France-Belgium tax treaty: the 1964 text is still the one that applies

The rules that recur in our files

• Residence (Article 1). An individual is resident of the State where they have a permanent home; if they have one in each State, of the State where their centre of vital interests lies, then their habitual abode, then their nationality. The Conseil d'État placed in France the centre of vital interests of a taxpayer whose spouse and two children lived there and who carried on a consulting business there, even though the income was received through a Belgian holding company (CE, 26 September 2012, no. 346556). A taxpayer whose permanent home is in Belgium is a Belgian resident under the treaty and cannot claim the deductions and reductions reserved for persons fiscally domiciled in France (CE, 8 July 2002, no. 225159).
• Taxes covered (Article 2). Income tax and corporate tax, as well as similar future taxes: the Conseil d'État held that the exceptional contribution on high incomes (CEHR) is one of them, and that a Belgian resident was not liable to it on life insurance income (CE, 10 July 2019, no. 425148). The treaty covers no wealth tax: IFI due by a Belgian resident on French real estate is governed by domestic law alone.
• Real estate (Article 3). Income from, and gains on the sale of, real estate are taxable only in the State where the property is situated. The Conseil d'État has upheld the administrative interpretation treating shares in property-rich SCIs as real property for the purposes of Article 3 of the treaty (CE, 24 February 2020, no. 436392); the decision does not extend to every property-rich company. The Montreuil administrative court applied a comparable characterisation to shares in a real-estate-rich SAS (21 November 2024, no. 2303528). An earlier judgment of the same court had held the gain made by a Belgian resident on shares in an SCI subject to corporate tax taxable in Belgium (7 June 2019, no. 1705505); the Conseil d'État's 2020 decision came after it.
• Dividends (Article 15). The State of the distributing company may levy at most 15% of the gross amount, or 10% where the beneficiary is a company owning outright at least 10% of the capital throughout a 365-day period including the payment date (a condition introduced by the multilateral convention). The treaty concept of dividend is narrow: the Conseil d'État held that a price supplement paid by a French company to a Belgian supplier holding none of its capital was not a dividend, and set aside French withholding tax under Article 18 (CE, 27 July 1984, no. 16649).
• Interest (Article 16). Taxable in the beneficiary's State of residence, the source State being allowed to levy at most 15%. Gains on the surrender of a capitalisation contract are income from debt-claims: the Versailles administrative court of appeal upheld the French levy on the surrender, by a Belgian resident, of a contract taken out in France (10 April 2012, no. 10VE03871).
• Gains on shares (Article 18). In the absence of a capital gains article, income not otherwise dealt with is taxable only in the State of residence: except for shares treated as real property (Article 3), a Belgian resident selling shares in a French company is not taxable in France (CE, 15 December 2004, no. 259771). A major exception: a gain realised while the taxpayer was resident in France and then deferred remains taxable in France when the deferral ends, even if the seller then lives in Belgium (CE, 29 March 2019, no. 392317).
• Directors (Article 9). Remuneration paid by reason of their office to directors, auditors, managing partners and similar office holders of public limited companies, partnerships limited by shares, cooperatives, French SARLs and Belgian private limited companies is taxable only in the company's State. The two administrations have agreed that management remuneration paid by a French SARL that has not elected partnership tax treatment to its manager resident in Belgium remains taxable in France, under Article 62 of the French Tax Code for a majority manager and as salary otherwise (BOI-INT-CVB-BEL-10-20, nos. 200 to 240). Normal remuneration received in another capacity, for salaried technical duties or a professional activity, follows its own rules (Articles 7 and 11).
• Salaries (Article 11). Taxable in the State where the work is performed, except for a temporary stay meeting three conditions: no more than 183 days in the calendar year, remuneration borne by an employer established in the State of residence, and work not performed at the expense of a permanent establishment or fixed base in the other State.
• Pensions (Articles 10 and 12). Private pensions, including social security pensions, and life annuities are taxable only in the State of residence. Government pensions and salaries are taxable in the paying State, except for residents of the other State who hold its nationality. For French nationals living in a care home in Belgium, the administration has set out residence rules, including a twenty-four-month period for married persons whose spouse remains in France (BOI-INT-CVB-BEL-10-30, no. 160).
• Relief from double taxation (Article 19). For a French resident, income taxable exclusively in Belgium is exempt from French tax but taken into account for the effective rate; Belgian-source dividends and interest are taxed in France, less the tax levied in Belgium. The Paris administrative court held that income subject in France to the flat tax (PFU) is not taken into account for that effective rate (29 November 2022, no. 2105936).
• Second home in France. The administration accepts that the treaty prevents the lump-sum taxation based on the rental value of a home in France (Article 164 C of the French Tax Code): a Belgian resident is taxable in France only on French-source income (BOI-INT-CVB-BEL-10-50, no. 90).

Five Conseil d'État decisions on the 1964 treaty

The 1964 text does not follow the OECD model: case law sets its scope on residence, dividends and capital gains.

• Residence: where the family and the activity are. The centre of vital interests is assessed by the place where the main professional activity is actually carried on and the real source of the income; the fact that income passes through companies established in the other State is irrelevant (CE, 26 September 2012, no. 346556).
• Dividends: a narrow notion. A price supplement paid by a French company to its Belgian supplier, which holds no share of its capital, is not a dividend; Article 18 reserves that income to the State of residence and bars French withholding tax (CE, 27 July 1984, no. 16649).
• Gains on shares: the State of residence alone. The gain a Belgian resident makes on selling shares in a French company is not taxable in France (CE, 15 December 2004, no. 259771).
• Deferred gain: the exception. A gain realised by a taxpayer then resident in France and placed in deferral remains taxable in France when the deferral ends, even if the taxpayer then lives in Belgium (CE, 29 March 2019, no. 392317).
• Shares in property-rich companies. The Conseil d'État upheld the administrative interpretation treating shares in property-rich SCIs as immovable property under Article 3 of the treaty (CE, 24 February 2020, no. 436392), without extending it to every property-rich company.

A signed text, with known sticking points

• An uncertain timetable. In February 2025, the French Government stated that discussions with Belgium on the taxation of government remuneration were still ongoing, and that ratification would be submitted to Parliament once they were finalised (ministerial answer, National Assembly, 4 February 2025, no. 1362). The text will apply at the earliest from 1 January of the year following its entry into force.
• Dividends and interest. Withholding tax on dividends capped at 12.8%, and exemption at source for a company holding at least 10% of the capital for 365 days; interest taxable only in the State of residence.
• Capital gains. Gains on shares in companies deriving more than 50% of their asset value from real estate situated in a State would become taxable in that State, where it treats them as real estate gains; property used in the company's own business is disregarded, and shares listed on a regulated market in the European Economic Area are excluded. A further clause targets an individual who was resident in the other State for at least six of the ten years before changing residence and held a substantial interest there (25% of profits) during the previous five years: gains on shares already held on departure remain taxable in that other State if they arise within seven years.
• Wealth. The 2021 treaty would cover wealth tax, which the 1964 treaty does not.
• Cross-border workers. Its Article 29 provides that the 2008 protocol's provisions on cross-border workers continue to have effect.