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Norway Ratifies Tax Treaty with Belgium

On 20 June 2014, Norway ratified the tax treaty with Belgium. As previously reported, the treaty was signed  23 April 2014, and once in force and effect will replace the 1988 tax treaty between the two counties as amended by the 2009 protocol.

Taxes Covered

The treaty applies to the following Norwegian taxes:

  • National tax on income
  • Municipal tax on income
  • County municipal tax on income
  • National tax relating to income from the exploration for and the exploitation of submarine petroleum resources and activities and related work, including pipeline transport of petroleum produced
  • National tax on remuneration to non-resident artistes

The treaty applies to the following Belgian taxes:

  • Individual income tax
  • Corporate income tax
  • Income tax on legal entities
  • Income tax on non-residents

Withholding Tax Rates

  • Dividends - 0% if the beneficial owner directly holds at least 10% of the paying company's capital for a period of at least 12 months; 5% if the beneficial owner is a qualified pension fund, otherwise 15% (current treaty: 5% if beneficial owner holds 25% or more of the paying company's capital, otherwise 15%)
  • Interest - 10% (current treaty 15%), although the following are exempt:
    • Interest paid in connection with a credit sale for goods, merchandise, equipment or services
    • Interest paid in respect of loans granted by a banking enterprise, except when represented by bearer instruments
    • Interest paid in respect of a credit or loan granted or extended by an enterprise to another enterprise
  • Royalties - 0%

Service PE

In general, a service PE will be deemed constituted when an enterprise from one Contracting State furnishes services in the other State through one or more individuals present in that other country for an aggregate period of 183 days or more in a 12 month period when for the same or connected project, or when 50% or more of the enterprise's gross revenue from business activities in such period(s) is derived from those services

Double Taxation Relief

Under the treaty, Norway uses the credit method to eliminate double taxation while Belgium generally uses the exemption method. However, Belgium applies the credit method when dividends, interest, and royalties are included in a Belgian resident's aggregate income and such income is subject to tax in Norway.

Limitation on Benefits

A protocol to the treaty, signed the same date as the treaty, includes a limitation on benefits provision whereby the benefits of the treaty will not be applicable for income paid or derived in connection with an artificial arrangement.

Entry Into Force and Effect

The treaty will enter into force once the ratification instruments are exchanged and apply from 1 January of the year following the date of its entry into force. The 1988 treaty and 2009 protocol will terminate and cease to be effective from the date the new treaty goes into effect.

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