In a previous newsletter, we have drawn the attention to new legal provisions according to which any Belgian taxpayer subject to Belgian company income taxation, Belgian individual income taxation, or Belgian non-resident income taxation will be fictively considered as having paid or attributed remunerations paid by a related foreign company to an employee who performs professional activities to the benefit of the Belgian taxpayer.
In an administrative circular dated 7 April 2020, the Belgian tax authorities have provided guidance on the scope of application of the above-mentioned fiction.
According to the Belgian tax authorities, it is not necessary that the employee has an employment contract with the Belgian taxpayer subject to Belgian income taxation. It is necessary and sufficient that the remunerations relate to professional activities falling within the daily activities of the Belgian taxpayer as set out in its bylaws. The fiction may therefore apply to remunerations paid in accordance with a secondment contract.
This position is in clear contradiction with the ratio legis of the fiction, as set forth in the travaux préparatoires of the law. Nevertheless, it does generate new withholding tax obligations – and hence individual tax form (« Fiche 281.10 » or « Fiche 281.20 ») obligations – within international groups of companies.
Should this new position be applied as it stands by the Belgian tax authorities, we recommend to do a case-by-case study and, more particularly, to look at the intra-group allocation of salary costs as well as re-invoicing methods.
We are currently in contact with the Belgian tax authorities to get confirmation of their interpretation.