The system of Tax credit for dividends received can lead to several disputes. Recent actuality confirms this.
What is Tax credit for dividends received? If a company is a shareholder of another company, it may obtain income as dividends. This income has already been taxed in corporate income tax.
To avoid double taxation of such income, article 202 of the Belgian Internal Tax Code exempts such income for 95%.
In accordance to the judgment of the European Court of Justice of 12 February 2009 on Cobelfret (case No. C.138/7), the tax administration allows that the available Tax credit for dividends received from companies within the European Economic Area is transferable to subsequent years (circular d.d. 23 June 2009).
According to this circular, this available Tax credit for dividends received cannot be included in the loss carry forwards.
This last limitation is disputable. The court of first instance in Bruges ruled in a judgment of 3 October 2012 that an available Tax credit for dividends received must be treated the same way as losses carried forward. The Tax credit for dividends received is thus assimilated to losses carried forward and may be included in the loss carry forwards.
This is only one example of many points that can give rise to disputes.