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By Sami Douénias, Tax partner and International Tax Leader, PwC Luxembourg, and Ilaria Palieri, Tax manager, PwC Luxembourg
The Court of Justice of the European Union (“the Court”) recently ruled in a case concerning the Belgian notional interest deduction(1). In particular, the Court deemed that the freedom of establishment principle precludes a legislation, such as the one at issue, from excluding from the notional interest deduction calculation the net value of the assets of a permanent establishment situated in another Member State (i.e. when that permanent establishment’s profits are exempt in Belgium by virtue of a double tax treaty). Conversely, the assets attributed to a Belgian permanent establishment are taken into account for that purpose...
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