Tax Treaty Case Law around the Globe 2015

S. 269Belgium: Employment Income from Directors – Physical Presence in the Source State

Edoardo Traversa/Gaëtan Zeyen

I. S. 270Introduction

The three decisions commented on below, respectively of the Liège (two) and Mons Court of appeals, concern remuneration of directors of Luxembourg companies in relation to the Belgian-Luxembourg Tax Treaty.

As a preliminary remark, it should be noted that contrary to the OECD Model, the provision of the Belgian-Luxembourg DTC relating to directors’ fees contains a distinction between, on the one hand, (“general”) members of a board (either management or supervisory) or an organ of equivalent nature – who are dealt with by its Article 16, § 1 – and, on the other hand, directors who are in charge of the day-to-day management of a company (or the daily technical, commercial or financial management) – dealt with under Article 16, § 2, which expressly refers to Article 15 of the DTC (relating to income from employment). This is in line both with Belgium’s reservation on Article 16 of the OECD Model, as well as with the wording of Article 15(2) of the Belgian Model Convention (2010) which expressly provides that remuneration received by a person dealt with in Articl...