Deduction at source - the special case of Belgium
Monday, 04 July 2005
“As part of a transfer contract between a French festival and our Belgian association for a reading with three artists, the French organizer has deducted 15% from the transfer; the problem is that our artists will also be taxed in Belgium; now, experience shows that the Belgian tax authorities do not take into account any payments made in France. They will therefore be taxed twice”.
Earnings from French sources for artistic services paid to residents of states having a tax agreement with France are only taxable in France (and thus liable for deduction at source) if the agreement stipulates nothing to the contrary.
In view of the bilateral agreements entered into with France, in most cases earnings from French sources for artistic services are subject to deduction at source in France (See Deduction at source on artistic services) .
However, the agreement concluded between France and Belgium is a special case.
If the Belgian artist is salaried and paid by an organizer based in France, the 15% deduction at source is due in France (in which case the earnings are liable for income tax in France).
On the other hand, if the Belgian artist performing in France is paid by an employer based in Belgium (which would appear to be the case here), the deduction at source is not usually due in France (in which case, his earnings are liable for tax in Belgium).
In fact, when the payment is made by an employer based in Belgium, one should refer to article 11 of the tax agreement dated 10 March 1964 on temporary assignments; in view of this article, salaries paid to artists by the Belgian employer are only taxable in France if the following three conditions are met:
- the artist stays temporarily in France for one or more periods of less than 183 days in any one calendar year;
- his payment for work done in France is made by an employer based in Belgium;
- the artist is not working for a stable or permanent establishment located in France.
