Open and Hidden Issues in the Interpretation of Article 2

The Belgian annual tax on collective investment institutions (BAT) has been imposed on foreign investment funds since 2004. This article demonstrates that BAT qualifies as a capital tax (article 2(2) of the OECD MC) and automatically falls within the scope of previously concluded income and capital tax treaties. This applies not only to treaties fully adhering to article 2 of the OECD MC (Germany, Malta, The Netherlands) but also to those that “exhaustively” list existing taxes in article 2(3) (Luxembourg, Sweden). In accordance with the OECD position, notably expressed in the 1969 OECD WP No. 30 Report, and the Vienna Convention on the Law of Treaties, the conclusions are drawn from a systematic interpretation of the treaties as a whole, including their double taxation relief provision (article 23). The findings on the functions and interactions of article 2(1)-(4) matter also for the Belgian tax on securities accounts, and some concern income tax treaties as well. The article considers BAT case law, focusing on the Belgian cassation court’s 2022 decisions concerning the Belgium-Luxembourg treaty (highlighting the differing article 2 reasoning of the two language benches) and their aftermath.