The relevance of the OECD and UN Model Conventions and their Commentaries for the interpretation of Belgian tax treaties
Introduction
Relatively few cases relating to cross-border situations are submitted to the
courts in Belgium. Being a small country with close neighbours, one may suppose
that questions and difficulties are mostly resolved through negotiations with
the tax authorities.
Belgium has a large treaty network, which increases annually; the first double
tax agreement in the field of income taxes was signed in the 1930s. To date,
Belgium has a treaty network covering almost ninety countries (not including the
exchange of information agreements). Moreover, it has signed double tax
conventions (not yet in force) with a dozen countries and has entered into
negotiations with around thirty.
The power to conclude (tax) treaties belongs to the king, while according to the
principle of legality, the tax law has to be decided by the Parliament. Treaties
must be approved by the Parliament; however, it has no power of amendment of a
treaty that has been negotiated and signed by the king; it could only refuse its
approval, which is not sufficient to have a significant impact on the framing of
Belgium’s international tax policy.
Despite the minor role played by Parliament in this matter, there seems to be a
consensus on the general guidelines regarding the international tax policy of
Belgium when concluding treaties, amongst which is the need to increase the
attractiveness of the country for foreign investors by eliminating tax obstacles
to cross-border entrepreneurship and to guarantee the competitiveness of Belgian
enterprises investing abroad. Consequently, Belgium as a rule favours the
exemption method for its capital export neutrality.