Brussels, 19.07.2004 (Agence Europe) - The European Commission has referred Belgium to the Court of Justice concerning the tax obligations it imposes on contractors who use foreign subcontractors to provide services in the construction sector.
Under Belgian law, a principal contractor who uses a subcontractor who is not registered in Belgium must: 1) be jointly responsible for the payment of the tax liabilities of the sub-contractor (limited to 35% of the total price without VAT); and 2) retain 15% of the amount paid to the sub-contractor for tax purposes.
According to the Commission, this rule discourages contractors from calling on sub-contractors not established in Belgium. It considers that the European information exchange systems between tax administrations would suffice to combat tax fraud in the construction sector.