On 28 February 2019 the Belgian parliament approved a new Belgian Code on Companies and Associations, as well as new tax legislation.

 

Indeed, Belgian tax law was in need of adaptation to the new corporate rules. In certain cases, however, these new tax rules have a far-reaching effect and seem to do more than merely formally adapt the tax legislation to the new corporate rules. We will here highlight some of the most relevant changes.

 

Nationality and tax residency of a company

 

Before the corporate law reform, the nationality of a company (and the subsequent applicable company law) was determined by the “real seat theory”, meaning that the company’s nationality depends on the place of the company’s real or effective head office. The corporate law reform now introduces the principle of the “incorporation theory” to determine the nationality of a company and the applicable company law, meaning that the location of the company’s registered office is the determining factor.

However, for Belgian corporate income tax purposes, a company’s tax residency will depend on the place of effective management of a company which is determined by both a human factor (“where do the company’s directors manage the company”) and by physical factors (“where is the real head office of the company located”).

 

As a result, a company might become subject to Belgian corporate income tax, without being subject to Belgian company law (or vice versa). In order to bring corporate and tax law into closer alignment, various definitions in tax law are now to be modified. Indeed, a new legal presumption provides that if a company has its registered office in Belgium, it is also deemed to have its place of effective
management in Belgium. In order to prove the opposite, the taxpayer will need to demonstrate that the tax residence of the company is established in another state and such in accordance with the tax legislation of that state.