🇧🇪 Belgium — 🇫🇷 France

Tax Treaty / Double Tax Avoidance Agreement detail

A new Belgium-France double tax convention was signed on 9 November 2021, replacing the 1964 convention that had governed bilateral taxation for nearly 60 years. The treaty modernises the framework in line with OECD BEPS standards and is effective from 1 January 2023. On dividends, the new treaty reduces the general withholding tax rate from 15% to 12.8% (matching France's internal Prélèvement Forfaitaire Unique flat rate), while introducing a full exemption (0%) for corporate shareholders holding at least 10% of the distributing company's capital continuously for 365 days — replacing the old 10% reduced rate. Interest is now taxed exclusively in the recipient's state of residence, eliminating the former 15% source-state withholding entirely. Royalties are similarly taxed exclusively at residence, with no source-country withholding. A significant structural change affects cross-border workers (frontaliers): the historic regime — under which French residents working in the Belgian border zone (e.g. Lille/Tournai, Givet/Charleroi corridors) were taxed exclusively in France — is phased out under the new treaty. However, a transitional regime protects those who were already benefiting from the arrangement before 1 January 2012, allowing them to remain within the old framework until 2033, provided their situation does not materially change. For those who became cross-border workers from 2012 onward, Belgium retains taxing rights on employment income as under the general rule. The treaty incorporates Multilateral Instrument (MLI) provisions directly — France ratified the MLI in 2018 and Belgium in 2019 — including the Principal Purpose Test anti-abuse clause (Article 28) and enhanced permanent establishment rules. Both countries are EU Member States so the Parent-Subsidiary Directive and Interest and Royalties Directive apply alongside the treaty, and social security coordination is governed by EU Regulation 883/2004. The tiebreaker for dual residents follows the standard OECD cascade: permanent home, centre of vital interests, habitual abode, nationality, then mutual agreement. No US-style saving clause applies.