Double taxation on French-source income: the Court of Cassation brings back the tax credit provided for in the Double tax convention!

Good news for the Belgian taxpayers who were suffering from a double taxation on their French-source dividends. They will be able to obtain a payback of a part of the Belgian taxes paid on their dividends over the last 5 years.

As far as the dividends are concerned, the Double tax convention concluded between Belgium and France provided first for the submission of the gross amount of the dividend to a French withholding tax, capped at a rate of 15%. Next, the remaining 85% was taxed in Belgium, generally at a fixed rate of 30%.

Article 19 of the Double tax convention provides certainly that Belgium must grant a foreign tax credit with respect to Belgian tax relating to dividends when a French tax has been actually withheld at source on such income, but only “under the conditions provided for in the Belgian law”. But the domestic Belgian law, which provided with the deduction of a tax credit – called Lump sum Foreign Tax Credit (LFTC) – had removed this tax advantage since 1989 for the individuals, except in the extremely rare case where the capital (i.e., the stocks and shares of French companies) is used in Belgium for professional purposes by the beneficiary.

As from 1989, there was thus a double taxation, which had been unsuccessfully challenged before the Court of Justice of the European Union on the basis, in particular, of the principle of free movement of capital.


However, in a judgment of 16 June 2017, the Belgian Court of Cassation has ruled that the Double tax convention dictates to Belgium to grant a lump sum foreign tax credit (at least equals to 15% of the net amount of the French-source dividends), regardless the limitations laid down by its domestic law. In accordance with the precedence principle of International law on Belgian domestic law, the Court states that the conditions for granting the lump sum foreign tax credit provided for in the Belgian domestic law (as from 1989) could not prevail on the text of the Convention. Meaning that this tax credit must be granted even when the capital which gives the right to obtain French-source dividends is not used in Belgium for professional purposes by the beneficiary.


The Belgian taxpayers which have received dividends on which a tax has been actually withheld at source in France, while such income was subject to tax in Belgium with no reduction, could file an ex-officio tax relief for the surplus of the taxes paid over the last 5 years. The payback could reach just over 12% of the total gross amount of the dividend. Of course, we can assist you in this matter.

The above-mentioned reasoning could be invoked for the French-source interest as well.

Finally, the decision of the Court could be transposed to the dividends and interest derived by the Belgian taxpayers from other States which have concluded with Belgium a Double tax Convention which provides the same provisions as those provided by the DTC concluded between Belgium and France, as it is the case for the DTC’s concluded with India and China.


Olivier Bertin