Belgium: Anti-abuse provision under parent-subsidiary directive rules applicable (court decision)
The court held in favor of the tax authorities, determining that the series of transactions constituted tax abuse.
The Mons Court of Appeal in Belgium in January 2026 held (2024/RG/227) that the anti-abuse provision in the Belgian implementation of the parent-subsidiary directive (PSD) applied to a series of transactions.
Summary
A Belgian individual in December 2016 transferred their shares in an existing family holding company (OldHoldCo) to a new holding company (NewHoldCo). Within 10 days, OldHoldCo received substantial dividends from an operating subsidiary and passed them up to NewHoldCo, which used the funds (€22.20 million) to buy out the shares of the individual's siblings for €21 million. Both holding companies claimed the tax-exempt dividend received deduction (DRD) on the distributions.
Following an audit, Belgian tax authorities denied the DRD at the NewHoldCo level, arguing that NewHoldCo was merely a passive conduit designed to turn taxable profit distributions into tax-exempt cash to finance the sibling buyout.
The court held in favor of the tax authorities, determining that the series of transactions constituted tax abuse. The decision was based on two main elements:
- Subjective element (intent): The court determined that the primary purpose of creating NewHoldCo and passing the dividends through it was to improperly obtain a tax benefit (the DRD), which directly contradicts the intended objective of the PSD.
- Objective element (lack of substance): The court found that NewHoldCo lacked true economic substance. It had no employees, no premises, no actual business operations, and generated limited revenue for four years following its 2016 incorporation.
Read a May 2026 report prepared by KPMG’s EU Tax Centre