Tax Treaty Case Law around the Globe 2012

Belgium: Interpretation of the Government Services Article, Delineation with the Employment Income Article

2.1. Introduction

The cases discussed here deal with the allocation of tax jurisdiction with regard to remuneration paid to government officials, and the delineation between the general rule on employment income (article 15 of the OECD Model Convention) and the special rule on employment income earned by government officials (article 19 OECD Model). This shows how an incorrect court decision in one of the contracting states to a tax treaty (here, France) affects both the case law in the other state (here, Belgium) and an interpretative mutual agreement between the two states.

2.2. Facts of the case

A Belgian national and resident of Belgium was employed by the French government or a French public legal entity (not carrying on a commercial or industrial activity) and worked in France. Accordingly, the taxpayer was a government official deriving French-source employment income in respect of services rendered in France to the French government or to a French public legal entity. The employee claimed to be exempt in Belgium on his remuneration under a combined reading of articles 10 a...