On 31 March 2011, Bill No. 53/1208/001 concerning various legal amendments was adopted by the Belgian Upper House.

Measures apply retroactively from 1 January 2011
The tax measures mainly relate to adjustments following infringement procedures started by the European Commission.

The measures, which apply retroactively from 1 January 2011, include the following:

1. Participation exemption
Under the participation exemption, a Belgian company may deduct 95% of dividends received from other Belgian companies and companies resident in other EU
Member States when calculating its taxable profits.

The remaining 5% is taxable at an effective rate of 33.99% (the general 33% tax rate plus the surcharge of 3%). Where a company has insufficient taxable profits for the full 95% to be deducted, the excess deductible amount may be carried forward. Liquidation bonuses received in the context of a cross-border merger are
100% deductible.

Dividends Received Deduction extended to EEA companies
This treatment is now extended to dividends received from subsidiaries resident in EEA Member States outside the European Union, i.e. Iceland, Liechtenstein and Norway.

Prior to 1 January 2011, to qualify for the dividends received deduction (or “DRD”), the following provisions should be met:

1. The shareholder must at least hold 10% of the share capital of the subsidiary or the subsidiary must have an acquisition value of at least EUR 2.5 million;
2. The subsidiary should be subject to tax;
3. The shareholder should have continuously held full ownership for an uninterrupted period of one year; and
4. The shares of the subsidiary must be accounted for as fixed assets.

Fixed assets accounting requirement abolished
Requirement 4., that the shares qualifying for the 95% DRD must be a fixed financial asset, was abolished because it is held to be incompatible with the EU
Parent-Subsidiary Directive by the European Commission.

2. Transfer of legal seat
The exemption that applies in the event of the transfer of a registered office of a Belgian company to another European Union Member State will be extended (from the European Company, “SE” or the European Cooperative, “SCE”) to all companies established in Belgium.

3. Dividend withholding tax for investment companies
The reduced 15% withholding tax applicable to dividends distributed by Belgian investment companies or by Belgian companies that are majority-held by individuals and that are quoted on an exchange or of which part of the capital is contributed by a Belgian private equity investment company (PRIVAK/PRICAF) is extended to investment companies or companies in the EEA respectively as well as to private equity investment companies in the EEA.

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