Representatives from PricewaterhouseCoopers outlined the benefits of an international tax treaty between the United States and Belgium at a seminar in New York.
The treaty, which was signed on Nov. 27, 2006, replaces one from 1970 that was amended in 1987. "The treaty is extremely competitive and consistent with U.S. treaties going back to the U.K. in 2001," said Oren Penn, principal of the U.S. Inbound Group of PwC's National Tax Services office.
The treaty contains withholding tax exemptions, a new "limitation on benefits" provision, tax relief for contributions made under pension plans, mandatory arbitration, an exemption from Belgian corporate income tax on U.S. income derived from a U.S partnership or fiscally transparent limited liability corporation, and the removal of barriers regarding the deductibility of pension contributions.
Under the new treaty, dividends paid to a qualifying pension fund will be exempt from dividend-withholding taxes, provided that the dividends are not derived from the carrying on of a business activity by the pension fund or through an associated enterprise.
The dividend-withholding tax "in most cases will be used by the U.S. investors to invest in Belgium," said Frank Dierckx, managing partner at PricewaterhouseCoopers Belgium Tax Consultants.
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