Belgium: Beneficial ownership not required for withholding tax exemption under Belgian law implementing EU interest-royalty directive (court decision)
Interest paid by Belgian company to Luxembourg parent qualified for withholding tax exemption even though parent might not be beneficial owner.
A Belgian lower court on August 12, 2025, held that the Belgian law implementing the EU interest-royalty directive (IRD) did not incorporate the requirement under the IRD that the recipient of interest be the beneficial owner of the income in order to qualify for exemption from withholding tax.
Consequently, interest payments made by a Belgian company to its Luxembourg parent between 2015 and 2019 qualified for the Belgian withholding tax exemption, even though the parent might not be considered the beneficial owner under the IRD.
The court also found that the Belgian anti-abuse rule (GAAR) could not be applied to counter the mere flow-through of interest payments via back-to-back loans to the ultimate beneficial owner, as the structure and transactions reflected genuine economic activity and were not set up with the sole or the primary purpose of obtaining a tax advantage.
Read a September 2025 report prepared by KPMG’s EU Tax Centre