On September 5, 2016 the Belgian Federale Overheidsdients Financiën (FOD) released a draft circular regarding the interpretation of Article 7 of the Belgian Model Tax Treaty. According to a press release issued by the Belgian FOD the draft circular mainly discusses the fundamental differences between Article 7 of the OECD Model Tax Treaty as it read before 2010 and as it reads since 2010. Special attention is given to the ‘transfer’ of an asset from one part of an enterprise to another part of that same enterprise.
The draft circular has been made available in both the Dutch and the French language.
Input/remarks regarding the draft circular have to be submitted via e-mail This email address is being protected from spambots. You need JavaScript enabled to view it. by October 3, 2016 at the latest.
Subjects discussed in the draft circular include a.o.:
· A general introduction;
· The texts of Article 7 of the OECD Model Tax Treaty as it read before 2010 and after 2010;
· General principles of Article 7 of the OECD Model Tax Treaty (old and new)
o relevant business approach
o functionally separate entity approach
o force of attraction
· Fundamental differences between the old Article 7 and the new Article 7
· Limitation of the OECD rules regarding the allocation of business profits to a permanent establishment
o Special case of gains
o Transfer from a Belgian permanent establishment
o Transfer from a Belgian main office
· Depreciable assets
o Allocation of profits to a foreign permanent establishment of a business which main office is residing in Belgium
o Allocation of profits to a Belgian permanent establishment of a business which main office is residing in a partner state
· Non-depreciable assets
o Allocation of profits to a foreign permanent establishment of a business which main office is residing in Belgium
Click here to be forwarded to the Dutch version of the draft circular as available on the website of the Belgian FOD, which will open in a new window.
Click here to be forwarded to the French version of the draft circular as available on the website of the Belgian FOD, which will open in a new window.
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