Belgium: Failure to allow deductibility of CFC taxes does not violate obligation to implement ATAD (CJEU Advocate General opinion)
Member states are allowed to adopt stricter measures without undermining ATAD’s objectives.
The Advocate General of the Court of Justice of the European Union (CJEU) on May 22, 2025, issued an opinion in case C‑524/23 that Belgium’s failure to transpose Article 8(7) of the EU Anti-Tax Avoidance Directive (ATAD)—which generally requires that foreign taxes paid by a controlled foreign company (CFC) be deductible for domestic tax purposes—does not constitute a breach of its obligation to implement the directive.
The Advocate General found that Belgium's choice to implement Model B of the CFC rules without incorporating the tax deduction required under Article 8(7) aligns with the directive's aim of protecting national tax bases and that minimum harmonization allows member states to adopt stricter measures without undermining the directive's objectives.
Read a June 2025 report prepared by KPMG's EU Tax Centre