Summary
Recent rulings by Belgium’s highest courts have quietly but significantly changed how taxpayers must approach the recovery of withholding taxes. What was once thought to be a generous five-year objection period is now revealed to be something quite different. If you are a taxpayer relying solely on an administrative objection or appeal to claim a refund, your position may be more precarious than initially expected.
This article explains what has changed, what it means for practice, and what taxpayers and their advisors should do now.
Key Considerations
Withholding tax or payroll tax must normally be paid spontaneously by the taxpayer. This is the case, for example, when a Belgian company pays dividends to its shareholders (30% tax applied at source) or when a Belgian employer deducts payroll tax from employee salaries as a prepayment of income tax. If it is later determined that the withholding tax was paid in error, the question arises: within what timeframe must a refund be claimed?
A request for a refund of withholding tax or payroll tax can be submitted within five years, counting from 1 January of the relevant assessment year (Article 368 of the Belgian Income Tax Code 1992). It was long assumed that a formal (administrative) objection had to be filed within that same five-year period. However, the Belgian Constitutional Court has now clarified that this provision does not set a deadline for filing an objection, but rather establishes a limitation period for initiating legal proceedings before tax court instead (Constitutional Court, 13 March 2025, no. 43/2025). This may require some taxpayers to take immediate action to preserve their rights.
Legal Window for Tax Refund Claims
Usually, Belgian taxpayers have a period of 12 months to file an administrative objection letter against a tax assessment they do not agree with or which is incorrect. This period starts from the 3rd working day following the date that the tax assessment was issued. However, in the case of (spontaneously paid) withholding taxes, there is no formal tax assessment because they are retained at the source (by the employer, bank, etc.) and paid directly to the tax authorities.
Since 2011, the law stipulates that a request for reimbursement must be filed within five years, starting from January 1 of the year in which the withholding tax was paid.
However, until 2003, the general statutory limitation period of ten years was applicable. Since the tax authorities want to close their accounts within a reasonable timeframe, this ten-year period was deemed excessively long. As a result, legislative intervention was necessary, which came in the form of Article 368 BITC 92.
From Objection to Legal Action: Judicial U-Turn
For years, it was widely accepted that Article 368 BITC 92 provided a five-year window during which a taxpayer could file an administrative objection with the tax authorities to claim back withholding taxes (roerende voorheffing or bedrijfsvoorheffing). This interpretation had the support of the tax authorities and was followed in daily practice.
However, in two significant rulings (Supreme Court, 21 December 2023 and Constitutional Court, 13 March 2025) that understanding was overturned. Both courts concluded that Article 368 does not provide a deadline for submitting an administrative objection. Instead, it is a limitation period during which a taxpayer must initiate a judicial claim if they wish to recover withholding tax.
Administrative Objection: Still Possible, but Risky
In practical terms, this means that simply filing an administrative appeal letter with the tax office will no longer suffice to safeguard a taxpayer’s rights. Strictly speaking, a formal legal action or another measure that interrupts the limitation period must be taken before the deadline expires.
This subtle legal distinction has far-reaching consequences. If a taxpayer files a refund request with the tax office but takes no further legal or formal steps, they risk having their claim expire—even if the administration never formally denied the request. Therefore, taxpayers should no longer rely on informal or administrative procedures alone if they are approaching the end of the five-year term.
Common Situations Where This Will Matter
This shift is particularly relevant in a number of real-world scenarios:
- A company conducts an internal audit and discovers that payroll tax exemptions (e.g. for R&D, shift work) were not properly applied in previous years and were thus overpaid.
- A taxpayer receives royalty or copyright income for which withholding tax was paid that is later reclassified by the tax authorities as salary.
- A foreign investor or shareholder requests a refund of Belgian withholding tax based on a tax treaty exemption that was initially ignored or overlooked.
- A refund request is filed in good faith, but the tax authority takes months or years to respond.
In all of these cases, failure to initiate timely legal action—whether by starting a court case or sending a formal notice to interrupt the statute of limitations—may result in the withholding tax refund becoming time-barred.
Legal Uncertainty, Practical Consequences
The new case law has created a mismatch between long-standing administrative practice and current legal doctrine. While the tax administration has not yet published a revised position, the risk for taxpayers is real.
The courts have clarified that Article 368 BITC 92 does not provide for a formal appeal procedure and therefore does not trigger the protection normally associated with such administrative objection. That also means that the objection procedure, unless it meets certain formal legal standards, does not interrupt or suspend the statute of limitations.
Moving Forward: What Taxpayers Should Do Now
Taxpayers and advisors should reassess any pending refund claims to determine whether the applicable limitation period is still open and what steps, if any, have been taken to interrupt it. If the claim is approaching the end of the five-year term, it may be necessary to start a legal claim in tax court before the deadline or take other legal action to interrupt the statute of limitations as defined under Belgian civil law.
Taxpayers should act with caution and speed. If you are unsure whether your situation is protected, consult a tax advisor to evaluate your position and avoid losing what could be a substantial tax refund.