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Belgium – China Double Tax Treaty

Belgium – China Double Tax Treaty

The avoidance of double taxation for Belgian-Chinese residents

Belgium and China have signed a renewed double tax treaty and protocol in 2009 meant to replace the one previously signed in 1985. The agreement targets residents of one or both countries, who derive various types of income from one country or the other.

The Convention for the avoidance of double taxation is also important for the exchange of information between the two countries as well as for the prevention of fiscal evasion. By signing this treaty, Belgium becomes an important trading partner for China and foreign investorsfrom China in Belgium or vice versa can benefit from the applicable tax advantages.

The taxes covered by the treaty

The double tax treaty applies on taxes on income levied in the Contracting States. The Belgian taxes for which the treaty applies are:

– the personal income tax;

– the corporate tax;

– the income tax on legal entities;

– the income tax on non-residents.

In case of China, the treaty applies for the following taxes:

– the personal income tax;

– the corporate tax.

The Convention also applies to any taxes levied in place of or in addition to the ones listed above imposed after the signature date of the treaty.

Our partner lawyers in China can give you complete information about the taxation system in the country.

Important provisions of the Belgian-Chinese treaty

The double tax treaty between Belgium and China provides important preferential tax rates for the withholding tax on dividends and royalties:

– the withholding tax rate on dividends is reduced from 10% to 5% for dividends paid by a Chinese company to a Belgian resident if the Belgian company has held 25% or more of the share capital in the Chinese company for an uninterrupted period of at least 1 year;

– the withholding tax rate on royalties is reduced from 10% to 7%.

Other provisions include a capital gains exemption for the alienation of shares listed on stock exchanges and the extension of the Belgian participation exemption to low-taxed or un-taxed Chinese subsidiaries operating in trade services.

The consultants at our Belgian law firm can give you additional details about the provisions of this treaty as well as about other double tax treaties signed by Belgium.