Belgian Socialist member of Parliament Hugues Bayet and Oxfam have expressed concern that intellectual property revenue could escape global minimum effective taxation envisaged under pillar 2 of the OECD‘s plan to modernize corporate tax rules. 

“It is interesting to note that this rule could have an adverse impact for companies paying royalties to Belgian companies benefiting from the Belgian IP regime,” Denis-Emmanuel Philippe, a lawyer and affiliate professor at the Université de Liège, told Tax Notes. He explained that Belgian companies under the patent box regime benefit from an effective tax rate of approximately 4 percent. “Therefore, if a foreign company pays royalties to such a Belgian IP company, the source country could request an additional tax of 5 percent” to reach the 9 percent required under the subject-to-tax rule, he said. Belgium would then lose its right to tax, transferring it to the royalty payer’s country, he added.

Read also the interview of Denis-Emmanuel Philippe in Tax Notes.