Are UK discretionary trust distributions taxable at 30% in Belgium for income years 2023 and 2024?

In principle, Belgium may treat distributions from a UK discretionary trust as dividends taxable at 30% under the Cayman tax. However, Constitutional Court ruling no. 12/2021 may prevent that taxation where the trust itself is subject to income tax of at least 15%, calculated according to Belgian rules. The outcome depends on the relevant income year, the applicable version of the Cayman tax and the available evidence.

The amounts below are illustrative. The analysis distinguishes income year 2023, assessment year 2024, from income year 2024, assessment year 2025.

How Belgium normally taxes distributions from a foreign trust

Belgian tax residents are generally taxable on their worldwide income.

A foreign trust may qualify as a “legal construction” within the meaning of Article 2, §1, 13°, a) of the Belgian Income Tax Code 1992, commonly abbreviated as CIR 92.

Under the Belgian Cayman tax, distributions made by such a structure to a Belgian resident may, in principle, be treated as dividends. These deemed dividends are generally subject to Belgian movable income tax at a flat rate of 30%.

The existence of the trust must also generally be reported in the relevant section of the Belgian personal income tax return. The distribution itself may need to be reported as movable income.

Correct annual disclosure of the trust is important, but disclosure alone does not determine whether each distribution is taxable. The nature of the trust, the applicable Cayman tax rules and the taxation borne by the trust must also be examined.

Should Belgium tax the gross or net distribution?

A practical issue is whether the Belgian assessment applies the 30% rate to:

• the amount actually paid to the beneficiary after UK tax; or

• the trust income before the UK tax borne by the trustees.

This distinction can materially affect the Belgian tax due.

For example, assume that a trust earns approximately €8,000 of income, pays around €3,000 of UK tax and distributes a net amount of about €5,000.

A Belgian tax of 30% would amount to approximately:

• €1,500 if calculated on the net payment of €5,000; or

• €2,400 if calculated on the gross income of €8,000.

The assessment notice should therefore be compared carefully with the trust statements, UK tax computations and amounts actually received.

Why the Belgium–United Kingdom tax treaty may not eliminate the double taxation

It may appear that the same income has been taxed twice:

• first in the United Kingdom at trust level; and

• again in Belgium when the beneficiary receives the distribution.

However, tax treaties primarily address juridical double taxation: the same taxpayer being taxed twice on the same income.

With a UK discretionary trust, the UK tax may legally be borne by the trustees, while the Belgian tax is imposed on the beneficiary. This may be viewed as economic double taxation involving two different taxpayers.

In addition, a trust distribution is not necessarily a dividend paid by a company resident in one of the contracting states. The treaty’s dividend provisions may therefore not apply in the same way as they would to an ordinary dividend from a UK company.

A Belgian challenge based only on the Belgium–United Kingdom treaty may consequently be vulnerable. The stronger argument may instead arise from Belgian constitutional law and the taxation actually borne by the trust.

Constitutional Court ruling no. 12/2021 and the 15% test

In ruling no. 12/2021 of 28 January 2021, the Belgian Constitutional Court annulled part of the Cayman tax legislation.

The annulment concerned the absence of an exception for beneficiaries receiving income distributed by a trust-type legal construction that is subject, in its jurisdiction of establishment, to income tax of at least 15% of its taxable income.

For this purpose, the taxable income must be determined according to the Belgian rules that would apply to the corresponding income.

The central question is therefore not simply whether tax was withheld when the distribution was paid. It is whether the trust or its trustees were themselves liable to tax on the underlying income at an effective rate of at least 15%.

Where that condition is met, the Constitutional Court ruling provides a potentially strong basis for arguing that the distribution should not be treated as a taxable dividend under the provision examined by the Court.

How a UK discretionary trust is taxed

UK discretionary trusts are subject to a specific tax system.

The trustees may themselves be liable to UK income tax as the trust earns income. The rates referred to in the source analysis are:

• 39.35% on dividend income; and

• 45% on most other trust income.

When income is later distributed to a beneficiary, the payment may be treated as net of tax. A corresponding tax credit is managed through the trustees’ tax pool.

The trustees may issue an R185 certificate to the beneficiary showing the gross income, tax credit and net payment.

This mechanism is important for the Belgian 15% test. It supports the argument that the tax is legally borne at trustee or trust level rather than merely being a personal withholding tax paid by the beneficiary.

Illustrative application of the 15% threshold

Assume a UK discretionary trust receives approximately €8,000 of dividend income and incurs around €3,000 of UK tax before distributing the remaining amount.

The effective UK tax rate would be approximately:

€3,000 ÷ €8,000 = 37.5%

That rate is well above the Belgian 15% threshold.

The calculation is only the first step. The Belgian test requires the trust’s taxable income to be recomputed according to the corresponding Belgian tax rules.

For straightforward dividend income, that recomputation may not necessarily reduce the effective rate below 15%. Nevertheless, the comparison must be documented rather than assumed.

Which documents can prove that the trust meets the test?

A general letter from the trustee confirming that UK tax was paid may be helpful, but more detailed evidence will usually be stronger.

Relevant documents may include:

• the trust’s UK tax return, including form SA900;

• the trustees’ detailed UK tax computation;

• the trust’s annual accounts or income statements;

• the beneficiary’s R185 certificates;

• statements reconciling the gross income, UK tax and net distribution;

• confirmation identifying the trustees as the persons legally liable for the UK tax; and

• a calculation comparing the trust’s UK-taxed income with the taxable base determined under Belgian rules.

The wording used in a Belgian objection is also important.

A statement that tax was paid “in the beneficiary’s name” could weaken an argument that depends on tax being borne by the trust or trustees. The factual and legal description should correspond exactly to the UK documents.

Income year 2023 and income year 2024 must be treated separately

The applicable Cayman tax legislation depends on the date of the distribution.

Income year 2023 — assessment year 2024

Distributions made up to the end of 2023 were governed by the earlier version of the Cayman tax, sometimes referred to as Cayman tax 2.0.

Constitutional Court ruling no. 12/2021 directly concerned a provision introduced by the programme law of 25 December 2017. The 15% taxation test is therefore particularly important when analysing distributions falling under that version of the legislation.

Income year 2024 — assessment year 2025

For distributions made from 1 January 2024, the reformed Cayman tax 2.1, introduced by the law of 22 December 2023, applies.

The relevant statutory provisions were rewritten. The Constitutional Court subsequently partially annulled aspects of that reform in ruling no. 117/2025 of 18 September 2025.

The constitutional reasoning concerning sufficiently taxed trusts may remain relevant, but the legal argument must be matched to the precise provision applicable to the distribution year.

An objection concerning income year 2023 should therefore not automatically be copied for income year 2024 without checking the amended legislation.

Can the beneficiary reclaim part of the UK tax?

A non-UK-resident beneficiary may, depending on the circumstances, be able to request repayment of part of the UK tax connected with a trust distribution.

That possibility should be considered cautiously.

A UK repayment could:

• reduce the economic double taxation;

• affect the trustees’ tax pool;

• change the final amount of UK tax attached to the distribution; and

• influence the evidence used to demonstrate that the trust meets Belgium’s 15% test.

The UK repayment position and the Belgian Cayman tax position should therefore be examined together before a repayment request is submitted.

How can a pending Belgian tax objection be reinforced?

A taxpayer who has already filed a timely administrative objection can generally supplement it while the tax administration has not yet issued its decision.

A supplementary submission may address:

1. Who bore the UK tax
   It should explain, with supporting documents, that the trustees were legally liable for the UK income tax.

2. The effective tax rate
   It should compare the UK tax with the trust’s taxable income and explain how the income would be determined under Belgian rules.

3. The applicable Cayman tax version
   The submission should identify whether the disputed distribution falls under the legislation applicable to income year 2023 or the reformed rules applicable from income year 2024.

4. The Belgian taxable base used in the assessment
   It should verify whether the 30% Belgian tax was calculated on the gross trust income or on the net distribution.

5. The supporting evidence
   The SA900 return, tax computations, R185 certificates and trust statements should be reconciled clearly.

A taxpayer may also request to be heard before the administration takes its decision.

What are the objection and court deadlines?

Under Article 371 CIR 92, the ordinary deadline for filing a Belgian tax objection has been one year since 1 January 2023.

When an objection has been rejected, the taxpayer generally has three months from notification of the decision to bring the dispute before the Court of First Instance.

The source analysis also notes that where the administration has not decided within six months, the taxpayer may bring the case before the court without waiting for an administrative decision.

These procedural periods should be checked against the exact notification, filing and acknowledgement dates in each file.

Frequently asked questions

Are all distributions from a UK trust automatically taxed at 30% in Belgium?

No. The Cayman tax may treat a trust distribution as a dividend taxable at 30%, but exceptions and constitutional limitations may apply. The result depends on the type of trust, the relevant income year and the taxation borne by the trust.

Does paying 39.35% UK trust tax automatically prevent Belgian tax?

Not automatically. The taxpayer must demonstrate that the tax was borne by the trust or trustees and that it represents at least 15% of the taxable income calculated according to Belgian rules.

Is an R185 certificate sufficient proof for Belgium?

An R185 is useful evidence, but it may not be sufficient by itself. The Belgian administration may also require the SA900 return, the trustees’ tax computation and a reconciliation of the trust’s income and tax.

Can the Belgium–United Kingdom treaty provide a tax credit?

Not necessarily. Because the UK tax and Belgian tax may be imposed on different taxpayers, the situation may constitute economic rather than juridical double taxation. The treaty may therefore not provide straightforward relief.

Should Belgian tax be calculated on the gross or net trust payment?

That depends on the legal characterisation and the basis used in the assessment. The Belgian assessment notice should be checked to determine whether the administration taxed the amount received or the underlying gross income.

Do the same rules apply to distributions made in 2023 and 2024?

Not necessarily. Income year 2023 generally falls under the earlier Cayman tax rules, while distributions made from 1 January 2024 fall under Cayman tax 2.1. The legal basis must be verified separately for each year.

Sources

• Tiberghien — Constitutional Court questions the application of the Cayman tax to trusts — https://www.tiberghien.com/en/2941/constitutional-court-questions-the-application-of-the-cayman-tax-to-trusts

• Afschrift — Annulment of the Cayman tax on distributions from trusts subject to tax — https://www.afschrift.com/2021/01/29/annulation-de-la-taxe-caiman-sur-les-distributions-de-trusts-soumis-a-limpot/

• Belgian Federal Public Service Finance — Belgium–United Kingdom tax convention — https://finances.belgium.be/sites/default/files/downloads/royaumeUni_FR.pdf

• Quilter — Taxation of income in discretionary trusts — https://www.quilter.com/help-and-support/technical-insights/technical-insights-articles/taxation-of-income-in-discretionary-trusts/

• HMRC — Trusts, Settlements and Estates Manual, TSEM3024: the tax pool — https://www.gov.uk/hmrc-internal-manuals/trusts-settlements-and-estates-manual/tsem3024

• Tiberghien — New Constitutional Court ruling: what remains of Cayman tax 2.1? — https://www.tiberghien.com/fr/4399/nouvel-arret-de-la-cour-constitutionnelle-que-reste-t-il-de-la-taxe-caiman-2-1

• Medadvice — How to respond to a Belgian tax audit in 2026 — https://www.medadvice.be/2026/02/05/comment-reagir-face-a-un-avis-de-controle-fiscal-en-2026/

This article presents a general framework and does not constitute a personalised tax opinion. Tax rules may change from one income year to another, and the correct treatment depends on the trust documentation, the applicable legislation and the taxpayer’s exact circumstances.

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