Tax Treaties and Social Security Conventions

National report: Belgium

Rust, 7-10 July 2005

Final version

A. General Part

I. Comparison of the National Social Security Systems and Tax Systems

a) Overview

1. The Belgian idea of “social security” has its roots in the creation of industrial workers’

associations for mutual assistance at the end of the 19th century, whose goal was to protect

the individual worker, through coordinated personal initiative, against the risks arising

from the poor labour conditions in a context of industrialization.

The Belgian social security system is thus, like the German and Austrian systems,

historically based on Bismarckian principles. The original SS comprehensive system,

created right after the Second World War, although visibly influenced by the 1942

Beveridge report by what its authors thought this system should be, was in reality limited

in its scope to private sector wage-earners (and their families) and financed by compulsory

contributions paid by employers and workers and by the State.

Then, progressively, the system was extended to other categories of the population

as a whole (to the public sector) or in part (to independent workers, students, disabled

persons). From 1975, increasing unemployment and the growing public deficit caused a

shift from a typical insurance-based model (with a link between contributions and

benefits) to a more restrictive system, with unlimited contributions (proportional to the

earned income) and limited benefits (with a statutory maximum). Transfer mechanisms

between SS sectors have also been set up in order to mitigate the overall deficit. These

measures were not sufficient; the part the State transfers to the overall budget of the SS

system has significantly grown in the last decades.

The SS is based mainly on a personal principle (the contributors are the

beneficiaries of the system). The principle of territoriality applies in certain cases,

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where benefits such as minimum guaranteed income for the elderly are granted to all

residents who fulfil the conditions of obtainment. In such cases, the national law limits

the rights to the payment of SS benefits for persons who are not resident on Belgian

territory.

These social assistance schemes are rather based on territoriality (residence): as a

starting point, it is important to point out that the present report will not deal with

these social assistance schemes, although they raise important issues, some of them

directly related to international questions (refugees, illegal immigrants, …)1.

2. The Belgian tax system has a typical continental European structure, with some

peculiarities.

Ranked by the importance of the amount of revenue generated by each tax, there are:

- income tax, applicable to four categories of taxpayers (physical persons,

companies, legal persons and non-residents). The income tax on physical

persons is subject to a progressive rate (max. 50%), except for income from

personal property: the tax rate applicable to this category of income is

proportional. The income tax on companies is also subject to a proportional

rate (33 %) in most cases. Resident persons and companies are subject to

income tax on their worldwide income,

- value added tax, based on EU principles and legislation,

- excises duties, some of them also EU-based,

- EU-customs duties

- inheritance tax and registration tax. As Belgium is a federal State, taxing

powers have been transferred to the Regions (among them, those concerning

inheritance and registration taxes), which also have taxing autonomy in the

areas that are not already covered by federal taxation. The regions also have

autonomous treaty-making power: they are internationally responsible for

matters for which they have internal legislative power.

- other taxes (on vehicles, environmental taxes, local taxes, …) of minor

importance also form part of the Belgian tax system.

1 See, for example, « Aide sociale, intégration sociale et surendettement » in Dumont, M., Actualités de la sécurité sociale : évolution législative et jurisprudentielle, Larcier, 2004, pp.11-337, esp. 275-337. About Belgian social security in general, I recommend the website of the Belgian Ministry for Social Security (http://socialsecurity.fgov.be) and the excellent Revue belge de sécurité sociale/ Belgisch Tiujdschrift voor Sociale Zekerheid, edited by the Federal Ministry of Social Security, partly available on-line on this website.

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The points of contact between the social security system and the tax system are

different in nature:

- Budgetary point of contact: the deficit of the social security system is covered

by tax revenues (“alternative means of financing”). Besides these alternative means,

there is also so-called “parafiscal” financing : this expression is used when part of the

revenue generated by some specific taxes are directly paid to the social security

budget.

- Legal nature of contributions:

For employees, social security contributions have both a social and a fiscal element.

Their “fiscal” nature derives from the fact that they are partly collected by tax

authorities (and then transferred to SS authorities) and also that they are levied on

taxable income. There is an ongoing debate in connection with the Belgian doctrine

about the very nature of these contributions, and their constitutional and legal regime

(see infra).

- Tax expenditures with social policy objectives: Several tax expenditures

pursue objectives that are very similar to those pursued by the social security system.

Example 1/Fiscal incentives to encourage private pension schemes (life insurance) in

order to partially compensate for the erosion of the social security system (art. 34, §1,

3° and §2 and §3 C.I.R./W.I.B.)

2/ Family benefits : deduction of a fixed amount from the taxable base (art. 132

C.I.R./W.I.B.).

3/ Deduction of healthcare costs exceeding a certain amount from the overall income

tax.

- Cooperation between social security and tax administrations:

This happens in two distinct areas: the collection of SS contributions by tax authorities

and the exchange of information. Although the tax and SS systems are each collected

by a distinct administration, specific contributions are (and were) assessed and

collected by the tax administration (on the basis of information transmitted by SS

bodies) and then transferred to SS institutions2. Another form of cooperation between

social and tax authorities is to be found in the method of calculating the contributions

of self-employed people; these contributions are based on the income earned in the

2 Zaglmayer, Schoukens, Pieters, Cooperation Between Social Security and Tax Agencies in Europe, IBM centre for the business of government, 2005, p.10

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preceding three years’ activity, and this information is given to the social institutions

by the tax administration.

3. Since the area of SS law, on the one hand, and the area of tax law, on the other hand,

are not coordinated and have a different scope and different criteria of application, a

migrating person could face problems as a result of this situation.

It may, for instance, happen that a migrating person can be considered to be outside

the application of the national legislation for tax purposes, but not for social security

purposes. The opposite situation may also occur. Frequent cross-border movements

with neighbouring countries, some of them with quite different SS systems (see the

Netherlands), increase the likelihood of such situations.

A typical example: a person working in Belgium and residing in France is laid off by

his employer: this employer is compelled to provide severance pay for a certain

number of months. The question is whether this amount will be taxed in Belgium

and/or in France and what social legislation is applicable to this severance pay.

4. The aim of SSCs concluded by Belgium has mainly been to facilitate the economical

immigration into Belgium by other countries’ nationals (from Italy, Morocco, Turkey,

etc …). This had become necessary because of the numerous foreign workers who

came to Belgium between the 1920s and 1970s to work in the industrial and mining

sectors3. Another aim was to solve local problems arising from cross-border situations.

5. Recent Belgian SSCs are based on the Model Provisions for a Bilateral Social Security

Agreement of the Council of Europe (1995). The Model drafted by the International

Labour Organization (Convention n°157 of 21 June 1982, not ratified by Belgium) is

also a source of inspiration.

6. The SSCs are not a very popular subject in Belgian literature, because European

coordination instruments have replaced the SSCs that Belgium had concluded with the

other Members States (and even with third countries4). With regard to international

social security law, the Belgian doctrine focuses mainly on EU social security law

3 About immigration in Belgium, see X., L’immigration en Belgique , Belgian Ministry of Employment, Labour and Social Dialogue , 2003 (available on www.meta.fgov.be) 4 See e.g. the Cooperation agreement between the EEC and the Kingdom of Morocco of 27 April 1976, approved by Council Regulation (EEC) n°221/78 of 26 September 1978, O.J., 1978, L 264, p.1

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(and its extension to third countries’ citizens5) and on the situation of cross-border

workers. The closely related field of social assistance to foreigners (asylum-seekers,

refugees,...) has also been the object of recent publications.

7. The Belgian legislation has been challenged before the ECJ in several cases dealing

with the relationship between SSCs and EC Law. The most significant cases are:

The Petroni Case (21 October 1975, case 24/75, ECR, 1149), quoted in the guidelines,

involved Belgian authorities: more than a compatibility problem between SSC and

European Law, this case raised a question on the validity of European legislation

(art.46, §3 of Reg. 1407/71) in respect to the EC Treaty (art.51). This case has

nevertheless had a great impact on the question of SSCs-EU law relations by

establishing the principle that the application of EU legislation may not diminish the

(extension of the) rights a person has from the application of domestic law. This

principle has been subsequently extended to the rights given by a SSC integrated in

national law.

The Kaucic Case (10 March 1977, case 75/76, ECR, 163): in this case, which did not

directly deal with SSCs, the application of a national provision preventing the

overlapping of benefits was at stake. This case concerned the payment of an invalidity

pension to the heirs of an Italian worker who had worked in Italy, Belgium and Austria

(at that time not a Member State). This worker had been granted a pension by Austrian

authorities calculated in accordance with the SSC concluded between Italy and

Austria. The ECJ ruled that "periods completed in a third country, whether or not such

country has entered into a social security convention with one or more of the relevant

Member States are not covered by any provision of the community regulations relating

to the harmonization by the member States of their system of social security” (point

9). The ECJ has since then modified its case-law on this point (see the Gottardo case).

The more recent Alami case (Order of the Court, 12 February 2003, case C-23/02,

Alami, ECR, p. I-1399) dealt with a SSC which had been signed not by a Member

State, but by the European Community itself. Mr Alami was a Moroccan citizen who

had worked previously in Belgium and in France and who was seeking to obtain

seniority supplement to his unemployment benefits. The Belgian authorities refused to

5 For example, Jorens Y and Schulte, B. (eds.) European Social Security Law and Third Country Nationals. Antwerp: Max-Planck Institut für Ausländisches und Internationales Sozial Recht, Die Keure, 1998

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take into account the period of time he had worked in France, since Belgian legislation

required for that a “relevant international agreement”. The ECJ considered this to be a

manifest breach of the non-discrimination principle (contained in the Agreement).

b) Bilateral social security conventions

8. Belgium has signed - general - bilateral SSCs with the following non-EU countries:

Algeria, Canada, Chile, Congo (only applicable to boatmen), Israel, Morocco, San

Marino, Tunisia, Turkey, USA, the former Yugoslavia (Croatia, Serbia-Montenegro,

Bosnia, Macedonia).

Concerning the EU or assimilated countries (members of the European Economic

Area), SSCs apply only insofar as they do not prevent the application of Reg. 1408/71,

except for the SSCs mentioned in Annex III of this regulation. Belgium has entered

into bilateral SSCs with the following EU or assimilated countries: Austria, France,

Germany, Greece, Italy, Ireland, Luxembourg, the Netherlands, Poland, Portugal,

Spain, and Switzerland (Reg. 1408/71 has been applicable to Switzerland since 1st

June 2002).

The number of DTCs signed by Belgium is much greater: on 1 January 2005, there

were DTCs with 83 countries6. Most of the DTCs cover taxes on income and are based

on the OECD Model and UN Model, while very few concern other types of taxes (i.e.

gift and inheritance taxes).

9. Belgian courts deal rather often with transnational social security situations. As a

consequence, the Belgian courts have asked the ECJ for numerous preliminary rulings

(see answer to questions 7 and 11).

An example of a decision of the Cour de Cassation/ Hof van Cassatie (Belgian

Supreme Court) is a judgment of 23 December 19917: in this case, the Court had to

determine the applicable legislation for family benefits paid to (Belgian or French)

persons who carried out a business activity both in France and in Belgium. The

question at stake was whether or not the Belgian authorities could require them to pay

6 The complete list of the DTCs signed by Belgium can be found on the Ministry of Finance’s database : www.fisconet.fgov.be 7 Cass., 23 December 1991, Cour de cassation/ Hof van Cassatie Reports, 1991 (92), p.380

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social contributions for the period before 1st July 1982 (entry into force of Reg.

1408/71 with respect to independent workers) on the basis of the SSC between France

and Belgium, signed in 1948). The Court stated that such persons are not subject to

Belgian legislation if their main business activity is carried out in France AND if they

are already subject to French legislation in connection with family benefits.

c) Multilateral Social Security Conventions and Reg. 1408/71

10. Belgium signed several multilateral SSCs: I.L.O. Social Security (Minimum

Standards) Convention n° 102 of 28 June 1952, European Social Charter of 18

October 1961, European Code of Social Security of 16 April 1964, European

Convention on Social Security of 14 December 1972, European Interim Agreement on

Social Security Schemes Relating to Old Age, Invalidity and Survivors

Belgium signed also multilateral SSCs in relation to specific categories of workers:

European Convention on the Social Protection of Farmers (6 May 1974), Rhine

Boatmen Agreement (27 July 1950), Convention on social security for international

transport workers (9 July 1956).

Belgium signed the following multilateral tax law conventions:

- EU: Convention 90/436/EEC on the elimination of double taxation in connection

with the adjustment of profits of associated enterprises8

- Council of Europe: Convention on mutual administrative assistance in tax matters

(25 January 1988). This convention also applies to “compulsory social security

contributions payable to general government or to social security institutions established

under public law” (art. 2, § 1, B, ii).

- Benelux: several agreements on administrative cooperation and on excise duties

11. There are numerous cases in which Belgium has been subject to ECJ jurisdiction

in the context of Reg. 1408/71. I have selected a few of them and will also give the

references of some others.

The Frilli case (1972, 1/72, ECR, 471): an Italian citizen worked and resided in

Brussels. After her retirement she was entitled only to a low retirement pension and

applied for the Belgian guaranteed income for old people. Belgium rejected the claim

because she wasn’t a Belgian national or a citizen from a country with which Belgium

had signed a SSC. The ECJ considered that this “guaranteed income to old-age

8 O. J., L 225 , 20/08/1990, p. 10 - 24

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persons” had to be seen as an “old-age benefit” within the meaning of Reg. 1408/71

and was not a social assistance benefit, despite the fact that no contribution had been

paid for this benefit.

The Bozzone case (31 March 1977, case 87/76, ECR, p.687): Mr Bozzone was an

Italian citizen, resident in Italy, who had worked in the former Belgian colony of the

Congo. He claimed a pension under a specific SS legislation related to working

activity in the former colony. The Belgian authorities did not grant him this pension

benefit since it was restricted to people residing on Belgian territory or on the territory

of the former Belgian colony. The ECJ stated that Reg. 1408/71 applied to this

situation and prohibited Belgium from imposing a residence condition.

The Laborero and Sabato cases (9 July 1987, cases 82/86 and 103/86, ECR, p. 3401)

also dealt with Italian citizens who had also worked in Congo: in its judgment, the

Court stated that the Belgian voluntary SS regime which was created for persons

working outside the EU (“sécurité sociale des travailleurs d’outre-mer”) had to be

considered as “applicable legislation” for the purpose of the application of Reg.

1408/71.

The recent Hervein and Hervillier cases (19 March 2002, cases C-393/99 and C-

394/99, ECR, p. I-2829) raised the question of the validity of Article 14c(1)b, now

Article 14c(b), and of the Annex VII to Regulation (EEC) No 1408/71 in respect of

art. 48 and art.52 of the EC Treaty in the case of company directors “inasmuch as [the

Reg. 1408/71] provides that persons who pursue an activity as employees in one

Member State and an activity as self-employed persons in another Member State are

subject to the legislation of both those Member States”. The ECJ considered Reg.

1408/71 compatible with the Treaty on this issue, pointing out the difference between

coordination, which is the objective of Reg. 1408/71, and harmonisation that would

have prevented the simultaneous application of two legislations in this case. This latter

objective lies however outside the scope of Reg.1408/71.

Other cases worth mentioning are:

18 November 1999, case C-161/98, Platbrood, ECR, p. I-8195; 17 December 1998,

case C-244/97, Lustig, ECR, p.8701; 15 February 1996, case C-53/95, Kemmler, ECR,

p. I-703; 3 February 1993, case C-275/91, Iacobelli, ECR, p. I-523; 11 June 1992,

cases C-90/91 and C-91/91, Di Crescenzo and Casagrande, ECR, p. I-3851; 18

February 1992, case C-5/91, Di Prinzio, ECR, p. 897; 14 December 1989, case C-

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168/88, Dammer, ECR, p.4553; 17 December 1987, case 323/86, Collini, ECR, p.

5489; 23 January 1986, case 296/84, Sinatra, ECR, p.1047, 2 February 1982, case

7/81, Sinatra, ECR, p.137.

12. The position of the ECJ can be summarized as follows. Reg. 1408/71 replaces the

existing bilateral SSCs between Member States. These SSCs, however, can be invoked

by individuals if two conditions are met: they must be more favourable to individuals

than the Reg. 1408/71 regime, and they must have produced or have started to produce

their legal effects on the beneficiary’s rights for periods of time prior to the

implementation of the Reg. or before the Member State of origin acceded to the EU.9

Where periods of insurance or of employment which form the basis of the workers’

rights have been partially completed during that time, the worker’s overall situation

must be assessed by referring to the provisions of the more favourable convention (see

Kaske case10).

These principles, laid down by the Court through its case-law, especially the Rönfelt

case, have been established in order to protect the legitimate expectations of migrant

workers, namely that they would continue to benefit from the advantages deriving

from the SSCs that were in force when they moved to another country11.

(See also answers to questions 7 and 11).

13. (See answer to question 12) In my opinion, the case-law of the ECJ in this area is

well-balanced and rather more favourable to workers. Its main goal is obviously to

ensure a smooth transition from a national context based on bilateral relations to more

integrated political and economic policies: in this sense, it has a limited scope in time.

II. Personal and Material Scope of SSCs and DTCs

a) Personal Scope

14.-15. Personal scope of Belgian SSCs: the SSCs apply to citizens of the Contracting

States, to stateless persons and refugees who are recognized as such by one of the

contracting parties, who are or have been subject to the legislation of one of the 9 For further developments, I refer to the most authoritative Belgian and European doctrine on this argument : Van Raepenbusch, S., « L’apport de la Jurisprudence récente de la Cour de Justice des communautés européennes en matière de sécurité sociale, in Dumont », M., op. cit., p.563sq. and La sécurité sociale des travailleurs européens, De Boeck, 2001, pp.57-65 10 ECJ, 5 February 2002, case C-277/99, Kaske, ECR, I-1261, point 32 11 Kaske case, point 27

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Contracting States. Most of the SSCs apply only to employed people and their

families, while some are also applicable to self-employed people.

Belgian DTCs have a different personal scope of application, since they apply to the

residents of at least one of the Contracting States. Citizenship generally plays no role

in the determination of the general scope of application of the DTC. Nationality is

sometimes a relevant factor for other purposes, e.g. for the application of the anti-

discrimination clause or for some specific provisions dealing with cross-border

workers (see the Belgian DTC concluded with the Netherlands in 2002 – infra).

16. The personal scope of application of Reg. 1408/71 did not include:

- certain categories of European citizens such as students12, disabled people, and

non-active people that were not or no more considered as members of the

family of an EU citizen who was himself an employed worker, an independent

worker or a retired person.

- non-EU nationals

- civil servants covered by a special SS scheme

Reg. 883/2004 extends the personal scope of Reg. 1408/71: it is applicable “to

nationals of a Member State, stateless persons and refugees residing in a Member State

who are or have been subject to the legislation of one or more Member States, as well

as to the members of their families and to their survivors” (art.2). The extension “to

nationals of third countries who are not already covered by those provisions [Reg.

1408/71 and 574/72] solely on the ground of their nationality” had already been made

by virtue of a separate Regulation (859/2003, adopted on 14 May 2003). It is,

however, important to stress that even after the entry into force of Reg. 883/2004, Reg.

1408/71 will remain applicable to nationals of third countries as long as no specific

Regulation is adopted to extend the scope of application of Reg. 883/2004 to them13.

b) Material scope

17. The social security areas covered vary for each of the SSCs Belgium has

concluded. Most of them, however, are applicable to all traditional SS categories

(sickness and maternity benefits, invalidity benefits, old-age pensions, family benefits,

12 Students have been covered by Reg. 1408/71 since 1997 (see Reg. 1290/97, O.J., 4 July 1997) 13 Pieters (D.), « Réforme du règlement européen de coordination : une perspective critique », R.B.S.S., 2004, pp.669-670

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benefits in respect of accidents at work and occupational diseases, unemployment

benefits, survivor’s benefits). This is not always the case. For example, the Belgium-

USA SSC covers only pensions and invalidity benefits.

18. The SSCs concluded by Belgium aim at determining the applicable legislation to

the persons covered the personal scope of application of the SSC, and ensuring that

these persons will not suffer any disadvantages from the fact that they migrate to

another Contracting State, which means that they will enjoy equal treatment as

nationals and retain in the state of their migration the rights to certain benefits (or in

course of acquisition) acquired in their state of origin.

At first glance, social contributions seem not to be covered by the scope of application

of SSCs. However, since the term “applicable legislation” refers to the SSC category

as a whole, there is no reason to distinguish between the contributive and the

beneficiary aspects of the legislation14. In consideration of the foregoing, it seems

hardly compatible with the regime laid down by SSC that a person should be obliged

to pay contributions for the same type of benefit in more than one contracting country;

this would mean that two or more national legislations would be applicable, which

would be inconsistent with the basic principle of the SSC.

19. DTCs generally cover taxes on income and on capital. Some DTCs signed by

Belgium also cover wealth taxes (e.g. Switzerland and the Netherlands) although such

a tax does not exist in the Belgian tax system. The taxes covered are generally

indicated in the DTC: for Belgium, these are the four taxes on income (physical

persons, companies, legal persons, non-residents).

The social contributions do not fall into the material scope of the Belgian DTC, even if

they are collected at the same time together with the income tax15. Since the internal

law of the state seems to be the decisive criterion (art.3, §2 OECD Model

Convention), it seems important at this point to draw attention to the state of the

internal case-law and doctrine debate in relation to this topic.

The Constitutional Court has ruled out that SS contributions could not be considered

as taxes for one reason: taxes are levied to cover the general expenses of the

commonwealth, while SS contributions are exclusively intended for the financing of

14 Pieters (D.), “Taxation and social security : non coordinated taxes and co-ordinated social security contributions”, Interaction between taxes and social security, Master in European social security, Katholiek Universiteit leuven, Academic year 2004-2005, p. 7 (the paper deals with EU Regulations, but this opinion can be extended to SSCs) 15 Schoonvliet (E.), Internationaal fiscaal recht, Biblo 1996, p.80,

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systems aimed at compensating the loss or completing the revenue deriving from

work16.

This decision has not met with unanimous support among Belgian scholars17

This does not mean that social contributions could not be regarded as taxes in the

future, first within the internal legal system and then in an international context. This

could depend on future possible reforms of the SS system.

20. In a paradigmatic Beveridgean system, fully tax-financed, there are no social

contributions as such, and the need to know if these - inexistent - contributions fall

within the scope of DTC disappears.

The real tax law problem which arises in Belgium from the coordination between tax-

financed and contribution-financed social security systems is the lack of equilibrium

between tax coordination and SS coordination in the European Union. Persons who

are in the specific situation of paying their taxes in one country and being subject to

the social legislation of another could face very profitable or very damaging financial

consequences, depending on the nature of the SS systems of the two countries. For

example, it is generally convenient to be taxed in France on earned income, be resident

in Belgium and be subject to the Belgian social legislation (having a small business in

Belgium, for instance): the overall financial burden is smaller, since the French tax

system on earned income is more favourable than the Belgian, which is also the case

for the Belgian system of social contributions and the Belgian tax system on capital

income compared to the equivalent French systems.

21. Social security law includes provisions which aim to prevent the overlapping of

benefits, but I am unaware of any provision in internal Belgian law for coordinating

the payments of contributions.

Since Belgium - geographically speaking! - is a small country with a relatively

important number of frontier workers, changes in the social security system of

neighbouring countries may negatively affect these frontier workers.

16 Const. Court, n.14/99, 10 Feb.1999 ; « les impôts servent à couvrir les dépenses générales d’intérêt public tandis que les cotisations à la sécurité sociale sont exclusivement affectées au financement de régimes d’allocations de remplacement ou de complément des revenus du travail ». In this case, the question at stake was to know whether or not the (tax) principle of legality (no taxation without representation) had to be applied to SS contributions that had been established on the basis of a Royal Decree (governmental act). 17 See especially Peeters, B., “Het onderscheid tussen socialezekerheidsbijdragen en belastingen: een vergelijkend overzicht van de Belgische en de Europese jurisprudentie”, in X., Liber amicorum Luc Hinnekens, 2002, p.374sq.

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In this context, it seems important to refer to the Van Munster18 case: in a case

involving Belgium and the Netherlands, the ECJ ruled that Member States, on the

basis of art. 5 EC in conjunction with art.39 CE, had the duty to avoid any damaging

consequences of the movement of persons, even as a result of the simultaneous

application of national legislations that are not discriminatory per se.

22. Reg. 1408/71 had been very much inspired by Bismarckian principles: social

security was based on “social risks”, and the benefits falling outside the idea of

insurance were considered as social assistance, not covered by the instruments of

coordination of social security systems. Reg. 883/2003 maintains the same traditional

approach, regardless of the important changes national SS have gone through in the

last decades, the most relevant being the receding of the distinction between social

insurance and social assistance benefits. The benefits covered are enumerated in art. 4,

and social assistance schemes are excluded. Compared to Reg. 1408/71, two new

types of benefits are included in the material scope of Reg. 883/2004: pre-retirement

benefits and paternity benefits (if considered as equivalent to maternity benefits).

23. In cases 34/98 and 169/98, the Court stated “for the purposes of the application of

Article 13 of Regulation No 1408/71, the decisive criterion is that of the specific

allocation of a contribution to the funding of the social security scheme of a Member

State” (point 40), and also 169/98 (point 38). The Court also insisted on the direct and

sufficiently relevant link between the provision in question (in these cases the

contributions were levied by France) and the legislation governing branches of social

security. In his conclusions, Adv-Gen. La Pergola seemed quite reluctant to enter into

considerations about drawing a line between social contributions and taxes, and was

more inclined to stress the fact that the way theses contributions were levied

obstructed the freedom of movement of workers guaranteed by the Treaty.

The qualification of a compulsory payment as tax or social contribution does not

always depend on the name given to this payment, and also varies according to the

scope of the legislation making this distinction. For example, a social security

contribution could be considered as tax for the application of constitutional principles

(legality, equality) guaranteeing the rights of the individual (taxpayer), while at the

18 ECJ, 5 October 1994, case n°415/93, ECR, p.I-4661. See also ECJ, 26 September 2000, case n° C-262/97, Engelbrecht, ECR, p. I-7321

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same time, being considered as a social contribution for the purpose of the application

of Reg. 1408/71.

In order to support this view, I refer to what the Court stated in case n°169/98: “The

fact that a levy is categorised as a tax under national legislation does not mean that,

as regards Regulation No 1408/71, that same levy cannot be regarded as falling

within the scope of that regulation and caught by the prohibition against overlapping

legislation.” (point 32)

In my opinion, a different legal qualification of the same compulsory payment may be

acceptable if it takes place in different legal contexts with different legal

consequences. This rather theoretical point of view has to be balanced against the

practical difficulties deriving from a double qualification, in respect to the clarity and

certainty of the law, and the administrative difficulties deriving from this double

status.

III. Distributive Rules and Coordination of Benefits

24. If it could be said that conflict rules exist both in SSCs as well as in DTCs,

obviously covering a different scope, it seems that there is not a real equivalent to

DTC’s method articles in SSCs.

SSCs signed by Belgium rather distinguish between a general part (personal scope,

general principles and definitions) and specific chapters/provisions concerning the

social security categories covered by the Convention.

In my view, the distinction between distributive rule and method articles found in

DTCs cannot be simply extended to SSCs for several reasons.

First, the underlying principle of a DTC is that two states are potentially responsible

for taxing the same taxable event, and that double taxation has to be avoided, or at

least mitigated, by restraining the power of one of the two (or more) states to tax,

either by prohibiting it to tax or by forcing it to take into account the fact that the

taxable event has already been taxed in the other country.

The underlying principles of SSCs are that, in case of migration, the host state is

compelled to maintain the rights of the migrating persons, nor is the state of origin

forced to do so: SSCs aim to fill this potential lack of social protection of the

migrating person, and sometimes, of his family.

14

Secondly, DTCs have as their main objective the distribution of conflicting taxing

powers between two (or more) countries in respect to taxable situations (types of

income) for which two or more countries are potentially competent. From this

perspective, they are coordination instruments, with “coordination” meaning “power-

sharing”.

SSCs, on the other hand, aim to ensure that rights to benefits granted to individuals

will be not affected by the fact that these individuals move outside the country in

which they were originally subject to SS legislation. They do this by extending the

scope of application of the national legislation to persons and situations that would not

have normally been covered. From this other perspective, they are also coordination

instruments, but with “coordination” meaning “burden-sharing”.

25. Conflict rules in SSCs determine the applicable legislation; the basic principle is

the lex loci laboris principle. There are exceptions for posted workers, transport

workers and public administration employees.

26. Belgian SSCs usually do not include any definition of residence. This means that

this term must be defined in accordance with the applicable national legislation (see

for example the convention with Chile of 1996, art. 1, 2)

The condition of residence for the granting of specific benefits in Belgian legislation

is, despite SSCs, sometimes an obstacle to real equality between foreign and Belgian

nationals.

Concerning DTCs, the notion of residence is both based on factual elements and on

national tax legislation. The reasoning is, in fact, quite circular: residents are those

who are paying taxes on their worldwide income, supposedly because they are

residents according to the tax legislation (in Belgium, because they have “settled

down” in Belgium – see art. 3, C.I.R./W.I.B.)19.

27. The basic principles in Belgian SSCs are the equality of treatment of citizens

(affiliated to the SS system) of the contracting countries, the maintenance of rights 19 See also a peculiar provision in the DTC signed with Switzerland: art. 4, §4, 2° (French version) « n’est pas considérée comme un résident d’un Etat contractant (…) une personne physique qui n'est pas assujettie aux impôts généralement perçus dans l'Etat contractant dont elle serait un résident selon les dispositions des paragraphes précédents, pour tous les revenus généralement imposables selon la législation fiscale de cet Etat et provenant de l'autre Etat contractant », OR (German version) “Nicht als (...) ansässig gilt (...) eine natürliche Person, die in dem Vertragsstaat, in dem sie nach den vorstehenden Paragraphen ansässig wäre, nicht mit allen nach dem Steuerrecht dieses Staates allgemein steuerpflichtigen Einkünften aus dem anderen Vertragsstaat den allgemein erhobenen Steuern unterliegt„

.

15

acquired in the other contracting state (the exportation of benefits in cash and the right

of access to equivalent SS in-kind services in the other country), and the aggregation

of periods of contributions. However, the application of these principles is sometimes

restricted by the application of conventional and internal rules on the coordination of

the benefits in order to avoid overlapping of benefits. The SSC provisions on this

matter generally state that national (anti-overlapping) legislation is also applicable to

benefits received from the competent authorities of the other contracting state. An

important exception to such restriction is the prorata of long-term contributions on the

basis of the periods of time the migrant person has spent in each of the two contracting

states.

Depending on the SS branches considered distinction is made between in-kind benefits

and cash benefits. In general, in-kind benefits (hospitalisation, for instance) are

granted to the members of the family, residents in a state A, by the authorities of this

state for a duration and under the conditions of that state’s legislation if the worker in

Belgium has this same right under his national legislation. The benefits will be

partially reimbursed by Belgium to the authorities of state A. An overlapping of

benefits is not very likely to happen in this case.

For cash benefits (invalidity pensions, for instance), payment must be made by the

competent contracting state, even if the beneficiary is not residing in its territory but in

the territory of the other contracting state. Anti-overlapping limitations might apply in

this case.

28. The principles of coordination of Reg. 1408/71 are not fundamentally different to

the principles of SSC coordination, except for the goal the European coordination

pursues: the main difference between the two regimes is that the EU coordination

scheme aims to promote the free movement of persons in the EU.

It is, however, extremely important to keep in mind that from the point of view of the

distributive rules and the equality principle, the European social security coordination

instruments primarily aim at ensuring the free movement of persons and workers in

particular (using the criteria of the country of employment in this context), while the

16

distributive rules of the DTC, as well as the coordination mechanisms in classic

bilateral SSC, do not have this objective as such (and use the residence criteria)20.

Concerning the limitation of rights, Reg. 1408/71, art.12 provides as follows: “This

Regulation can neither confer nor maintain the right to several benefits of the same

kind for one and the same period of compulsory insurance.”

In the Annexes of the Regulation, the following specific provisions apply to

Belgium: “Persons whose entitlement to sickness insurance benefits in kind derives

from the provisions of the Belgian compulsory sickness and invalidity scheme

applicable to self-employed persons shall be eligible under the provisions of Chapter 1

of Title III of the Regulation, including Article 35 (1), under the following conditions:

(a) In the event that they are temporarily resident in the territory of a Member State

other than Belgium, the persons concerned shall be entitled:

(i) to the benefits in kind provided for under the legislation of the Member State of

temporary residence in respect of hospitalisation care;

(ii) to reimbursement in respect of other benefits in kind provided for under the

Belgian scheme by the relevant Belgian institution at the rate provided for under the

legislation of the State of temporary residence.

(b) In the event that they are permanently resident in the territory of a Member State

other than Belgium, the persons concerned shall be entitled to the benefits in kind

provided for under the legislation of the Member State of permanent residence

provided that they pay the relevant Belgian institution the appropriate additional

contribution provided for under Belgian regulations.”

29. Reg. 1408/71 provides in art. 1, H) that “residence” means habitual residence, as

opposed to “stay” (temporary residence). It is important to remember that the terms

employed in European legislation cannot be freely interpreted by Member States,

otherwise it would compromise the uniformity of application of EU Law.

In the Di Paolo case (76/76), the ECJ, interpreting the word “residence” according to

art.71 of Reg.1408/71, dealing with unemployment benefits of (former) cross-border

20 See the ECJ cases Gilly (12 May 1998, case C-336/96, ECR, p. I-2793) and De Groot (12 December 2002,

case C-385/00, ECR. p. I-11819)

17

workers, took a very factual approach based on the worker’s intention and

circumstances (habitual centre of its interests, length of stay,…).

It seems relevant to add that residence plays an important role in the European context

because of its connection to nationality, and the prohibition of discrimination. The

criterion of residence used by the legislation of a Member State could be

discriminatory, if it leads to a situation in which, due to an apparently neutral

application of this criterion, nationals of that Member State are favoured in

comparison with other EU citizens21.

30. As set out above, the rationale of Reg. 1408/71 is to encourage the free movement

of persons in the EU territory. It is therefore logical to consider that, if this Reg. is not

applicable, the Treaty (which is implemented by the Reg.) shall apply. In the Kemmler

case22, the ECJ applied art. 43 of the Treaty (ex-52) on the freedom of establishment.

In order to determine the applicable legal system in this case of double payments of

contributions, not covered by Reg. 1408/71, the ECJ stated that a Member State could

not impose such an obligation on persons who already carry out an independent

activity in another Member State, where they are resident and where they are already

subject to the SS regime23.

IV. Interpretation and Qualification Conflicts Concerning SSCs and DTCs

31-33. Some SSCs mention that the terms that are not defined in the convention will

have the meaning which is assigned to them by the applicable legislation. No reference

is made to the context, as in art. 3 of the OECD-Model Convention.

Interpretation conflicts are generally solved by arrangements between the competent

authorities of the contracting countries. If they do not manage to reach an agreement,

the final provisions of the Convention usually refer to the possibility of an arbitration

procedure (see e.g. art.27 of the SSC signed between Belgium and Chile on 9

September 1996).

21 ECJ,15 January 1986, case 41/84, Pinna, ECR.,p.1 22 ECJ, 15 February 1996, Inasti v. Kemmler, case n° C-53/95, ECR, p. I-706 23. See Schoukens, P., „Die Situation der Selbständigen im Himblick auf Artikel 43 (ex 52) und Artikel 49 (ex 59) des EG-Vertrags“, in X., Soziale Sicherheit in Europa : Konferenz „Der- EG-Vertrag und die Verordnung 1408/71, 17. und 18. Juni 1999, Bundesministerium für Soziale Sicherheit und Generationen, 1999, p.152-184

18

National courts also play an important role in connection with SSC interpretation (see

answer to question 9).

Most of the DTCs signed by Belgian provide for a mutual agreement procedure.

Generally, this procedure between national competent tax authorities, but initiated by

the taxpayer, provides satisfactory results. An example of qualification conflicts

between French and Belgian legislation is the amount CEOs receive from their

company. In France, these amounts are considered wages, while they fall into the

category of independent business income in Belgium.

34. Interpretation conflicts arising from the application of Reg. 1408/71 find a natural

judge in the ECJ. No national authority has the power to independently interpret the

terms of the regulations: this prohibition is valid also when the two Member States

involved in the particular case should manage to reach an agreement on a particular

issue. This facilitates the uniform and effective coordination of SS systems within the

EU Member Countries.

The ECJ, when interpreting the EC social security coordination rules, adopts a

teleological interpretation based on article 39 of the EC Treaty, since, as it has been

said, these rules have been established to achieve the free movement of persons and

workers in particular inside the EU.

35. The Advisory Committee on Social Security for Migrant Workers has to be

distinguished from the Administrative Commission. The latter, composed of state

representatives, a commission representative and experts, must perform several tasks

according to art.81 of the Reg. It is in charge of questions of interpretations and may

therefore make recommendations, take decisions and adopt resolutions. Its decisions

(around 200) are not binding on national courts since it is an advisory and not a

judiciary or legislative authority. These decisions have proven to be very useful for the

complex coordination of Reg. 1408/7124.

The Advisory Committee, composed of representatives of the state and of social

parties, has a more limited power (art.83). It may “examine general questions or

questions of principle and problems arising from the implementation of [European SS] 24 White, R., EU Social Security Law, Longman, 1999, p.17 and Van Raepenbusch, S, La sécurité sociale des travailleurs européens, de Boeck, 2001, p.15. The procedure, however, is cumbersome and Member States often prefer avoiding (if possible) the Administrative Commission by finding bilateral solutions to local cross-border problems.

19

Regulations (…)” and “formulate opinions on the subject for the Administrative

Commission and [make] proposals for any revision of the Regulations”. It does not

play a relevant role in the coordination of national social security systems. Its utility is

that this type of institution offers non-governmental bodies from all Member States the

possibility to be informed about the developments of such coordination and, at same

time, to meet each other and to exchange views, bolstering in this way the building of

a common European conscience.

B. Special Issues V. Specific Provisions

a) Cross-border workers and posted workers

36. Belgian SSCs signed with neighbouring countries include specific provisions on

cross-border workers: Belgium even signed a specific SSC for cross-border workers

with Luxemburg (24 March 1994) and concluded several agreements with France and

the Netherlands in this matter. They provide more favourable regimes than Reg.

1408/71 (e.g. complimentary reimbursement under Luxemburg legislation of medical

benefits in kind granted in Belgium - see art. 5 of the Agreement between Belgium and

Luxemburg). Since Reg. 1408/71 also includes specific provisions for cross-border

workers, SSCs regulate aspects which are (partially) not covered by European

coordination.

Belgian DTCs also include (or included) a specific fiscal regime for these workers.

The DTC with France, signed in 1970, provides that cross-border workers are taxed on

the wages and salaries in their country of residence and not in the country where the

professional activity is performed (art.11). Prior to its amendment in 2002, the DTC

with Germany had a similar provision.

An extremely interesting measure is included in the new DTC signed with the

Netherlands in 2001; art. 27 provides compensating measures for Dutch cross-border

workers to take into account the payment of SS contributions in Belgium for tax

purposes in the Netherlands.

The difference between old DTCs signed and Reg. 1408/71 lies in the definition of

frontier workers. The DTC with France and the former DTC with the Netherlands

defined the term border zone - very broadly for the Dutch Convention (half of the

Belgian territory) and much narrower for France (20 km from the border).

20

The present DTC trend is, however, to apply the general regime to cross-

borders workers.

37. An employed worker who usually works on Belgian territory remains subject to

Belgian legislation when he is sent to the territory of a contracting State by his

employer to carry out an activity on behalf of the employer25. The maximum posting

period is generally 12 months, although some SSCs provide for a longer period. The

maximum period may be extended with the approval of the host state.

This possibility is mostly restricted to a condition of nationality (the posted worker has

to be a citizen of one of the Contracting States). However, SSCs concluded with

Canada, Chile, the USA, the Philippines, and Switzerland do not mention this

nationality requirement.

These rules differ greatly from the “posting” rules of DTCs, which are more restrictive

(183-day rule, the employer cannot be a resident of the host state, and the

remuneration cannot be paid by an employer’s PE in the host state). This leads to the

relatively frequent situation that posted workers are posted under SS legislation rather

than under a DTC regime.

38. It is definitely possible to be subject to taxation in one country and to be subject to

social contributions in another. In the case of income earned by non-resident employed

workers, it is however unlikely to happen, considering the fact that the lex loci laboris

principle applies to both social and fiscal regimes. However, this possibility was (and

is still, in the French-Belgian SSC) the general rule in the case of the frontier workers’

specific regime under DTCs, which, contrary to the general principle of taxation in the

country of activity, provided for these workers to be taxed in the country of residence.

39. The E-101 issued by the competent authorities of the country of origin is binding

upon the national authorities of the host country26. It creates a legal presumption of

posting which can only be reversed by the issuing authority, possibly on the request of

the authorities of the host country. This is a consequence of the principle of loyal

cooperation (art.10 EC Treaty). In the absence of the E-101 form, it is still possible to

prove posting on the grounds of factual circumstances. The E-101 must not necessarily

25 Regardless of the application of SSCs, the Belgian legislation allows both for nationals and aliens subject to Belgian social legislation that they will remain covered if the period of time spent abroad in a non-EU country does not exceed six months, with the possibility of a six-month extension, see X., Guide social permanent, vol. 13, Kluwer, 1997, T.II, Chap.13 26 ECJ, 10 February 2000, Fitzwilliam, case n° C-202/97, ECR, p.I-883

21

be issued before the posting takes place: it can be issued during the posting period and

even thereafter (in this case, it will have a retroactive effect)27

The certificate of residence issued by the competent tax administration is one of the

acceptable means of evidence a taxpayer can use to prove that he/she is or is not

resident in a contracting state. This factual situation of residence can be proven by

other means (copy of the identity card, etc…).

40. see answers to questions n° 36 to 39

41. The ECJ approach in the Centros case is typical for the application of freedom of

movement. In this case, the national legislation restricted the right of a company which

was set up in accordance with the law of one Member State to establish a branch in

another Member State, where this company intended to carry out its entire business; a

company was established abroad for the sole purpose of benefiting from more

favourable rules governing the formation of companies, e.g. the minimum amount of

share capital required. The rationale of the Court’s decision, that considered this

national legislation to be contrary to art.43 EC, was that the difference in the

legislations of the Member States in that area of law was not a sufficient justification

to restrict the freedom of establishment of companies in the territory of the European

Union (except in - single- cases of fraud). Centros is not a tax law case, but it can

apply to the (direct) tax law area, as it applies to all the areas of national law that are

not harmonized or coordinated.

The Plum case is based on a very different approach. In this case, the Court, in a

Community legislation, had to interpret a particular notion (the posting) with reference

to a situation that was clearly not intended by the European legislator (“workers of a

construction company established in one Member State who are posted to carry out

construction work in the territory of another Member State in which, apart from

purely internal management activities, that undertaking performs all of its activities”).

Posting being a derogation to the general lex loci laboris rule, it has to be narrowly

construed and limited to the situation when the absence of this regime would severely

hinder the free movement of workers and companies in the EU (short duration and

27 JORENS (Y.), “Grensoverschrijdende tewerkstelling van werknemers en zelfstandigen : conflict regels in het socialzekerheidsrecht”, in Peeters, B., Europees belastingrecht , Larcier, 2005, p.634

22

exceptional working period in a Member State where the company has no or almost no

business activities).

Again, this different approach can be justified due to the difference in coordination

processes in (direct) tax law and social security law.

b) Pensions28

42. In Belgian SSCs, pensions are paid to citizens of the Contracting Parties,

regardless of their country of residence (it may not be this latter country which has to

grant the pension).

Pensions are generally taxed in the state where the recipient resides. However, public

pensions and pensions paid by a public authority of a state on the basis of social

security legislation are taxable in that state, even if the beneficiary resides abroad.

An important exception to this principle can be found in the new DTC signed with the

Netherlands for pensions exceeding a certain amount and for the constitution of which

particular fiscal advantages have been granted (see art. 18, §2 of the Convention of

2001): in order to avoid a phenomenon of fiscal emigration of Dutch retired people to

Belgium, such income shall be taxed in the state of the source29.

43. Belgian SSCs use the rules of aggregation and prorata of the periods of insurance

under the SS system of the Contracting States in order to calculate pensions. Initially,

the SS institutions of the Contracting Parties calculate the theoretical pension as if all

these periods had occurred under their own legislation (aggregation). Then, this

amount is reduced in proportion to the actual periods of time the person has spent

covered by the legislation of each country (prorata).

There is also another method used in SSCs, called “direct calculation” (rechtstreekse

berekening) - see SSC with Canada, Morocco and Tunisia. In that case, the pension is

simply calculated proportionally to the number of years of contributions: generally,

Belgian SSCs allow the use of this method on condition that the amount of the pension

so calculated is at least equal to the amount calculated according to the aggregation-

prorata method.

For pensions that are calculated on the basis of income (average, last), some Belgian

SSCs contain specific provisions (see the former SSCs signed with Poland, art.21).

28 On the Belgian perspective, see Van Limberghen, G., Pensioenen van Belgen in het buitenland, Kluwer, 1991 29 The Constitutional Court rejected a claim against this provision in a judgement of 4 February 2004 (case n° 20/2004)

23

44. Pensions are calculated in accordance with art. 46 of Reg. 1408/71. This article

takes into account the different methods of calculation in the social legislation of each

Member State: generally, for Belgian pensions, the method used in the Reg. is the

aggregation/prorata method. (art.46, §2).

45./46. The calculation of pension rights under SSCs or the European regime

presupposes close cooperation between competent national authorities. To facilitate

this collaboration, national SS institutions are allowed to exchange information

directly, without having to follow the classic procedure (through diplomatic bodies).

Unless expressly permitted by the SSC or by the Regulation, Belgian authorities,

however, cannot apply foreign pension legislation since SS legislation is a branch of

public law the application of which is strictly connected with the territoriality

principle. The same applies to tax law.

To simplify things, standard forms are set up on the basis of conventional or European

legislation. The standard form to be used under Reg. 1408/71 is the E 200.

When the contracting country uses a different method of calculation than Belgium,

SSCs generally provide that the method used by the former country should not lead to

a calculated amount that would be lower than the amount calculated in accordance

with the method of aggregation and prorata used in Belgium.

As for the DTCs, an ineffective administrative coordination between national tax

authorities could lead to double taxation or an increased taxation of income (upon

application of the progressive clause). Depending on the circumstances, it could also

lead to double non-taxation of certain types of income or to a reduced taxation (see the

savings income before the implementation of the savings directive, 1 July 2005).

c) Anti-Discrimination Clauses

47.-48. In SSCs, the equality of treatment clause ensures that the persons who fall

within the personal scope of the Convention will be treated equally by each

contracting state as the nationals of that contracting state (see art. 4, Chile SSC, 1996).

DTCs also contain a non-discrimination clause (art. 24 OECD Model Convention)

between nationals of the contracting parties. It does not cover indirect discrimination

and is based on reciprocity.

24

There seem to be major differences between the two types of anti-discrimination

clauses (ADC). The SSCs ADC is limited to the material scope of the SSC: it applies

only to rights and obligations arising from the applicable national legislation. The

DTCs ADC does not have such a limitation: its material scope covers all types of

taxes, not only income and capital taxes.

It is interesting to notice that some recent DTCs ADC apply also to non-residents in

one or both of the Contracting States. (see e.g. Belgium-South Africa DTC (1995), art.

23 and Belgium-Argentina DTC (1996), art.24).

49. In relation to Reg. 1408/71, it is important to consider the whole picture. The

entire European legislation is governed by the non-discrimination principle between

the citizens of the Member States. Besides the general non-discrimination principle of

Article 12 of the EC Treaty30, there are various specific applications of this principle in

secondary legislation: Art. 3 of Reg. 1408/71 belongs to this category and is thus

limited to the scope of the Regulation itself.

The extension of the personal scope of Reg. 1408/71 to nationals of third countries in

2003 can be considered a big step forward towards universal social rights31. This

extension also had the objective of reducing the administrative costs linked to the

different status of third country nationals who were already subject to the social

legislation of one Member State.

50. The Gottardo decision blatantly overruled the restrictive approach adopted in the

Grana-Novoa case. This decision could not have existed without the development of

the ECJ tax case-law throughout the 90s. In my opinion, the decisive argument in the

Gottardo case was that the Court could not deny the advantage of an anti-

discrimination clause in an SSC to a (“poor”) person applying for a pension, while it

had already awarded the advantage of ADC in DTCs to a (“rich”) branch of a

30 Becker, U., “Gleichbehandlung- Direkter Einfluss von Artikel 12 (ex 6) des EG-Vertrags auf die grenzüberschreitende Gleichstellung aller relevanten Gesichtspunkte hinsichtlich Umfang, Anspruch und Gewährung von Leistungen“ in Soziale Sicherheit in Europa : Konferenz „Der- EG-Vertrag und die Verordnung 1408/71, 17 und 18. Juni 1999, Bundesministerium für Soziale Sicherheit und Generationen, 1999, p.121-149 31 Council Regulation (EC) No 859/2003 of 14 May 2003 extending the provisions of Regulation (EEC) No 1408/71 and Regulation (EEC) No 574/72 to nationals of third countries who are not already covered by those provisions solely on the ground of their nationality, O. J., L 124 , 20 May 2003, p. 1

25

multinational company in the Saint-Gobain case32. It was a matter of consistency and

fairness.

It is worth mentioning Recommendation n°22 concerning the Gottardo interpretation

(OJ, L326, 13 December 2003, p.35): at point 2, it is stated that the new SSCs signed

by Member States will explicitly refer to a non-discrimination principle with an

extension to EU-nationals from other Member States. This weakens the principle of

reciprocity, typical of (bilateral) conventional relations.

d) Dispute settlements

51.-53. (also see the answers to questions n°31-33) The proceedings regarding dispute

settlement in DTCs signed by Belgium are similar to art.25 of the OECD-MC.

In most of the SSCs signed by Belgium, there is no equivalent to article 25 OECD-

MC. The individual claimant has no right to initiate proceedings for the settlement of

disputes. Belgian SSCs, however, contain a provision which aims to facilitate the

administrative and judicial proceedings to make the protection of the rights guaranteed

by the Convention more effective. This disposition provides that “any claim,

declaration or appeal which should have been submitted, in order to comply with the

legislation of a Contracting Party, within a specified period to an authority, institution

or tribunal of that State shall be admissible if it is submitted within the same period to

a corresponding authority, institution or tribunal of the other Contracting party

State.” There is a similar provision in Reg. 1408/71 (art.86, 1).

54.-55. The exchange of information in tax matters is not only regulated by the

provisions of DTCs signed by Belgium; other international instruments, such as the

Council of Europe/OECD Convention on Mutual Administrative Assistance in Tax

Matters, signed on 25 January 1988 (in force since 1 December 2000), and European

legislation, such as the Council Directive 77/799/EEC of 19 December 1977

concerning mutual assistance by the competent authorities of the Member States in the

field of direct taxation and taxation of insurance premiums, are also applicable33.

32 ECJ, 21 September1999, Case C-307/97, Saint-Gobain ZN , ECR, p. I-6161, paragraphs 57 to 59 33 Helemans (F.), “De grensoverschrijdende uitwisseling van inlichtingen op het vlak van inkomstenbelasting, BTW en successierechten”, T.F.R., 2001, p.115

26

27

The exchange of information in tax matters aims to prevent tax evasion or tax fraud;

some DTCs signed by Belgium explicitly refer to this objective (see the DTC signed

with the USA or Indonesia).

Belgian DTCs contain provisions that are similar to art.26 and 27 of the OECD-MC.

Information may be exchanged between the competent authorities either on request or

automatically or spontaneously.

In SSCs, exchange of information is fundamental to the effective application of the

provisions protecting migrants. The authorities of each Contracting State are therefore

obliged to provide any information which is needed to apply the convention. Some

SSCs have a very peculiar equality of treatment rule in this area; the authorities of a

Contracting State are obliged to collaborate with the authorities of the other

Contracting State, as though implementing their own legislation (see art. 24, SSC with

Chile, 1996; art. 64, European Convention of Social Security). It means that in

collaborating with each other competent authorities have the same powers and are

facing the same legal limitations as they do under national law.

Reg. 1408/71 has a similar provision on mutual assistance (art.84, 2). Moreover, the

Regulation even provides for mutual assistance in the collection of contributions

(art.92).

Edoardo Traversa Fellow researcher FNRS

Université Catholique de Louvain, Belgium