Taxand Belgium investigates the fairness tax law.
Since the introduction in 2013 by the Di Rupo government of the so-called “fairness tax”, large Belgian companies as well as large foreign companies with a Belgian permanent establishment, which distribute dividends while having little or no taxable base by benefiting from the application of the notional interest deduction and/or tax losses carried forward, are liable to the fairness tax. This is a specific tax at the rate of 5.15% on the difference between the distributed dividends and the taxable base finally subject to corporate income taxes.
Soon after the introduction, a demand for annulment / invalidity was filed with the Belgian Constitutional Court. During this procedure, the Court submitted preliminary rulings to the European Court of Justice in order to get a decision on the question of whether the fairness tax is in line with the laws and regulations of the European Union regarding the Parent-Subsidiary Directive and the Freedom of Establishment legislation.
The European Commission informed the Belgian government in August 2014 that, in their opinion, the fairness tax was in violation of Article 4 of the Parent-Subsidiary Directive and other clauses of applicable European law.
The opinion of the Advocate General is not binding on the judges of the European Court of Justice. In most cases however, the judges of the Court do concur with such an opinion.