CJEU – Recent Developments in Direct Taxation 2018

1. S. 2Introduction

As in previous years, the CJEU has and still is dealing with quite a number of cases that relate to Belgian direct tax law. In this contribution, we will discuss two recently decided cases that concern the taxation of income from real property in the hands of an individual (Section 2.) and the taxation of a Belgian resident who works in Luxembourg (Section 3.). The cases that are still pending relate to the exemption of pension income under a Double Tax Treaty (“DTT”) (Section 4.) and the interpretation of the Parent-Subsidiary Directive (“PSD”) (Section 5.).

2. Commission v Belgium (C-110/17)

2.1. Facts and legal background

Belgian resident individuals are taxable on their worldwide income, including income from real property. The taxable base generally depends on two questions, i.e. (i) what is the real property used for, and (ii) where is it situated?

If it is not rented out, the taxable income from real property situated in Belgium is equal to the indexed cadastral income (e.g. land) or the indexed cadastral income increased by 40 % (e.g. real property other than land). If the real property is situated abroad, the taxable income equals the rental value.

An exemption is availa...