On January 4th the new Treaty against Double Taxation and Tax Evasion between China and Belgium has become effective and substitutes the preceding treaty signed on 1985. This new Treaty is mainly in line with the standard OECD Model of 2008, and in line with the new Double Taxation Treaties that are being executed in recent years.

There are however some aspects of novelty: for instance we have to highlight the provision, contained in this Treaty and derived from the 2011 UN Model Convention, that extends to the definition of  the “permanent establishment” the supplying of services, including consultancy services, by a  company using employees or other personnel hired or appointed by such company for that purposes and for activities having a duration (for the same projects or for connected projects) of 183 days within twelve months’ period.

Finally, in fighting tax evasion, the new Treaty govern the exchange of information between the relevant tax authorities, and specifically states that “In no case shall the provisions of paragraph 3 [i.e. a Contracting State may not disclose information connected to trade, business, industrial, commercial professional secrets, etc.]  be construed to permit a Contracting State to decline to supply information held by banks or other financial institutions on request by the other Contracting State.”

We will now monitor whether China will enter into new Treaties with other Countries to establish or to amend previously signed “Double Taxation Treaties”, such as the newly signed Treaty between China and Netherland on May 2013.

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