Possibilities for Luxembourg SICAVs to Reclaim Belgian Net Asset Tax and Withholding Tax
12 Nov 2024
Executive Summary
For several years, debates have persisted about whether the Belgian Net Asset Tax (NAT), also known as the "Belgian taxe d'abonnement," can be levied on Luxembourg-based SICAVs under the Luxembourg-Belgian Double Tax Treaty (DTT).
Recently, the Court of Appeal of Ghent ruled that Belgium cannot levy the NAT overturning the negative decision of the Supreme Court in 2022. This positive decision creates an opportunity for Luxembourg SICAVs to reclaim the Belgian NAT paid. However, the debate remains given a Court of Appeal of Liège decision confirming that Belgium can levy the NAT (reconfirming another negative Supreme Court decision of 2022).
Additionally, the judgment reaffirms the access of Luxembourg SICAVs to the DTT, allowing them to benefit from reduced Withholding Tax (WHT) rates on interest and dividends, and potentially reclaim excess WHT paid.
Context
Previously, several judgments from the Courts of First Instance and Courts of Appeal have confirmed that:
Luxembourg SICAVs have access to the DTT.
NAT falls within the scope of taxes covered by the DTT.
NAT qualifies as a wealth tax.
According to Article 22 of the DTT, wealth (except in specific circumstances like real estate and ships) can only be taxed in the Residence State. Therefore, Belgium cannot levy the NAT on Luxembourg SICAVs.
However, a procedure before the European Court of Justice regarding the compatibility of the Belgian NAT with EU law was unsuccessful.
Supreme Court Decisions of 2022
In 2022, the Supreme Court issued two seemingly contradictory judgments changing the landscape:
On March 25, 2022, the French-speaking Court ruled that the NAT does not qualify as a wealth tax, hence it does not conflict with the DTT.
On April 21, 2022, the Dutch-speaking Court decided that while the NAT is a wealth tax, it is not included in the DTT's exhaustive list of such taxes, allowing Belgium to levy it.
These cases were referred back to the respective Courts of Appeal of Liège (French-speaking) and Ghent (Dutch-speaking) for final decisions, which were rendered in November 2024.
Court of Appeal Decisions
On November 5, 2024, the Court of Appeal of Ghent decided that the NAT is a wealth tax and the DTT prevents Belgium from levying it. This decision overturned the 2022 judgment of the Supreme Court's Dutch-speaking Chamber.
On November 6, 2024, the Court of Appeal of Liège confirmed the 2022 Supreme Court's French-speaking Chamber decision, stating that Belgium can levy the NAT.
The decision from the Court of Appeal of Ghent can still be appealed by Belgium.
Future Implications
The new, seemingly contradictory Court of Appeal decisions indicate that the issue of the NAT is not yet fully resolved, also taking into consideration the four positive Court of Appeal decisions from Brussels in April 2023 (link newsflash).
The positive decision from the Court of Appeal of Ghent encourages Luxembourg SICAVs to:
Take (protective) measures regarding the NAT paid.
Assess the possibility of introducing WHT reclaims for excess WHT paid based on the DTT.
This judgment may also impact the Belgian tax on securities accounts paid by Luxembourg residents and whether the DTT prevents Belgium from levying this tax.
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Luc Buelens
