Belgian Net Assets Tax falls outside treaty scope

Key Changes

On 4 September 2026, the Belgian Court of Cassation issued its judgment in case F.23.0109.N (and in three parallel cases), concerning the application of the Belgian annual tax on foreign-law collective investment undertakings, commonly referred to as the Belgian Net Assets Tax or annual subscription tax (taxe d’abonnement), to Luxembourg investment funds marketed in Belgium.

The cases concerned refund claims brought by Luxembourg investment funds that argued that the Belgian Net Assets Tax was covered by the Belgium–Luxembourg Double Tax Treaty and could therefore not be levied in the circumstances at issue.

The Court of Cassation overturned the judgments of the Brussels Court of Appeal dated 25 April 2023 and referred the case to the Antwerp Court of Appeal for a rehearing.
The Court held that:

The list of existing taxes covered by Article 2(3) of the Belgium–Luxembourg Double Tax Treaty is exhaustive.
Article 2(4), which extends the treaty to future taxes, applies only to taxes that are identical or substantially similar to the taxes exhaustively listed in Article 2(3).
The Belgian annual tax applicable to foreign-law collective investment undertakings is neither one of the taxes listed in Article 2(3) nor identical or substantially similar to those taxes.

Accordingly, the Court concluded that the Belgian annual tax does not fall within the scope of the Belgium–Luxembourg Double Tax Treaty.

Implications for Investment Funds

The judgment is relevant to Luxembourg investment funds marketed in Belgium as well as to ongoing and potential refund claims concerning the Belgian Net Assets Tax.

The tax is imposed on foreign-law collective investment undertakings and is calculated on the total net amounts outstanding in Belgium as of 31 December of the preceding year. The rates referred to in the context of the dispute are 0.0925% of holdings attributable to individual investors and 0.01% of holdings attributable to institutional investors.

Key implications include:

Continued application of the Belgian Net Assets Tax

The judgment supports the continued application of the Belgian annual tax to Luxembourg investment funds marketed in Belgium, as the Court held that the tax falls outside the scope of the Belgium–Luxembourg Double Tax Treaty.
Impact on refund claims

The decision overturns the legal basis of the favorable Brussels Court of Appeal judgments that had supported refund claims by certain Luxembourg investment funds. It therefore materially affects the prospects of obtaining a refund of Belgian Net Assets Tax on the basis of the treaty.
Significant financial implications

The potential historical refund exposure has been estimated in press reports at approximately EUR 1.5 billion. Luxembourg investment funds reportedly account for a substantial proportion of the assets invested by Belgian residents in foreign investment funds.
Relevance for Luxembourg funds with Belgian investors

Luxembourg investment funds that are, or have been, subject to the Belgian Net Assets Tax should consider the implications of the judgment for their historical tax positions and any pending refund proceedings.
Double Tax treaty claim

This judgement doesn’t negatively impact withholding tax reclaim based on double tax treaty.

Key Considerations

The Court of Cassation’s reasoning is based principally on its interpretation of Article 2 of the Belgium–Luxembourg Double Tax Treaty.

The Court noted that unlike the 1963 OECD Model Tax Convention, Article 2(3) of the treaty does not contain the words “in particular”. They therefore interpreted the list of existing taxes covered by the treaty as exhaustive rather than illustrative.

The Court further held that Article 2(4) covers future taxes only where they are identical or substantially similar to the existing taxes listed in Article 2(3), and that the inclusion of the general provisions concerning taxes on income and capital in Article 2(1) and Article 2(2) does not automatically bring subsequently introduced taxes within the treaty’s scope.

The Court concluded that the Belgian annual tax applicable to foreign-law collective investment undertakings is not identical or substantially similar to the Belgian or Luxembourg taxes listed in Article 2(3).

Finally, the proceedings are not entirely concluded. The case has been referred to the Antwerp Court of Appeal, which will rehear the matter in accordance with the Court of Cassation’s ruling. Other proceedings concerning the Belgian Net Assets Tax may also remain pending before the Belgian courts.

Comments

The judgments of 4 September 2026 were provided by the united chamber of the Dutch and French language benches. Although the cases concerned procedures conducted in Dutch language, the court no longer follows the reasoning line of the 21 April 2022 decision by the Dutch-language bench, which seemed to entail that no Belgian capital tax whatsoever could come in treaty scope (which, in view of the treaty’s Art. 23 would not be a bona-fide interpretation pursuant to Art. 31 of the Vienna Convention of the Law on Treaties).

In essence, the 4 September 2026 judgments constitute a repetition of the results of the 25 March 2022 decision by the French-language bench of the Belgian Court of Cassation. However, this time, the Court of Cassation refrained from providing any detailed reasoning.

Two aspects of the judgments attract criticism:

As concerns the need for a comparison with an existing tax listed in Art. 2(3), the Court of Cassation dealt neither with the OECD position (1969 OECD WP30 Report) nor a very broad consensus in international tax literature, both pointing to the opposite result. In fact, for tax treaties that contain Art. 2(1)-(4) – whether or not their Art. 2(3) contains the words “in particular”, a new tax qualifying as income or capital tax pursuant to Art. 2(2) automatically falls in treaty scope (Art. 2(1): “This Convention shall apply to income or capital taxes…”). For these treaties, it is therefore irrelevant whether the new tax is also substantially similar to a tax listed in Art. 2(3). For these treaties, Art. 2(4) has constitutive significance only for the rare cases where Art. 2(3) listed a tax that is not an income or capital tax and a new tax is identical or substantially similar to such listed tax. In a nutshell, the Court of Cassation treated the Belgium-Luxembourg Treaty as if both states had included in its Art. 2 only the equivalents to Art. 2(3) and (4) OECD MC.
Moreover, even if one considered, with the court, substantial similarity with a listed tax as constitutive and thus as the decisive test, one would rightly expect a detailed explanation, especially on why the Belgian Net Assets is not substantially similar to the Luxembourg wealth tax (impôt sur la fortune). Reliance on the decision of 25 March 2022 would not suffice, as this 2022 decision attempted to provide reasoning, but it was seriously flawed in several aspects (logical and factual).

Conclusion

After the 2022 judgments, the Belgian Court of Cassation’s judgments of 4 September 2026 address again the application of the Belgium–Luxembourg Double Tax Treaty to the Belgian Net Assets Tax. By holding that the tax falls outside the treaty’s scope, the Court has overturned the favorable 2023 Brussels Court of Appeal judgment concerned.