India-Belgium DTAA: Complete Guide to the Double Taxation Avoidance Agreement

Quick answer: Under the India-Belgium DTAA, dividends are capped at 15% and interest at 15% (10% for loans granted by banks), while royalties and FTS are taxed at 10% — a rate formally incorporated into the treaty in January 2001 under its Most Favoured Nation clause. Signed 26 April 1993 and effective 1 October 1997, the treaty's 2025 Amending Protocol (effective 26 June 2025) overhauled its information-exchange and tax-collection-assistance provisions.

Key takeaways:

• Dividends capped at 15%; interest 15% general, 10% for bank loans
• Royalties/FTS taxed at 10% under the MFN clause, notified in 2001
• 2025 Amending Protocol (effective 26 June 2025) updated information exchange
• Construction PE threshold: 6 months; no separate service-PE clause
• MLI in force since 1 October 2019 for both countries

Overview of the India-Belgium DTAA

The Double Taxation Avoidance Agreement (DTAA) between India and Belgium is a comprehensive bilateral tax treaty that prevents double taxation and fiscal evasion with respect to taxes on income. Originally signed on 26 April 1993, this treaty facilitates cross-border trade and investment between two nations with significant economic ties — Belgium hosts the headquarters of the European Union and serves as a gateway for Indian companies entering the European market.

The DTAA covers Indian income tax (including surcharges) and Belgian individual income tax, corporate tax, legal entities tax, and non-resident income tax. Belgium is home to major financial institutions, the SWIFT network, and the Euroclear clearing system, making the tax treaty particularly relevant for cross-border financial transactions. The treaty provides reduced withholding tax rates on dividends, interest, royalties, and fees for technical services, and includes provisions on permanent establishment, capital gains, and mutual agreement procedures.

Treaty History & Current Status

The India-Belgium DTAA has undergone significant evolution since its original signing:

• Original Treaty: Signed on 26 April 1993 in Brussels. The treaty entered into force on 1 October 1997, with effect from 1 January 1998 in Belgium and 1 April 1998 in India.
• First Protocol (1993): Signed alongside the treaty, this Protocol addressed specific provisions relating to Articles 5 (PE), 7 (Business Profits), and 12 (Royalties/FTS). Crucially, it included a Most Favoured Nation (MFN) clause for royalties and FTS — if, after 1 January 1990, India agreed a lower rate or narrower scope with another OECD member state, that lower rate or narrower scope would apply to Belgium as well.
• Amending Protocol (2017/2025): Signed on 9 March 2017 in New Delhi, this protocol entered into force on 26 June 2025. It substantially modernized the treaty by replacing Articles 26 (Exchange of Information) and 27 (Assistance in Collection of Taxes), aligning the treaty with the current international standard on tax transparency and eliminating banking secrecy as grounds for refusing information exchange. India notified the Protocol on 10 November 2025 (Notification No. 160/2025).
• MLI Application: Both India and Belgium ratified the Multilateral Instrument. The MLI entered into force for both countries on 1 October 2019, introducing the Principal Purpose Test (PPT).

The MFN clause in the original Protocol is particularly important. After India agreed a 10% rate on royalties and FTS with other OECD members (such as Sweden), India formally notified the lower rate for Belgium: Notification S.O. 54(E) dated 19 January 2001 substituted Article 12, capping royalties and FTS at 10% with effect from 1 April 1998 in India. Because the reduction is incorporated in the notified treaty text, it is unaffected by the Supreme Court of India's 2023 Nestlé ruling that un-notified MFN benefits cannot be claimed.

Key Treaty Articles

Business Profits (Article 7)

Business profits of a Belgian enterprise are taxable only in Belgium unless the enterprise carries on business in India through a permanent establishment. If a PE exists, India may tax the profits attributable to that PE. The Protocol to the treaty clarifies that in determining profits of a PE, deductions are allowed for expenses incurred for the purposes of the PE, including a reasonable allocation of executive and general administrative expenses.

Dividends (Article 10)

Dividends paid by an Indian company to a Belgian resident may be taxed in India, but the tax is capped at 15% of the gross amount. This rate applies where the beneficial owner is a Belgian resident. The domestic Indian rate on dividends paid to non-residents is 20%, so the treaty saves Belgian investors 5 percentage points.

Interest (Article 11)

Interest arising in India paid to a Belgian resident is limited to 15% of the gross amount for general interest and 10% for interest on any loan of whatever kind granted by a bank (Article 11(2)(a)). The reduced tier is confined to bank loans; loans from non-bank financial institutions fall in the 15% residual category under Article 11(2)(b).

Royalties & Fees for Technical Services (Article 12)

Royalties and fees for technical services are capped at 10% of the gross amount. The rate flows from the MFN clause in the Protocol and was formally incorporated into Article 12 by Notification S.O. 54(E) dated 19 January 2001, effective 1 April 1998 in India. The same notification narrowed the royalty definition, excluding payments for the use of industrial, commercial or scientific equipment. The 10% rate covers payments for copyrights, patents, trademarks, know-how, and managerial, technical, or consultancy services.

Capital Gains (Article 13)

Capital gains from the sale of immovable property are taxable in the country where the property is situated. Gains from movable property forming part of a PE are taxable in the PE's country. Share gains are not sheltered by the seller's residence: under Article 13(4) India may tax gains on shares of a company whose property consists principally of immovable property situated in India, and under Article 13(5) it may tax gains on shares forming part of a participation of at least 10% in an Indian company. Only gains on property not covered by the earlier paragraphs are taxable solely in the alienator's state of residence (Article 13(6)). India's domestic provisions on indirect transfers and GAAR apply in addition. If capital gains are attributable to a PE, they are taxable where the PE is located.

Withholding Tax Rates Summary

The following table summarizes the applicable DTAA rates versus domestic Indian rates for payments to Belgian residents:

For detailed rate breakdowns by category, see our India to Belgium withholding tax rates page. Note that surcharge and Health & Education Cess apply over and above these DTAA rates when income exceeds specified thresholds.

Permanent Establishment Rules

Article 5 of the India-Belgium DTAA defines a permanent establishment as a fixed place of business through which the business of an enterprise is wholly or partly carried on. The definition includes:

• A place of management, branch, office, factory, workshop, or mine/quarry/oil well
• A building site or construction, installation or assembly project (including connected supervisory activities) lasting more than six months

Unlike several of India's treaties, the India-Belgium DTAA contains no separate service-PE clause — beyond construction projects, a PE arises only through a fixed place of business or a dependent agent.

The Protocol to the treaty contains important clarifications on PE, particularly regarding insurance activities and the scope of supervisory activities. The MLI's Principal Purpose Test applies to the treaty from FY 2020-21; the MLI's optional PE-related provisions (such as the anti-fragmentation and expanded dependent-agent rules) modify the treaty only to the extent India's and Belgium's MLI positions match.

2025 Protocol Impact on PE

The 2025 Amending Protocol does not directly modify Article 5, but the enhanced information exchange provisions (new Article 26) give tax authorities broader access to information about Belgian enterprises' activities in India, potentially strengthening PE identification and enforcement.

Tax Residency & Certificate Requirements

To claim benefits under the India-Belgium DTAA, a Belgian resident must obtain a Tax Residency Certificate (TRC) from the Belgian Federal Public Service Finance (SPF Finances/FOD Financien), confirming tax residency in Belgium for the relevant period. In addition, Form 41 (formerly Form 10F) must be submitted electronically on the Indian income tax portal.

The Indian payer deducting tax under section 393(2) of the Income-tax Act, 2025 (Table, Sl. No. 17; section 195 of the Income-tax Act, 1961) must obtain the TRC and Form 41 before applying reduced treaty rates. Without these documents, domestic rates apply. For remittances, Forms 145 and 146 (formerly Forms 15CA and 15CB) compliance is mandatory, with a CA certifying the applicable rate in Form 146.

Mutual Agreement Procedure (MAP)

Article 25 provides for MAP when taxation is not in accordance with the treaty. The competent authorities — the Ministry of Finance (Department of Revenue) in India and, on the Belgian side, the federal or regional Ministers of Finance — shall endeavour to resolve disputes by mutual agreement. The 2025 Amending Protocol also replaced the treaty's earlier aid-and-assistance provision with a new Article 27 on Assistance in the Collection of Taxes, which obligates both countries to assist in collecting revenue claims covering taxes of every kind, including interest, penalties, and collection costs.

India has not opted for mandatory binding arbitration under the MLI. Taxpayers facing unresolved MAP cases may pursue domestic appellate remedies. For guidance on the MAP process, consult our detailed guide.

How to Claim Treaty Benefits

Claiming DTAA benefits under the India-Belgium treaty involves these steps:

1. Obtain TRC from Belgium: Request a Tax Residency Certificate from SPF Finances/FOD Financien for the relevant financial year.
2. File Form 41: Submit Form 41 electronically on the Indian e-filing portal with residency details, TIN, and treaty information.
3. Self-Declaration: Provide a declaration confirming beneficial ownership, absence of PE in India (if applicable), and eligibility for treaty benefits.
4. Apply the Notified 10% Rate: For royalties and FTS, the 10% rate already forms part of the notified treaty text (Notification S.O. 54(E) dated 19 January 2001) — no separate MFN claim is required.
5. Submit Documents to Indian Payer: Share the TRC, Form 41, and self-declaration with the Indian company so they can apply the appropriate treaty rate.
6. Claim Treaty Relief: If taxes were withheld at higher rates, claim relief under section 159 of the Income-tax Act, 2025 (section 90 of the Income-tax Act, 1961) by filing an Indian tax return.
7. Form 145/Form 146: The Indian payer must file Form 145 and obtain CA certification via Form 146 before remittance.

For detailed instructions, read our guide on how to claim DTAA benefits in India. Belgian companies entering India should also review our Belgium company registration guide and tax advisory services.

Frequently Asked Questions

What is the withholding tax rate on dividends under the India-Belgium DTAA?

The India-Belgium DTAA caps the withholding tax on dividends at 15% of the gross amount under Article 10(2). This is lower than the domestic Indian rate of 20% but higher than many other Indian DTAAs. The rate applies when the beneficial owner is a Belgian resident.

Has the MFN clause reduced the royalty and FTS rates?

Yes. Under the Protocol's Most Favoured Nation clause, India's later 10% royalty/FTS rates with OECD members (such as Sweden) flowed to Belgium, and the reduction was formally notified on 19 January 2001 (Notification S.O. 54(E)), effective 1 April 1998 in India. The rate for royalties and FTS under the India-Belgium DTAA is therefore 10%, and — being part of the notified treaty text — it is unaffected by the Supreme Court's 2023 Nestlé ruling on un-notified MFN claims.

What changed in the 2025 Amending Protocol?

The Amending Protocol (signed 2017, effective 26 June 2025) replaced Articles 26 and 27, expanding information exchange to all taxes (not just income tax), eliminating banking secrecy as grounds for refusal, and introducing mutual assistance in tax collection. It aligns the treaty with the current international standard on tax transparency and strengthens enforcement against tax evasion. India notified it on 10 November 2025 (Notification No. 160/2025).

Is the India-Belgium DTAA covered by the MLI?

Yes. Both India and Belgium have ratified the MLI, which entered into force on 1 October 2019 for both countries. The MLI introduces the Principal Purpose Test for anti-abuse, effective for the India-Belgium DTAA from FY 2020-21; its optional PE provisions apply only where both countries' MLI positions match.

What is the PE threshold for construction projects under this treaty?

A building site or construction, installation or assembly project (together with connected supervisory activities) constitutes a PE if it continues for more than six months. The treaty has no separate service-PE clause — beyond construction projects, a PE arises through a fixed place of business or a dependent agent.

Can Belgium deny information exchange under the new protocol?

The new Article 26 expands information exchange to all taxes and removes banking secrecy protection. For criminal tax matters — defined to cover intentional conduct whether occurring before or after the Protocol's entry into force — information can be sought even for past periods. Belgium cannot decline to supply information solely because it is held by a bank, other financial institution, nominee, or fiduciary.

How is double taxation eliminated for Belgian companies with Indian income?

Article 23 sets out relief on each side. India relieves double taxation by the credit method. Belgium generally relieves it by exempting income that the treaty allows India to tax, with credit-type relief under Belgian law for certain categories such as interest and royalties. The mechanics differ by income type, so Belgian companies should confirm the treatment of each income stream, but the effect is that the same income is not taxed twice.