The New Belgian CFC Rule under Model A of the EU Anti-Tax Avoidance Directive (2016/1164): The Infamous Trend Carries On – Part 1

In this two-part article, the author discusses the New Belgian CFC Rule under Model A of the ATAD. Part 1 deals with the compatibility of Belgium’s implementation of the ATAD’s CFC substance carve-out with EU law and the CJEU’s case law. Part 2, to be published in issue 5 of European Taxation (2026), analyses the case law of other Member States on the application of the substance carve-out under long-standing entity-based CFC rules. The lessons drawn from these cases will be of particular relevance for Belgium and other EU Member States that have more recently adopted entity-based CFC legislation. Two further issues will also be addressed: the interaction between the CFC substance carve-out and the PSD GAAR and the still unexplored question of the elimination of double taxation arising from the application of the CFC rules.