provided that the company or establishment/branch fulfils certain conditions and can be considered a so-called eligible quoted (either the Belgian company or a (grand)parent is quoted) or intra-group financial company
• 0% WHT rate applying to interest on loans granted by professional investors (essentially all Belgian tax resident companies and branches) to financial institutions established in the European Economic Area or in a tax treaty country (of which there are over 85). Interest on loans granted, for example, by UK, French or US banks will be exempt from Belgian interest WHT
• Provided certain conditions are met, interest from registered bonds issued by Belgian tax resident companies/branches benefits from the 0% Belgian WHT rate

Interest WHT exemption based on the EU Interest & Royalties Directive: 

Since 1 January 2004, Belgian tax law has provided for an interest WHT exemption between “associated EU tax resident companies”. 

Note that Belgian tax law is more flexible than the Interest & Royalties Directive since it also provides for a WHT exemption in the case of an indirect holding of at least 25%. 

See also 1.7.2 and 1.7.3. 

Interest WHT exemption based on tax treaty protection 

Under the tax treaties with the US, Germany, Luxembourg and the Netherlands, 0% interest WHT is possible if certain conditions are satisfied. 

All these interest WHT exemptions are subject to some (manageable) minor formalities. 
 

Some best practice finance structures (without interest WHT leakage)