4 June 2021

Withholding tax on French dividends: tax authorities accept the opinion of the Court of Cassation (after all)

Income from foreign movable property received by a Belgian taxpayer is (usually) subject to withholding tax in the country of origin. In Belgium, this income is also taxed as movable income. This leads to double taxation.

Double taxation of movable income

Foreign withholding tax on foreign movable property is, under certain conditions, (partly) offset against Belgian income tax (the so-called “flat rate on foreign tax”, hereafter “flat tax“). One of these conditions is that this income from movable property is part of a professional activity in Belgium. Individuals receiving foreign withholding income thus pay in principle both a foreign withholding tax and a Belgian income tax, i.e. the withholding tax, without these being creditable or reclaimable. The maximum rate of foreign withholding tax and its settlement is often regulated in a double tax treaty between Belgium and the country where the income from movable assets is earned/paid. Nevertheless, a situation of double taxation often arises.

French-Belgian context

This double taxation manifests itself clearly in the French-Belgian context. A Belgian individual receiving dividends from French shares pays 12,80% withholding tax in France and 30% withholding tax in Belgium. From a gross dividend of EUR 1,000, a net amount of EUR 610.40 remains.

individualgroup investor

no flat tax applicationflat tax application
gross dividend1.000,001.000,00
French withholding tax12,80%12,80%
net dividend at the border872,00872,00
Belgian withholding tax30,00%15% (30% – 15% flat tax)
net dividend610,40741,20

Does the French-Belgian double taxation treaty offer any solace?

On the basis of the French-Belgian double tax treaty, France can withhold a maximum of 15% on French dividends (in this case: 12,80%). In addition, this treaty explicitly provides that Belgium must grant a tax credit (read: set-off) of at least 15% to compensate the French withholding tax. The tax due in Belgium is then reduced to the extent allowed by the Belgian flat tax legislation (without this part being less than 15%). 

By adding the condition of professional activity (see above) to the Belgian flat tax regime, the Belgian legislator has made it impossible for Belgian private investors to obtain a credit for their withholding tax paid in France.

However, because international treaties take precedence over purely internal legal provisions, the Court of Cassation ruled that the Belgian rules subjecting the set-off to additional conditions cannot be applied. Consequently, the Court of Cassation ruled that Belgian private investors are also entitled to a credit for the French withholding tax paid. Therefore, the Belgian investor will be left with a net profit of EUR 741.20 from a French gross dividend of EUR 1,000 (see above). 

Administration (does not) accept(s) this jurisprudence

Initially, the Administration refused to apply this case law. It continued to refuse to grant a credit for French withholding tax to Belgian individuals, despite a clear ruling from the Court of Cassation.

In October 2020 and in February 2021, the Court of Cassation confirmed its earlier case law of 2017. Following these judgments, the Minister of Finance was questioned in the Chamber about the Administration’s position. The Minister confirmed that from now on the Administration must comply with this case law and will also allow an offset of the flat tax on French dividends for private investors, as provided for in the French-Belgian double tax treaty.


A new treaty between Belgium and France has been negotiated in recent years. Since recent tax treaties signed by Belgium provide in principle for the recognition of internal law limitations to the flat tax regime, it can be expected that the above-mentioned issue will become irrelevant. This new Franco-Belgian treaty may not enter into force for several years, definitively settling this debate at the expense of private investors.

It is also noteworthy that the wording and context of the (current) Franco-Belgian double tax treaty is specific and only comparable to a handful of other treaties, such as Italy. The relevance of this case law for similar discussions in a different cross-border context is therefore still unclear today.

Evert Moonen – Robbe Dumont

Published in VOKA – Ondernemers, VOKA Kamer van koophandel West-Vlaanderen, editie 10 2021

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