(June 18, 2015)
On June 18, 2015 the European Commission issued a press release announcing that it refers Belgium to the Court of Justice of the European Union (CJEU) of its tax legislation which provides for different methods of assessing income from property. As a result of this, the income which a Belgian resident earns from property located abroad is assessed at a higher value than that from comparable property in Belgium.
Belgian law thus favors investments in certain properties located in Belgium and penalizes taxpayers who choose to invest in similar property in other Member States of the EU or the European Economic Area (EEA).
According to the European Commission such a difference in tax treatment constitutes an infringement of the free movement of capital guaranteed by Article 63 TFEU and Article 40 of the EEA Agreement. In this respect the European Commission also refers to the ruling of the CJEU in case C-489/13 Verest and Gerards versus Belgische Staat (ECLI:EU:C:2014:2210) (September 11, 2014). In that case the CJEU ruled as follows: “Article 63 TFEU must be interpreted as precluding legislation of a Member State, such as that at issue in the main proceedings, in so far as it is liable to lead, when a progressivity clause contained in a convention for the prevention of double taxation is applied, to a higher rate of tax on income merely because the method for determining income from immovable property results in income deriving from immovable property that is not rented out situated in another Member State being assessed at a higher amount than income from such property situated in the first Member State. It is for the referring court to ascertain whether that is in fact the effect of the legislation at issue in the dispute in the main proceedings."
The press release furthermore states that the European Commission sent a request to Belgium on 22 March 2012 in the form of a reasoned opinion, asking it to amend its legislation. Since Belgium has not done so, the Commission has decided to refer the matter to the Court of Justice of the European Union. It also states that: “The European Commission is not criticising Belgian tax policy on the assessment and taxation of the income of Belgian residents deriving from property located in Belgium. What is contrary to EU law, however, is the use of a different method of assessment which results in a higher value being attributed to income earned from property located abroad.”
The ruling of the CJEU in case C-489/13 Verest and Gerards versus Belgische Staat (ECLI:EU:C:2014:2210) can be found here.
For further information, click here to be forwarded to the press release as issued by the European Commission in this respect.
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