In general, tax treaties do not impose tax. Tax is imposed by domestic law; therefore, tax treaties limit the taxes otherwise imposed by a State. In effect, tax treaties are primarily relieving in nature. Similarly, tax treaties do not allocate taxing rights, although it is often claimed that they do. In light of this fundamental principle, it is usually appropriate before applying the provisions of a tax treaty to determine whether the amount in question is subject to domestic tax.
If the amount is not subject to tax under domestic law, it is unnecessary to consider the treaty.
For example, assume that under the provisions of a treaty between Belgium and Georgia, interest paid by a resident of one State to a resident of the other State is subject to a maximum rate of withholding tax of 10 per cent.
If, under the law of Belgium, interest paid by a resident in that country to an arm’s-length lender resident in Georgia is taxed at 30% WHT, the treaty does not give Belgium the right to impose a 30% per cent withholding tax on the interest.
A common example is
Wise cashback, where they withhold 30% interest.
If you’re eligible for a lower withholding tax rate under the Belgium double tax treaty with your country of residence, you can apply to the Belgian tax authority using the
official form for refund of Belgian WHT (Form 276 INT).
Now, you need to get this form stamped by the Georgian tax office.
As a result, you would have your residence confirmed within the meaning of a DTT.