Belgium; France
Report from Dr René Offermanns, IBFD Senior Research Associate

Treaty between Belgium and France – Court of Appeal Ghent decides on individuals' "centre of vital interest" under treaty
On 24 June 2008, the Court of Appeal Ghent (Hof van Beroep Gent) decided a case on the place of residence of individuals under the 
Belgium-France tax treaty (the Treaty). Details are summarized below.

(a) The taxpayers, a Belgian couple, emigrated to France shortly before their retirement age. They de-registered themselves from the municipality register in Belgium. Their Belgian owner-occupied dwelling was rented to a company owned by the husband. Furthermore, the tax for second homes owned in Belgium by residents or non-residents was paid with respect to this house. Shortly after their emigration, the husband received his lump-sum pension.

The Belgian tax authorities held that the lump sum was taxable in Belgium because the taxpayers were still resident in Belgium, because they still owned a house there. The taxpayers, on the contrary, held that the lump sum was only taxable in France based on Art. 18 of the Treaty.

(b) Issue. The issue was whether or not the taxpayers were still residents of Belgium

 From the facts, the Court deduced that the taxpayers had a permanent home available in both countries. However, their centre of vital interest was deemed to be in Belgium. This was based on the fact that the Belgium couple immediately responded to mail received from the Belgian administration at their Belgian address   . Furthermore, the husband was the director of a company without personnel located in Belgium, which meant that he had to be permanently available for his Belgian clients. Finally, the taxpayers had various Belgian bank accounts and they could not provide proof of any expenses made in France.

The Court also decided that the fact that the taxpayers de-registered themselves from the Belgian municipality register, and filed tax returns in France, was insufficient to deem France as their centre of vital interest.

(c) Decision. The Court observed that based on Art. 1(2) of the Treaty that individuals are resident in the country where they have a permanent home. If they have a permanent home available in both states, it is decisive where they have their closest personal and economic relations, i.e. their centre of vital interest.

Consequently, the couple was held to be resident in Belgium and the lump sum for the pension was held to be taxable in Belgium.