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.)
David Seutin (Wed,) studied this question.