On 24 September 2021, Norway's Council of State approved the ratification of the pending protocol to the 2014 income tax treaty with Belgium. The protocol, signed 8 September 2021, is the first to amend the treaty and includes the following changes:

• The preamble is updated in line with BEPS standards;
• Article 1 (Persons Covered) is amended with the addition of provisions regarding transparent entities, providing that income derived by or through an entity or arrangement that is treated as wholly or partly fiscally transparent under the tax law of either Contracting State shall be considered to be income of a resident of a Contracting State but only to the extent that the income is treated, for purposes of taxation by that State, as the income of a resident of that State;
• The scope of Belgian taxes covered under Article 2 (Taxes Covered) is expanded to include "the withholding tax on immovable property";
• A new definition of closely related (associated) is added in Article 3 (General Definitions), providing that a person or enterprise is closely related to an enterprise if, based on all the relevant facts and circumstances, one has control of the other or both are under the control of the same persons or enterprises and, in any case, a person or enterprise shall be considered to be closely related to an enterprise:
  • if one possesses directly or indirectly more than 50% of the beneficial interest in the other (or, in the case of a company, more than 50% of the aggregate vote and value of the company's shares or of the beneficial equity interest in the company); or
  • if another person or enterprise possesses directly or indirectly more than 50% of the beneficial interest (or, in the case of a company, more than 50% of the aggregate vote and value of the company's shares or of the beneficial equity interest in the company) in the person and the enterprise or in the two enterprises;
• Paragraph 3 of Article 4 (Resident) is replaced, providing that if a person other than an individual is considered resident in both Contracting States, the competent authorities will determine the person's residence for the purpose of the treaty through mutual agreement based on its place of effective management, place of incorporation, and any other relevant factors, and if no agreement is reached, the person will not be entitled to any relief or exemption from tax provided by the treaty, except Article 22 (Elimination of Double Taxation), Article 23 (Non-Discrimination), and Article 24 (Mutual Agreement Procedure);
• Paragraphs 2 and 3 of Article 10 (Dividends) are replaced, providing for a 5% withholding tax on dividends if the beneficial owner is a pension fund and a general rate of 15% in other cases (unchanged), as well as an exemption if the beneficial owner is a company that has directly held at least 10% of the paying company's capital throughout a 365-day period that includes the day of the payment of the dividend (revised holding-period condition);
• Paragraph 2 of Article 11 (Interest) is replaced, although the 10% withholding tax rate is maintained;
• The specific main purpose tests in Articles 10 (Dividends), 11 (Interest), 12 (Royalties), and 21 (Other Income) are removed;
• Paragraph 3 of Article 20 (Offshore Activities) is replaced, including revised provisions in relation to the inclusion of activities carried on by a closely related enterprise in determining whether the 30-day activity condition is met for an offshore activity PE;
• Paragraph 2 subparagraph e) of Article 22 (Elimination of Double Taxation) is replaced, providing further clarification on the exemption for dividends provided by Belgium when paid out of income generated by the active conduct of a business, including that the exemption shall not apply to the extent that the paying company that is a resident of Norway has deducted, or may deduct, the dividends from its profits;
• Paragraph 1 of Article 24 (Mutual Agreement Procedure) is replaced, providing that where a person considers that the actions of one or both of the Contracting States results or will result in taxation not in accordance with the provisions of the treaty, they may present their case to the competent authority of either Contracting State (instead of just the State of residence);
• Article 24 (Mutual Agreement Procedure) is amended with the addition of new arbitration provisions, including that if the competent authorities are unable to reach an agreement to resolve a case within three years from the date when all the information required by the competent authorities has been provided to both competent authorities, any unresolved issues arising from the case shall be submitted to arbitration if the person that submitted the case so requests in writing;
• A new Article 28 (Entitlement to Benefits) is added, providing that a benefit under the treaty shall not be granted in respect of an item of income if it is reasonable to conclude, having regard to all relevant facts and circumstances, that obtaining that benefit was one of the principal purposes of any arrangement or transaction that resulted directly or indirectly in that benefit, unless it is established that granting that benefit in these circumstances would be in accordance with the object and purpose of the relevant provisions of the treaty;

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