DTAA Between India And Belgium: Tax Relief, Rules, Benefits & Capital Gains

Understanding international tax rules can be confusing, especially for those earning in more than one country. The DTAA between India and Belgium helps avoid double taxation on the same income, providing relief to NRIs, investors, and businesses. This agreement promotes financial transparency and ensures fair taxation between both nations. By defining how various income types, such as dividends, royalties, and capital gains, are taxed, the treaty supports stronger trade relations, encourages foreign investments, and maintains tax clarity for individuals and organisations involved in cross-border transactions.

DTAA Between India and Belgium - Quick Info

Here is a quick overview of the essential details regarding the DTAA agreement between India and Belgium.

Objective of the DTAA Between India and Belgium

The DTAA India-Belgium treaty was established with several key objectives aimed at fostering a stronger economic partnership between the two nations. [1]

• To Avoid Double Taxation: The primary goal is to ensure that income earned by a resident of one country in the other is not unfairly taxed in both jurisdictions, providing significant tax relief.
• To Promote Bilateral Investment: By creating a stable and predictable tax environment with clear rules and lower tax rates, the treaty encourages and facilitates cross-border investment and trade.
• To Prevent Tax Evasion: The agreement includes provisions for the exchange of tax-related information between the Indian and Belgian tax authorities, helping to counter tax evasion and ensure compliance.
• To Allocate Taxing Rights Clearly: The treaty provides unambiguous rules that define which country has the primary right to tax different types of income, thereby reducing the potential for tax disputes.

Significance of DTAA for India and Belgium

The DTAA holds immense significance for the economic relationship between the two countries and for the individuals and businesses involved in cross-border activities.

For India

Belgian investors are attracted by the offering of tax certainty and reduced tax liabilities. This inflow of Foreign Direct Investment (FDI) can boost economic growth, generate employment, and facilitate the transfer of technology.

For Belgium

The DTAA encourages Belgian companies to expand their operations into the vast Indian market without the fear of being taxed twice on their profits. It provides a clear legal framework that protects their investments and simplifies their tax obligations.

For Individuals and NRIs

For individuals working across both countries or for NRIs with investments in India, the treaty provides much-needed relief and clarity, ensuring their global income is taxed fairly.

India-Belgium DTAA Tax Rates

A major benefit of the treaty is that it prescribes a maximum DTAA rate between India and Belgium that can be charged at the source on certain types of income. [2]

Taxes Covered under DTAA Between India and Belgium

The agreement applies to a wide range of taxes on income levied by both countries to ensure comprehensive protection against double taxation.

• Dividends: Income earned from shares in a company. The DTAA caps the tax that can be charged in the source country at 15%.
• Interest: Income from debt, such as from bank deposits or bonds. The treaty provides for a two-tiered tax rate, generally 15% but reduced to 10% for interest on bank loans or credit sales. This is relevant when considering the Taxation rules for NRO accounts.
• Royalties and Fees for Technical Services (FTS): Payments for the use of intellectual property (royalties) or for managerial, technical, or consultancy services (FTS). The tax on these is capped at 10% as per Article 12 of the DTAA between India and Belgium.
• Salaries: Income earned by individuals from employment. The treaty provides clear rules to determine which country has the right to tax this income.
• Capital Gains: Profits from the sale of assets, such as real estate or shares. The DTAA specifies which country can tax these gains.

Taxation on Capital Gains under the DTAA Between India and Belgium

The rules for taxing capital gains are a critical part of the treaty, especially for those involved in real estate investments.

Gains from Immovable Property

Capital gains from the sale of immovable property (like a house, land, or apartment) may be taxed in the country of the property’s location. Therefore, if a Belgian resident sells a property in India, India has the primary right to tax the capital gains as per its domestic laws. This makes understanding TDS on sale of property by an NRI crucial.

Gains from Movable Property

In most other cases, gains from the sale of movable property (like shares) are taxable only in the country where the seller is a resident.

Permanent Establishment Clause

An exception is made if the capital gains are attributable to a "Permanent Establishment" (a fixed place of business like a branch or factory) in the other country. In such cases, the gains are taxable in the country where the permanent establishment is located.

Impact for Investors

This framework provides clarity for Belgian NRIs investing in Indian real estate. They are aware that any capital gains from their Indian property will be subject to Indian tax laws, and proper Legal due diligence for NRIs investing in Indian real estate is highly recommended before any transaction.

Taxation on Employment Income Under DTAA

The DTAA provides clear guidelines for individuals working in the other country to avoid being taxed on their salary in both places.

The 183-Day Rule

As a general principle, an employee's salary is taxed in their country of residence. However, if they perform their work in the other country for a period exceeding 183 days in a given fiscal year, their salary can also be taxed in that other country.

Employer's Residence

The income can also be taxed in the other country if the salary is paid by an employer who is a resident of that country, or if it is borne by a "Permanent Establishment" of the employer in that country.

Practical Example

A Belgian resident on a short-term assignment in India for five months (less than 183 days) would typically not pay Indian income tax on their salary, provided their salary is paid by their Belgian employer and not by a branch office in India.

What are the Documents required to claim DTAA TDS?

To avail the benefits of the lower withholding tax (TDS) rates under the DTAA, a non-resident must provide the following key documents to the payer in India.

• Tax Residency Certificate (TRC) issued by the Belgian tax authorities.
• A self-attested copy of the PAN Card.
• A self-declaration in Form 10F.
• A declaration of beneficial ownership of the income.
• A declaration stating they have no Permanent Establishment (PE) in India.

How to Claim DTAA Benefits?

The method for claiming tax relief depends on your country of residence and where the income is earned. It is crucial to understand the process and the general Income tax rules for NRIs.

Indian residents earning in Belgium

Such citizens can claim a Foreign Tax Credit (FTC) when filing their income tax return in India. This is done by filing Form 67 and providing proof of the Belgian tax paid.

Belgian residents/NRIs earning in India

Such citizens can provide the required documents (TRC, Form 10F) to the Indian payer. The payer can then apply the lower TDS rate as specified in the treaty. For payments made from India, understanding Form 15CA and 15CB for NRIs is also a critical step. In some cases, applying for a lower TDS certificate for NRIs can further streamline this process.

DTAA Impact on NRIs, Investors, and Businesses

The DTAA agreement has a significant and positive impact on various stakeholders involved in cross-border activities between India and Belgium.

For NRIs

The treaty provides much-needed tax certainty for their Indian-sourced income, such as rent from property or interest from bank accounts. This is especially important for those who are renting out a home in India.

For Investors

The clear and often lower tax rates on dividends and interest reduce the tax burden, encouraging Belgian individuals and companies to consider how NRIs can buy property in India or invest in Indian businesses.

For Businesses

The treaty fosters a more favourable environment for trade and the provision of services by providing clear guidelines on the taxation of business profits, royalties, and fees for technical services.

How NoBroker Can Help with NRI Services?

Managing Indian property and taxation while living in Belgium becomes easier with NoBroker’s NRI-focused services. Whether you need help with tenant management, rent collection, or legal documentation, our team ensures every step complies with the DTAA between India and Belgium. NoBroker’s experts assist with TDS on property sales, income tax filing, and DTAA-related guidance to help NRIs stay compliant. With professional legal support and transparent services, you can handle your Indian investments confidently and without unnecessary hassle.

Know More How DTAA Works in India with Different Countries: