I am happy to share my last article in L’Echo [1] co-authored with my colleague Arnaud Leroy.

For Luxembourg SICAV, successfully invoking the Belgium-Luxembourg Income and Capital Tax Treaty (“DTT”) is not a walk in the park!

1️. Annual tax on collective investment institutions

The case-law as it stands offer very limited possibilities for Luxembourg SICAV to claim exemption from the annual tax on collective investment institutions on the basis of the DTT.

↪️ Luxembourg investment funds that have attracted Belgian-resident investors will suffer from double taxation, as Luxembourg also imposes a subscription tax on the investment funds’ worldwide net assets.

2️. Reduced withholding tax on dividends distributed by Belgian listed companies

Benefits under the DTT can only be claimed by a taxpayer who
is resident in one contracting state, i.e. a person who is liable to tax. Meeting this requirement is not straightforward when collective investment vehicles are involved: a Luxembourg SICAV is, as a rule, exempt from corporate income tax in Luxembourg.

Under current case law, Luxembourg SICAV are nevertheless considered as treaty resident of Luxembourg based (amongst other) on their liability to subscription tax (cfr the decisions of the Court of Appeal of Brussels of 29/11/2018 and 25/4/2023; ruling of the Court of Appeal of Ghent of 5/11/2024).

↪️ A Luxembourg SICAV invests in Belgian listed companies. Upon dividend distributions made by the Belgian companies, a dividend WHT of 30% is levied. The Luxembourg SICAV files a refund request to the Belgian tax authorities, based on Art. 10, (2) DTT (which provides for a reduced WHT rate of 15%).

In practice, Belgian tax authorities refuse to grant the resident status to Luxembourg SICAV => they reject refund requests filed by Luxembourg SICAV (when they answer to the refund requests…)…

3️. Tate & Lyle WHT exemption ?

Can the Luxembourg SICAV invoke the so-called “Tate & Lyle” withholding tax exemption (art. 264/1 of the ITC), in the event that the acquisition value of the shares in each listed company exceeds 2,5 mio € ?

🔅 No : this exemption is subject to the condition that the recipient of the dividend is subject to corporate income tax without enjoying a derogatory / preferential tax regime. Luxembourg SICAV do not meet this subject to tax condition, as they benefit from a “subjective” exemption in Luxembourg.

Denis-Emmanuel Philippe 

[1] https://denisemmanuelphilippetax.be/media_fr/l-echo-les-deboires-des-sicav-luxembourgeoises-avec-le-fisc-et-la-justice-belge/