In a 7 March announcement, Belgium’s Finance minister confirmed that the tax authorities will follow Belgian jurisprudence on the double taxation of French dividends paid to Belgian investors.
Two Belgian court cases opened the possibility that Belgian resident taxpayers could claim a foreign tax credit against the tax to be paid on French-source dividends. For prior coverage, see BDO’s alert Recent rulings on taxation of French-source dividends may provide opportunities.
This right to claim a foreign tax credit is based on the Belgium-France double taxation agreement (DTA), but as a result of some court cases, in 1988 the Belgian tax authorities disallowed the application of the foreign tax credit for individuals. As the jurisprudence evolved, the Belgian tax authorities had to amend their position, but they maintained a very restrictive interpretation of taxpayers’ rights.
As we previously reported, the Belgian tax authorities’ position was that the foreign tax credit on French-source dividends is granted only to taxpayers who have included those dividends in their annual income tax return. Their argument is that the non-application of the foreign tax credit when the taxpayers did not include the dividends in the income tax return is the result of a decision made by the taxpayers themselves to consider the withholding tax as final. Although the courts’ decisions created the right to the foreign tax credit for taxpayers who did not include their French-source dividends in their tax return, most taxpayer claims to obtain a refund for overpaid taxes on French-source dividends that were not included in a tax return were rejected by the tax authorities.
In his announcement of 7 March 2025, the new minister of Finance confirmed that the tax authorities have now resigned themselves to the position of the Court of Cassation: As long as the current Belgium-France treaty remains applicable, Belgium should grant a 15% tax credit against taxes paid on French-source dividends. This applies regardless of whether the taxpayer had reported those dividends in their annual income tax return or not. The procedure to be followed for the reimbursement or what amounts are involved remain to be determined.
It is important to note that this foreign tax credit is available only with respect to French-source dividends received by Belgian residents. No credit is available for taxes paid on dividends received from other countries.
Moreover, the foreign tax credit mechanism is not included in the new treaty that Belgium and France signed on 9 November 2021, which has not yet entered into force. The new treaty will enter into force on 1 January of the year following that year when the new treaty is ratified by both countries; in other words, 1 January 2026 at the earliest. Under the new treaty, French dividends received by Belgian residents will be treated the same way as dividends from other countries: a 30% tax will apply on the dividend amount net of foreign taxes.
For more information on the taxation of French-source dividends, please consult your regular BDO contact or the author of this article.
Peter Wuyts
BDO in Belgium
Two Belgian court cases opened the possibility that Belgian resident taxpayers could claim a foreign tax credit against the tax to be paid on French-source dividends. For prior coverage, see BDO’s alert Recent rulings on taxation of French-source dividends may provide opportunities.
This right to claim a foreign tax credit is based on the Belgium-France double taxation agreement (DTA), but as a result of some court cases, in 1988 the Belgian tax authorities disallowed the application of the foreign tax credit for individuals. As the jurisprudence evolved, the Belgian tax authorities had to amend their position, but they maintained a very restrictive interpretation of taxpayers’ rights.
As we previously reported, the Belgian tax authorities’ position was that the foreign tax credit on French-source dividends is granted only to taxpayers who have included those dividends in their annual income tax return. Their argument is that the non-application of the foreign tax credit when the taxpayers did not include the dividends in the income tax return is the result of a decision made by the taxpayers themselves to consider the withholding tax as final. Although the courts’ decisions created the right to the foreign tax credit for taxpayers who did not include their French-source dividends in their tax return, most taxpayer claims to obtain a refund for overpaid taxes on French-source dividends that were not included in a tax return were rejected by the tax authorities.
In his announcement of 7 March 2025, the new minister of Finance confirmed that the tax authorities have now resigned themselves to the position of the Court of Cassation: As long as the current Belgium-France treaty remains applicable, Belgium should grant a 15% tax credit against taxes paid on French-source dividends. This applies regardless of whether the taxpayer had reported those dividends in their annual income tax return or not. The procedure to be followed for the reimbursement or what amounts are involved remain to be determined.
It is important to note that this foreign tax credit is available only with respect to French-source dividends received by Belgian residents. No credit is available for taxes paid on dividends received from other countries.
Moreover, the foreign tax credit mechanism is not included in the new treaty that Belgium and France signed on 9 November 2021, which has not yet entered into force. The new treaty will enter into force on 1 January of the year following that year when the new treaty is ratified by both countries; in other words, 1 January 2026 at the earliest. Under the new treaty, French dividends received by Belgian residents will be treated the same way as dividends from other countries: a 30% tax will apply on the dividend amount net of foreign taxes.
For more information on the taxation of French-source dividends, please consult your regular BDO contact or the author of this article.
Peter Wuyts
BDO in Belgium