Constitutional Court Trims Scope of Belgium’s ‘Cayman Tax’

Belgium’s anti tax avoidance rules for offshore structures can’t automatically classify a dedicated investment fund with over 50% ownership by one person or related persons as abusive, one of the country’s top courts ruled.

The country’s Constitutional Court also ruled Thursday the government can’t apply exit tax to profits earned by a structure before its founder became a Belgian resident for tax purposes.

The rules—known as the Cayman Tax—allow the tax authorities to levy income earned by Belgian residents through a variety of offshore structures, such as trusts or low-taxed legal entities.