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Tax Treaty between Belgium and Seychelles has Entered into Force

On 24 November 2017, Belgium published in the Official Gazette the Act of 30 June 2015 that authorizes the entry into force (effect) of the income tax treaty with Seychelles, as well as the amending protocol. The notes to the Act specify that the treaty entered into force on 10 September 2015 and the amending protocol entered into force on 22 June 2016. The treaty, signed 27 April 2006, is the first of its kind between the two countries.

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 - 0% for interest on debt-claims or loans of any nature - not represented by bearer instruments - paid to banking enterprises and interest on deposits made by an enterprise with a banking enterprise; 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%

Note - The final protocol to the treaty clarifies that consideration for technical assistance or technical services are not be considered to be payments for information concerning industrial, commercial, or scientific experience for the purpose of Article 12 (Royalties), but may be taxed in accordance with the provisions of Article 7 (Business Profits).

Capital Gains

The following capital gains derived by a resident of one Contracting State may be taxed by the other State:

  • Gains from the alienation of immovable property situated in the other State; and
  • Gains from the alienation of movable property forming part of the business property of a permanent establishment in the other State.

Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State

Double Taxation Relief

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

Belgium generally applies the exemption method. However, with respect to income covered by Article 7 (Business Profits), if the amount of Seychelles tax is less than 15% of the net amount of the income, Belgium will instead reduce to half the Belgian tax which is proportionally relating to that income, calculated as if that income was from Belgian sources.

For dividends, Belgium will apply the exemption method under the conditions and within the limits provided for in Belgian law. However, Belgium will apply the credit method if the dividends are included in a company's aggregate income for Belgian tax purposes and are not exempted under Belgian law.

For interest and royalties, Belgium generally applies the credit method, subject to the provisions of Belgian law.

Limitation on Benefits

Article 27 Limitation on Benefits provides 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.

Amending Protocol

The amending protocol to the treaty, signed 14 July 2009, amends Article 24 (Exchange of Information).

Effective Date

The treaty, as amended by the protocol, applies from 1 January 2016.

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