US-Belgium Double Taxation Treaty
December 28, 2007
Entry into force of the Income Tax Treaty and Protocol
On November 27, 2006 the Ambassador to Belgium, Tom C. Korologos, and the Deputy Prime Minister- Minister of Finance, Mr. Didier Reynders, signed a new Income Tax Treaty and Protocol to replace the existing bilateral income tax treaty, concluded in 1970, as amended in 1987, between the two countries. The Treaty and Protocol were signed in Brussels.
On July 16, 2007, the Belgian ratification instruments were sent by the Embassy to the Department of State and on December 28, 2007, the Department of State transmitted the instrument of ratification of this Convention to the Embassy of Belgium. In conformity with article 28 of the Convention, the agreement entered into force on December 28, 2007.
The agreement significantly reduces tax-related barriers to trade and investment flows between the United States and Belgium. It also modernizes the treaty to take account of changes in the laws and policies of both countries since the current treaty was signed.
The most important aspect of the Treaty and Protocol deals with the taxation of cross-border dividend payments. The Treaty and Protocol provide for the elimination of the source-country withholding tax on dividends arising from certain direct investments and on dividends paid to pension funds. The Treaty and Protocol also provide for mandatory arbitration of certain cases that cannot be resolved by the competent authorities within a specified period of time. This is only the second time that a U.S. tax treaty has contained such a provision. In addition, the Treaty and Protocol also strengthen the Treaty's provisions preventing so-called treaty shopping, which is the inappropriate use of a tax treaty by third-country residents. The Treaty and Protocol will also serve to improve the exchange of information between the two countries, including bank information.
With respect to the signing, Ambassador Korologos stated "This is a win-win treaty. The signing today is a tribute to the initiative of President Bush and Prime Minister Verhofstadt both of whom became personally involved. I congratulate the Finance Minister and the U.S. Treasury who worked out the details in record time. It is another example of the close US-Belgian economic and political ties."