The Commission also decided to bring an action before the Court of Justice concerning the manner in which Belgium taxes certain income of foreign cooperative societies and those pursuing a social objective, and certain interest paid to foreign companies.

Belgium grants an exemption from withholding tax on the first tranche of dividends paid by cooperative societies and for the first tranche of dividends (or interest) allocated or attributed by societies pursuing a social objective. The exemption only applies to cooperatives established under Belgian law and societies pursuing a social objective, which are authorised in Belgium. According to the Commission, these rules constitute an unjustified restriction on the free movement of capital as established by the TFEU and Agreement on the EEA.

The Commission is also disputing Belgian legislation, which charges withholding tax on interest from certain debt-claims paid to foreign investment companies, and on interest relating to securities deposited or registered in an account with financial institutions established outside Belgium.

The same interest paid to Belgian investment companies or relating to securities deposited or registered with financial institutions established in Belgium is exempt.

In the Commission’s view, this rule could discourage cross-border investment and restrictions the freedom to provide services and movement of capital under the TFEU and Agreement on the EEA respectively.