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- 1. Subject to the provisions of the law of the United Kingdom regarding the allowance as a credit against United Kingdom tax of tax payable in a territory outside the United Kingdom (as it may be amended from time to time without changing the general principle hereof):
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- a) Belgian tax payable under the laws of Belgium and in accordance with the provisions of this Convention, whether directly or by deduction, on profits, income or chargeable gains from sources within Belgium (excluding, in the case of a dividend, tax payable in respect of the profits out of which the dividend is paid) shall be allowed as a credit against any United Kingdom tax computed by reference to the same profits, income or chargeable gains by reference to which the Belgian tax is computed;
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- b) in the case of income (other than loan interest) derived from a Belgian company (other than a company with share capital) by a member of that company the credit shall take into account the Belgian tax charged in respect of that income, whether charged on the company or on the member if:
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- (i) the member’s liability as a member of that company is unlimited, or
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- (ii) the member is a company which is a resident of the United Kingdom and which owns not less than 10 % of the capital (other than loan capital) of the Belgian company;
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- c) in the case of a dividend paid by a company which is a resident of Belgium to a company which is a resident of the United Kingdom and which controls directly or indirectly at least 10% of the voting power in the Belgian company, the credit shall take into account (in addition to any Belgian tax creditable under sub-paragraph (a) of this paragraph) the Belgian tax payable by the company in respect of the profits out of which such dividend is paid.
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- Notwithstanding the provisions of paragraph 1 of Article 23 of the Convention, from the entry into force of its law providing for the exemption from tax of certain overseas dividends the United Kingdom shall eliminate double taxation on those dividends in accordance with that law. (Cf. Article XV, paragraph 2 of the Protocol signed on 24 June 2009 amending the Convention between Government of the Kingdom of Belgium and the Government of the United Kingdom of Great Britain and Northern Ireland for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains signed on 1 June 1987).
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- 2. In the case of Belgium, double taxation shall be avoided as follows:
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- a) Where a resident of Belgium derives income, not being dividends, interest or royalties, which is taxed in the United Kingdom in accordance with the provisions of this Convention, Belgium shall exempt such income from tax but may, in calculating the amount of tax on the remaining income of that resident, apply the rate of tax which would have been applicable if such income had not been exempted.
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- b) The exemption provided for in subparagraph (a) of this paragraph shall also be granted with respect to income regarded as dividends under Belgian law, which is derived by a resident of Belgium from a participation in an entity that has its place of effective management in the United Kingdom, and has not been taxed as such in the United Kingdom, provided that the resident of Belgium has been taxed in the United Kingdom, proportionally to his participation in such entity, on the income out of which the income regarded as dividends under Belgian law is paid. The exempted income is the income received after deduction of the costs incurred in Belgium or elsewhere in relation to the management of the participation in the entity.
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- c) The term ‘taxed’ used in subparagraphs (a) and (b) means that the item of income is subjected to the tax regime that is normally applicable to such item according to the United Kingdom tax law.
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- d) Notwithstanding the provisions of sub-paragraphs (a) and (b) of this paragraph and any other provision of the Convention, Belgium shall, for the determination of the additional taxes established by Belgian municipalities and conurbations, take into account the earned income (revenus professionnels / beroepsinkomsten) that is exempted from tax in Belgium in accordance with sub-paragraphs (a) and (b). These additional taxes shall be calculated on the tax which would be payable in Belgium if the earned income in question had been derived from Belgian sources.
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- e) Subject to the provisions of Belgian law regarding the deduction from Belgian tax of taxes paid abroad, where a resident of Belgium derives items of his aggregate income for Belgian tax purposes which are interest or royalties, the United Kingdom tax levied on that income shall be allowed as a credit against Belgian tax relating to such income.
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- f) Dividends derived by a company which is a resident of Belgium from a company which is a resident of the United Kingdom shall be exempted from the corporate income tax in Belgium under the conditions and within the limits provided for in Belgian law.
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- g) Where a company which is a resident of Belgium derives from a company which is a resident of the United Kingdom dividends which are included in its aggregate income for Belgian tax purposes and which are not exempted from the corporate income tax according to sub-paragraph (f) of this paragraph, Belgium shall deduct from the Belgian tax relating to such dividends the United Kingdom tax levied on such dividends in accordance with Article 10 of this Convention and the United Kingdom tax levied on the profits out of which such dividends are paid. This deduction shall not exceed that part of the Belgian tax which is proportionally relating to such dividends.
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- h) Where in accordance with Belgian law, losses of a Belgian enterprise attributable to a permanent establishment situated in the United Kingdom have been effectively deducted from the profits of that enterprise for its taxation in Belgium, the exemption provided for in sub-paragraph (a) of this paragraph shall not apply in Belgium to the profits of other chargeable periods attributable to that permanent establishment to the extent that those profits have also been relieved from tax in the United Kingdom by reason of compensation for the said losses.
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- 3. For the purposes of paragraph 1 of this Article, profits, income and capital gains owned by a resident of the United Kingdom which may be taxed in Belgium in accordance with the provisions of this Convention shall be deemed to arise from sources in Belgium.
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- 4. [REPLACED by paragraph 1 and paragraph 4 of Article 7 of the MLI] (Refer to the box following Article 28 of the Convention) [No relief shall be available under this Article if it was the main purpose or one of the main purposes of any person concerned with a scheme or arrangement in connection with which relief is claimed to take advantage of this Article by means of that scheme or arrangement].