Brexit implications on Corporate income tax

On 24 December 2020, negotiations between the European Union and the United Kingdom lead to the conclusion of the EU-UK Trade and Cooperation Agreement (EU-UK TCA). The EU-UK TCA provisionally entered into force as of 1 January 2021 pending its full ratification by the EU parliament.

Hereafter we outline the most important Belgian consequences for Corporate income tax.

  • From 1 January 2021, EU law including Directives, Regulations and the CJEU decisions should in principle no longer be applicable in the UK. This implies that in case of restructurings whereby UK companies are involved, the EU Merger Directive will possibly not apply.
  • In particular, taxpayers should asses situations including the application of the EU Parent-Subsidiary (dividends and liquidation bonus) and the EU Interest and Royalties Directive as from now they should rely on the UK – Belgian double tax treaty for the avoidance of double taxation (resulting in other treaty based formalities, including more administrative burden).
  • Following the UK / EU Trade and Cooperation Agreement, the UK has decided to devise its own reporting of cross border arrangements to conform with OECD agreed standards and rules, while retaining a requirement to report in line with its previous EU DAC6 rules only those arrangements where hallmarks D1 or D2 concerning the frustration of beneficial ownership reporting are present. It is still necessary to consider whether there is any EU DAC6 reporting requirement in any other EU member state, according to the rules in that member state.

For more information on the Brexit implications on other fields, we refer to following newsletter.

The EU-UK Trade and Cooperation Agreement: relevant implications