On 21 June, State Secretary Van Rij, Belgian Finance Minister Van Peteghem and Flemish Finance Minister Van Diependaele signed the new tax treaty between the Netherlands and Belgium in Brussels. This new treaty replaces the current treaty from 2001. The new tax treaty is important to prevent double taxation, combat abuse and it offers a solution to some ongoing bottlenecks under the current treaty, including for teachers, professors and athletes and artists.
Bottlenecks removed relating to teachers, professors and for athletes and artists
Among other things, the new treaty removes bottlenecks that existed for teachers, professors and for athletes and artists who perform across the border. With the amended treaty, teachers and professors working across the border in principle pay tax in the country where they work. This creates more equality, and they pay tax more often in the same country where they owe their social security contributions. Unlike under the current treaty, they are treated the same as other employees. Administrative burdens are avoided for athletes and artists, because under the new treaty (unlike under the current treaty) they do not owe tax in the other country for a short-term operation across the border. They then pay tax on the relevant income in the country where they live.
Anti-abuse provisions and tax on profits
The new tax treaty also contains provisions to tackle tax avoidance through abuse of the treaty. For example, the treaty contains provisions to be able to levy profit tax in the country where activities are carried out earlier than under the current treaty. These provisions come from the international BEPS project against tax avoidance (Base Erosion and Profit Shifting).
Emigrated director-major shareholders
The new treaty also contains two adjustments for director-major shareholders with their own bv who have emigrated to Belgium. For example, under the new treaty it will be possible for the Netherlands to tax dividends up to ten years after emigration, even if the BV has moved to Belgium.
In addition, the treaty stipulates that Belgium will not levy tax under the new treaty on the sale of the shares or on liquidation of the BV if a Dutch tax claim is still open. This is the claim relating to the increase in value of the shares of the director-major shareholder that arose during the period that this shareholder was a resident of the Netherlands.
Teleworking and tax
The Netherlands and Belgium are still discussing the situation of cross-border workers who work from home. It has been decided not to wait for the signing of this treaty until these discussions have been concluded.
For the social security position for teleworkers we refer to: Framework agreement on cross-border telework – Article 16 (1) of Regulation (EC) No. 883/2004 in cases of habitual cross-border telework. (witscraft.com)
Before the treaty enters into force, the relevant parliaments in both countries still have to give their approval to this treaty. For this purpose, the Netherlands and Belgium are also drawing up a joint explanation of the treaty. In the Netherlands, as usual, the treaty is first submitted to the Council of State for advice and then presented to Parliament.