Following a very long ratification process, the 2010-dated agreement for the avoidance of double taxation (DTA) concluded between FYR Macedonia and Belgium finally entered into force on July 17 2017.
The treaty, generally applicable from January 1 2018, replaces the old treaty signed between former Yugoslavia and Belgium in 1980.
The DTA defines maximum withholding tax rates of 15% on dividends (or 5% if the beneficial owner holds directly at least 10% of the dividend-paying company or 0% if the beneficial owner holds at least 25% of the dividend-paying company for an uninterrupted period of 12 months), whereas interest is taxed at the Macedonian statutory rate of 10%, as are royalties. The term "royalties" is deemed to also include films or tapes used for TV or radio broadcasting as well as the use or right to use scientific, industrial or commercial equipment.
It is worth noting that the reduced dividends' withholding rates of 5% and 0% are lower than the ones previously prescribed (previously 10% under the condition of 25% participation).
The treaty's limitation of benefits clause states that no reduction or exemption is applicable to income related to artificial arrangements, i.e. arrangements that meet no legitimate financial or economic needs, nor have valid economic reasons. In terms of the method of double taxation avoidance, both countries generally use the credit and exemption-with-progression method.
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