On 27 January 2014, Belgium’s finance ministry announced changes to the effective dates of the Double Tax Agreement (DTA) with China.
The finance ministry had previously announced that the agreement would come into effect on Jan. 4, 2014 and apply to taxes on income derived from January 1, 2015, and on other income of taxable periods beginning on or after January 1, 2015. However, the finance ministry has now said that the respective dates have changed, with the agreement given the effective date of December 29, 2013.
The new treaty comprises a few major changes compared to the previous agreement (signed in 1985 and amended in 1996). The treaty includes a broader definition of permanent establishments (PE) and reduces withholding tax rates paid by Chinese companies to Belgian resident companies.
The treaty also includes a new exemption rule for capital gains on shares. Capital gains from the alienation of shares may be taxed in the residency state of the company whose shares are alienated, provided that the alienator owns at least 25% of the shares of that company.
