All you need to know about the tax treaty between Belgium and the United Arab Emirates

Tax treaty between Belgium and the United Arab Emirates: what property investors need to know

Investing in real estate in the United Arab Emirates can be an exceptional opportunity for Belgian residents. However, understanding the applicable tax rules is essential to maximize your profits and avoid double taxation. The tax treaty signed between Belgium and the United Arab Emirates plays a key role in the taxation of these investments. Here are the essential points to know.

Avoiding double taxation

One of the main aims of the tax treaty between Belgium and the United Arab Emirates is to avoid double taxation. This means that Belgian investors will not be taxed twice on the same income in both countries.

Taxes concerned

The agreement applies to several types of tax, including :

• In Belgium: personal income tax, corporate income tax, non-resident income tax and the complementary crisis contribution.
• In the United Arab Emirates: corporate income tax and similar local taxes.

Tax residence and determination criteria

If you are a Belgian resident with investments in the Emirates, it's important to understand how your tax residence is determined. According to the treaty, you are considered a resident of a country if you are taxable there by virtue of your domicile or residence. If you are resident in both countries, several criteria are used to determine your main tax residence:

1. The location of your permanent home.
2. The center of your economic interests.
3. Nationality if the above criteria do not allow a decision to be made.

Real estate income and taxation

For real estate investors, income from property located in the Emirates may be taxed in the Emirates, even if you are a Belgian tax resident. This includes rental income, as well as capital gains from the sale of real estate.

Real estate capital gains

Gains from the disposal of real estate located in the United Arab Emirates may also be subject to local taxation. However, under the treaty, these gains will not be taxed again in Belgium, thus avoiding double taxation.

Dividends, interest and royalties

Dividends paid to Belgian residents by an Emirates company may be taxed in the Emirates, but a reduced rate generally applies. Under the treaty, Belgium grants a tax credit for taxes paid in the Emirates.

Interest and royalties follow a similar pattern: they may be taxed in the Emirates, but a credit is granted in Belgium to avoid double taxation.

Methods of eliminating double taxation

To avoid double taxation, the convention provides for two main methods:

1. Tax exemption: In Belgium, certain income from the Emirates may be exempt from tax, notably real estate income.
2. Tax credit: For income such as interest and royalties, Belgium grants a tax credit corresponding to the tax paid in the Emirates.

Tax non-discrimination

Belgian residents must not be subject to higher taxes or tax obligations than those imposed on residents of the Emirates in similar circumstances. This ensures fair treatment of foreign investors.

Conclusion

For Belgian investors in real estate in the United Arab Emirates, the tax treaty between the two countries provides a clear framework for avoiding double taxation and protecting your investments. By understanding the tax rules and taking advantage of tax exemptions and credits, you can optimize your returns while remaining compliant with the regulations of both countries.