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Belgium Approves Tax Treaty with Seychelles

On 13 March 2015, the Belgian government approved for ratification the pending income tax treaty with Seychelles. The treaty, signed 27 April 2006, is the first of its kind between the two countries. A protocol to the treaty, signed 14 July 2009, was also approved for ratification.

Taxes Covered

The treaty covers Belgian individual income tax, corporate income tax, income tax on legal entities, income tax on nonresidents, and the supplementary crisis contribution. It covers Seychelles business tax.

Service PE

The treaty includes the provision that a permanent establishment will be deemed constituted when an enterprise furnishes services within a Contracting State through employees or other engaged personnel for the same or connected project for a period or periods aggregating more than 6 months within any 12 month period.

Withholding Tax Rates

  • Dividends - 0% if the beneficial owner is a company that has directly held at least 25% of the paying company's capital for an uninterrupted period of at least 12 months, 5% if the beneficial owner is a company directly holding at least 10% of the paying company's capital, otherwise 15%
  • Interest - 5% for interest paid on commercial debt-claims resulting from deferred payments for goods, merchandise or services supplied by an enterprise, otherwise 10%
  • Royalties - 5%
  • Capital Gains - generally exempt, except for gains from the alienation of immovable property and gains from the alienation of movable property forming part of the business property of a permanent establishment

Double Taxation Relief

Belgium generally applies the exemption method. However, if the amount of Seychelles tax is less than 15% of the net amount of the income, Belgium will instead reduce to a half the Belgian tax which is proportionally relating to that income, calculated as if that income were income from Belgian sources.

For dividends, Belgium will generally apply the exemption method, but will apply the credit method if the dividends are included in a company's aggregate income for Belgian tax purposes and are not exempted.

For interest and royalties, Belgium applies the credit method.

Seychelles applies the credit method for the elimination of double taxation.

Limitation on Benefits

Article 27 Limitation on Benefits includes the provision that the benefits of the treaty will not apply for a resident of a Contracting State if the main purpose or one of the main purposes of such resident or connected person was to obtain the benefits of the treaty.

2009 Protocol

The protocol to the treaty signed in 2009 amends Article 24 Exchange of Information.

Entry into Force and Effect

The treaty will enter into force once the ratification instruments are exchanged, and will apply from 1 January of the year following its entry into force.

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