You are here:
01 March 2018 / news

Belgian Constitutional Court decides on Fairness Tax

On 1 March 2018, the Belgian Constitutional Court annulled the Belgian fairness tax. The Court however limited the retroactive effect of the annulment, unless in the specific situation of the redistribution of a dividend.

Belgian Constitutional Court decides on Fairness Tax

Background

The fairness tax is a separate tax of 5,15% on distributed profits which have not been effectively taxed as a result of the notional interest deduction and/or tax losses carried forward. On 31 January 2014 a request for annulment was introduced before the Belgian Constitutional Court. The Constitutional Court referred to the European Court of Justice (ECJ) with a request for a preliminary ruling. On 17 May 2017 the ECJ decided that the fairness tax violated Article 4 of the Parent-Subsidiary Directive (PSD) to the extent a resident company redistributes dividends in a taxable period following the taxable period in which it received these dividends.

Decision of the Constitutional Court and consequences

The Court decides that the way in which the fairness tax is determined violates the Articles 10, 11 and 172 of the Belgian Constitution which guarantee equality and non-discrimination. Since the calculation of the fairness tax becomes unworkable in view of this violation, the Court annuls the fairness tax entirely. The annulment is binding from the moment the decision of the Court is published in the Belgian Official Journal.

In general the annulment has retroactive effect, which means that the annulled act is deemed to never have existed. For financial reasons, the Court however decided to moderate the retroactive effect in this particular case. For assessment years 2014-2018, the effects of the annulled act are maintained. This implies that the fairness tax cannot be recovered for those years. The retroactive effect is nonetheless maintained with respect to the situation that a Belgian company redistributes a dividend since this was considered incompatible with the PSD by the ECJ.



Ultimate beneficial owners become public in the UBO register

Ultimate beneficial owners become public in the UBO register

Ultimate beneficial owners (hereafter UBOs) of all Belgian companies and foundations have to register in the new Belgian UBO register by 30 November 2018 at... read more
New definition of enterprise: Belgian civil law partnerships become public

New definition of enterprise: Belgian civil law partnerships become public

Belgian civil law partnerships are subject to few formalities under current legislation. At present, they do not have to be registered, nor do they have to keep... read more
Tax Controversy Leaders Guide - 2018 edition - Loyens & Loeff

Loyens & Loeff experts recognised as Tax Controversy Leaders in Belgium

Christian Chéruy, Thierry Charon and Caroline Docclo are recognised as Tax Controversy Leaders in Belgium in the 8th edition of the Tax Controversy Leaders guide,... read more