Tax treatment of Belgian income received by a tax resident of Greece
A tax resident in Greece receives from a Belgian company:
a) dividend (as a shareholder)
b) remuneration of a member of the Board of Directors
Which is their tax treatment in Greece, taking into account the provisions of the relevant Treaties for the avoidance of double taxation (hereinafter “DTT”):
a) With regard to the tax treatment of dividend income received by an individual, who is resident in Greece, from a legal entity established in Belgium, the following applies:
According to article 10 (1) and (2) of the DTT between Greece and Belgium (Law 3407/2005), dividends paid by a Belgian company to a Greek resident are taxed in Greece. However, it is noted that such dividends are also taxed in the State in which the company paying the dividends is resident (Belgium), but the tax imposed cannot exceed fifteen percent (15%) of the gross amount of the dividends.
Regarding the taxation in Greece and according to Greek legislation, dividend income is taxed at a rate of five percent (5%).
Therefore, the Greek tax resident – individual who acquires income from dividends from abroad (Belgium), regardless of whether the dividends are imported into Greece or remain abroad, must declare it in the annual income tax return, in which all his/her income must be listed and will be taxed at a rate of five percent (5%) (Circular no.1042/2015).
In conclusion, the tax to be paid in Greece will be five percent (5%), and if the income is taxed in Belgium as well, the total tax, for both (2) countries, cannot exceed fifteen percent (15%), provided that the required supporting documents are available and they are filed before the Greek tax authority so that Greece to give a credit for any foreign payable tax against the Greek corresponding tax applies for the same income and up to the amount of the Greek tax.
b) With regard to the tax treatment of income from the remuneration of BoD members received by an individual, who is tax resident in Greece, from a legal entity established in Belgium, the following applies:
According to article 16 of the DTT between Greece and Belgium (Law 3407/2005), two (2) cases can be distinguished:
A. Percentages, performance expenses and other similar benefits received by a Greek resident in his capacity as a member of the board of directors of a company established in Belgium may be taxed in both Greece and Belgium. The same applies to benefits received in connection with the exercise of such activities which are considered under Belgian legislation, similar activities to those carried out by a member of the board of directors of a company.
B. Remuneration received by a Greek resident in his capacity as a member of the board of directors of a company established in Belgium for the performance of his day-to-day administrative or technical activities, as well as remuneration received in his personal capacity as a partner in a company, other than a limited company, may be taxed in accordance with the provisions of Article 15 of the DTT, as if it were remuneration of an employee for paid employment whose employer is the company.
Thus, in particular in (B) above, according to Article 15 of the DTT, any wages, salaries, daily wages and other similar remuneration received by a Greek resident on the basis of paid employment are taxable only in Greece, unless the employment is carried out in Belgium, in which case the remuneration received may be taxed in Belgium.
However, remuneration received by a resident of Greece for paid employment carried out in Belgium is taxable only in Greece if:
a) the beneficiary resides in Belgium for a period or periods not exceeding a total of 183 days in a 12-month period beginning or ending in the financial year concerned; and
b) the remuneration is paid by or on behalf of an employer who is not resident in Belgium; and
c) the fees are not charged to a permanent establishment or fixed base which the employer maintains in Belgium.
Therefore, in both cases (A) and (B) above, the remuneration of board members received by a individual, who is tax resident in Greece, from a legal entity established in Belgium will definitely be taxed in Greece and, depending on the facts of the nature of the activities/remuneration and the place where the activities are actually carried out, may also be taxed in Belgium.
Please note that if the “employment” is carried out only in Greece, then the following applies:
– if the directors’ fees fall under (A) above, they may also be taxable in Belgium, since the DTT does not distinguish on the basis of the place of employment;
– in case the directors’ fees fall under case (B) above, then it will be taxed only in Greece.
Regarding the taxation in Greece and according to the Greek legislation, for the remuneration of Board members, we distinguish the following two (2) cases:
I. According to the provisions of Article 12 par. 2d΄ of Law 4172/2013 (hereinafter referred to as the “C.T.I.”) stipulates that for the purposes of the C.T.I., an employment relationship exists when an individual provides services as a director or member of the Board of Directors of a company or any other legal person or legal entity. Accordingly, remuneration paid to a member of the board of directors for services provided under the Articles of Association or in contracts concluded between him/her and the company (Articles 99 to 101 of Law 4548/2018) is considered as income from employment and is taxed in accordance with the provisions of Article 15 par. 1 of the Tax Code and in particular the following scale:
| Income | Tax rate |
| 0 – 10.000 | 9% |
| 10.001 – 20.000 | 22% |
| 20.001 – 30.000 | 28% |
| 30.001 – 40.000 | 36% |
| 40.001 – | 44% |
Specifically, monthly income from employment is subject to withholding tax based on the above scale after its prior reduction to an annual income. However, withholding tax is only withheld by a legal entity or legal entity that carries out business activity and has its tax residence in Greece, or operates through a permanent establishment in Greece, and makes payments. In the present case, therefore, the legal person making the payment of the fees is established in Belgium, so it is not liable to withholding tax, but the individual himself will have to file an income tax return and pay the tax due.
It is noted that since foreign tax has been paid, it will be credited against the corresponding Greek tax and up to the amount of the Greek tax, provided that the required supporting documents are submitted before the Greek Tax Authority.
II. Remuneration paid in any form to members of the Board of Directors from the profits of the legal person or legal entity falls, inter alia, within the meaning of dividends (POL.1042/2015 and D12A 1046040 EX 2014/14.3.2014). Therefore, remuneration paid to a member of the Board of Directors from the profits of a company incorporated in Belgium will be taxed as a dividend, so those described in question under a) above apply.
The information is accurate to the best of our knowledge as at the time of writing. We have no obligation to update it. We accept no responsibility against any third party who is not a client of the firm and has not signed the terms of our engagement.