Belgium introduces domestic exemption of withholding tax on royalties

On 31 October 2025, a Royal Decree (NL - FR) was published in the Belgian Official Gazette which introduces a domestic exemption of withholding tax on income from the rent, lease, use or concession of tangible movable property paid to a foreign company.

With the exemption, the Belgian government aims to level the playing field for Belgian companies renting or leasing physical assets such as building material or industrial, commercial or scientific equipment on the international market. Previously, a withholding tax of 30% was in principle due which was often grossed up. Many of the double taxation agreements concluded by Belgium already provide for an exemption from withholding tax on royalties pursuant to Article 12 of the OECD Model Tax Convention. However, the application of a treaty exemption on royalties depends on the exact wording of the treaty and requires time-consuming formalities which can cause delays and uncertainty.

Note that in case the income is paid to a foreign company with which the Belgian taxpayer is in a direct or indirect relationship of mutual dependence and which is not subject to income tax or is subject for that income to a considerably more advantageous tax regime, the exemption only applies if the payment is made in the context of an authentic transaction done for valid business reasons which reflect economic reality. A tax regime is not considered as considerably more advantageous if the Belgian taxpayer can demonstrate that the foreign company is subject to an effective income tax which is at least 50% of the income tax which would be due if the foreign company was established in Belgium.

In order to claim the exemption, the Belgian taxpayer must only establish a single one-off attestation identifying the parties and the tangible movable property involved (probably at the moment of first payment for which the exemption is claimed). The attestation must also confirm that the payment is made in the context of an authentic transaction (only in the above-mentioned case of payment to linked parties established in tax havens). Finally, the attestation must mention the financial account to which the payment is made. If the information on the attestation changes, a new attestation must be established (cfr. art. 117, §13 RD/BITC).

The new exemption applies to income paid or attributed as from 1 November 2025.

This Royal Decree introduces a domestic exemption from withholding tax on income derived from the rent, lease, use, or concession of tangible movable property paid to foreign companies. We welcome the simplification introduced by the legislator as it eliminates tax costs and reduces formalities and uncertainties for Belgian companies. If you have questions or require assistance, do not hesitate to contact your KPMG advisor.