Belgium: Tax administration focuses on directors, executives with management responsibilities at foreign company

Tax administration challenges taxpayer claims that certain directors, executives with management responsibilities at foreign companies is not taxable

Tax administration focuses on directors, executives at foreign companies

The Belgian tax administration recently has enhanced its focus and started to challenge taxpayer claims that certain director or executive remuneration obtained from foreign companies is not taxable in Belgium. 

Example of director of French company

Belgian residents may undertake management responsibilities with regard to a French company without sufficiently understanding the possible tax consequences.

Under Article 9 of the Belgium-France income tax treaty, jurisdiction for taxation of remuneration resulting from the exercise of a director's duties is attributed to the country where the company is a resident (assume the country of residence is France), provided that the company adopts a form as provided for by the income tax treaty.

However, being a director of a company established in France does not mean that all amounts paid to the director by the French company are not taxable in Belgium. Tax jurisdiction only rests with the country where the company is established with regard to remuneration received within the framework of the formal services of the director. This implies that only the part of the remuneration paid for participation with the board of directors will be taxable in France, as the country of residence of the French company.

For other remuneration, the income tax treaty between Belgium and France refers to Article 11 (employees) and Article 7 (self-employment activities). Thus, the remuneration paid to a Belgian salaried executive in a capacity other than as a member of the board of directors of the French company would be taxable in Belgium, with the exception of activities conducted in the French territory. Remuneration paid to an independent Belgian entrepreneur also would be taxable in Belgium, unless the self-employed person has a permanent establishment in France to which the income can be attributed.

Read a May 2021 report (French) prepared by the KPMG member firm in Belgium



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