For nearly twenty years, choosing a Belgian holding company required little debate. The combination of an exemption regime for capital gains and dividends, an extensive tax treaty network, and a well-established level of legal certainty made Belgium an obvious choice for international groups.
That certainty has now faded. With the entry into force of Pillar Two, stricter substance requirements, and the growing number of anti-abuse measures, the question is no longer merely rhetorical: does Belgium remain, in 2026, a jurisdiction of choice for establishing an international holding company?
Why Has Belgium Long Been a Preferred Holding Jurisdiction?
Belgium’s historical attractiveness as a holding jurisdiction has been based on a combination of factors whose stability reassured international groups for more than two decades when choosing between European jurisdictions:
- the Dividend Received Deduction (DRD) regime, set out in Articles 202 to 205 of the Belgian Income Tax Code 1992, which—subject to participation, threshold and taxation conditions—eliminates a substantial portion of the economic double taxation of dividends received by the holding company;
- the absence of withholding tax on outbound dividends in many intra-group situations, particularly through the application of the EU Parent-Subsidiary Directive and Belgium’s network of double tax treaties;
- an exceptionally broad treaty network, enabling efficient structuring of dividend, interest and royalty flows with a large number of operating jurisdictions;
- an efficient advance ruling practice and relatively predictable case law;
- reasonable incorporation and operating costs compared with other European financial centres.
This foundation has not disappeared. However, it is no longer sufficient on its own to justify choosing Belgium. The international environment has changed fundamentally, requiring companies to reassess their holding location strategy.
What Has Changed?
Four converging developments have fundamentally reshaped the criteria for selecting a holding jurisdiction. These developments are not unique to Belgium, but they directly affect how a Belgian holding company must now be structured and justified.
A. Pillar Two and the End of Tax Rate Arbitrage
Directive (EU) 2022/2523 of 15 December 2022, implemented into Belgian law by the Act of 19 December 2023, introduces a minimum effective tax rate of 15% for multinational groups exceeding the applicable consolidated revenue threshold.
For these groups, selecting a holding jurisdiction solely because of a favourable nominal corporate tax rate has largely lost its relevance. Any effective tax rate advantage may be offset through the application of a top-up tax elsewhere within the group.
Consequently, the focus has shifted to other factors, including the quality and predictability of the legal environment, access to tax treaties, and the ability to demonstrate genuine economic substance.
B. The Requirement for Genuine Economic Substance
Tax authorities—both in Belgium and abroad—as well as the courts now examine the economic reality of holding structures far more closely.
A holding company can no longer exist merely on paper. It must have:
- a management body that genuinely meets and makes decisions in Belgium;
- appropriate personnel and resources consistent with its activities;
- real business premises; and
- a documented decision-making process.
This substance requirement, already reflected in case law concerning the concept of beneficial ownership, has become central to the application of tax treaties and EU directives alike.
C. Stronger Anti-Abuse Measures
Several legal instruments now operate together to restrict arrangements lacking genuine economic justification:
- the ATAD Directive (EU 2016/1164), including ATAD II on hybrid mismatches;
- the DAC6 Directive (EU 2018/822), requiring the reporting of certain cross-border arrangements; and
- the Principal Purpose Test (PPT) under Article 7 of the OECD Multilateral Instrument, allowing treaty benefits to be denied where obtaining those benefits was one of the principal purposes of an arrangement.
Together, these measures significantly reduce the scope for structures whose sole purpose is tax optimisation.
D. The Gradual End of “Empty” Holding Structures
Automatic exchange of information between tax authorities, increased transparency regarding beneficial ownership, and the convergence of international standards have made holding structures without genuine substance increasingly visible—and therefore increasingly vulnerable.
This trend is not temporary. It reflects a lasting transformation of the international tax landscape from which no jurisdiction can entirely escape.
This comparison leads to a more nuanced conclusion than a simple ranking of jurisdictions: no single jurisdiction is universally superior. The optimal choice depends on the group's actual business activities, its ability to establish genuine management in the jurisdiction, and the consistency between the legal structure and the operational reality it is intended to reflect.
Conclusion
The question is no longer where taxation is most favourable, but where a structure can sustainably demonstrate genuine economic substance within a stable legal environment that supports its long-term development.
From that perspective, Belgium continues to offer significant advantages for groups whose presence is driven by genuine business considerations. Conversely, structures established solely for tax purposes now face a considerably greater risk of being challenged.
This evolution confirms that effective corporate structuring now requires an integrated approach combining tax law, corporate mobility, and company law. It is within this multidisciplinary framework that Vanbelle Law Boutique advises companies, investors and executives on both domestic and international transactions.
