The New Belgian CFC Rule under Model A of the EU Anti-Tax Avoidance Directive (2016/1164): The Infamous Trend Carries On – Part 2

In this two-part article, the author discusses the new Belgian controlled foreign corporation (CFC) rule under Model A of the Anti-Tax Avoidance Directive (ATAD). Part 1, which was published in issue 4 of European Taxation (2026), dealt with the compatibility of Belgium’s implementation of the ATAD’s CFC substance carve-out with EU law and the case law of the Court of Justice of the European Union (CJEU). Part 2 analyses, in section 3., the case law of other EU 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 Parent-Subsidiary Directive (PSD) general anti-avoidance rule (GAAR) (section 4.) and the still unexplored question of the elimination of double taxation arising from the application of the CFC rules (section 5.)