Newsletter
TAX TREATIES WITH BELGIUM AND DENMARK
Agreement between the Taipei Representative Office in Belgium and the Belgian Office, Taipei for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (Belgium Treaty), and the Agreement between the Taipei Representative Office in Denmark and the Danish Trade Or-ganisations'' Taipei Office for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income (De-mark Treaty) have become effective. This brings the number of European countries with which Taiwan has tax treaties already in effect to six—Macedonia, the Netherlands, the UK, Sweden, Belgium, and Denmark.
The Belgium Treaty and the Denmark Treaty took effect on 14 and 23 December 2005 re-spectively. For income from which tax is with-held at source, the treaties apply to income paid or due from 1 January 2006; for other incomes, they apply in the taxation period beginning on 1 January 2006.
Both treaties provide that if a beneficial owner of dividends, interest, or royalties earned from one territory is a resident of the other territory, tax levied on such income in the originating territory shall not exceed 10% of the total income. The business profits of an enterprise of one territory are taxable only in that territory, except that if the enterprise has a permanent establishment in the other territory, the profits attributable to the permanent establishment are taxable in the other territory.
Accordingly, if a resident of Belgium or Den-mark receives dividends, interest, or royalties in Taiwan after 1 January 2006, Taiwan should levy income tax on them at a withholding rate of 10%; and if an enterprise that is resident of Bel-gium or Denmark earns profits in Taiwan after 1 January 2006, such profits will be exempt from business income tax in Taiwan, except for any part of the profits that is attributable to a per-manent establishment that such an enterprise maintains in Taiwan.