INTERNATIONAL TAX PLAZA - The European Commission takes Belgium to the CJEU over the incorrect transposition of the CFC legislation as laid down in ATAD

In the Official Journal of October 22, 2023 it is announced that the European Commission decided to take the Kingdom of Belgium to the Court of Justice of the European Union (the CJEU) for failing to correctly transpose the Anti-Tax Avoidance Directive (Directive (EU) 2016/1164) (ATAD), in particular for failing to correctly transpose part of the CFC legislation included in ATAD.

The European Commission claims that the Court should: declare that the Kingdom of Belgium has failed to fulfil its obligations under Council Directive (EU) 2016/1164 of 12 July 2016 laying down rules against tax avoidance practices that directly affect the functioning of the internal market, by failing to correctly transpose Article 8, Paragraph 7 thereof.

Legal context

Article 8, Paragraph 7 of Directive (EU) 2016/1164 reads as follows: “The Member State of the taxpayer shall allow a deduction of the tax paid by the entity or permanent establishment from the tax liability of the taxpayer in its state of tax residence or location. The deduction shall be calculated in accordance with national law.”

Pleas in law and main arguments

The Commission takes the view that the Kingdom of Belgium has not correctly transposed Article 8(7) of Directive (EU) 2016/1164. The Commission does not have any information that demonstrates the effective and complete transposition of that article.

Follow International Tax Plaza on Twitter (@IntTaxPlaza)