Within the FPS Foreign Affairs, the service responsible for economic agreements monitors the procedure leading up to the establishment of social security agreements, double taxation agreements and bilateral agreements on protecting investments, among other things.
- Social security agreements are usually the responsibility of the federal government and determine the situation of employees and self-employed people who are subjected to the social security system of one of the countries with mandatory membership systems during their career or who switch from one system to another. They also set out the applicable social security legislation.
- The prime objective of a double taxation agreement is either to avoid the international levying of double income tax altogether or at least to mitigate the consequences of double taxation.
Double taxation entails two separate international authorities levying similar taxes on the same taxpayer for the same taxable activity exercised over the same period of time.
Double taxation is avoided either by tying the right to levy tax exclusively to the taxpayer’s place of residence or by recognising the right of the respective taxpayer’s home country to collect tax from him or her. This means either obliging the taxpayer’s country of residence to offset the tax levied in the country of origin against its own levied tax or exempting taxable income in the respective country from tax.
In addition, agreements govern the exchanges between the tax administrations of both countries involved of the information required to execute the provisions of the agreement as well as the domestic legislation governing earnings covered by the agreement.
A number of agreements provide for administrative assistance when collecting the taxes to which they apply.
Finally, such agreements contain provisions especially regarding the arrangement of mutual consultations, the limitation of the respective agreement’s applicability, and the principle of not discriminating on the basis of nationality.
- The aims of a bilateral investment agreement, apart from encouraging investment, are to offer investors guarantees of maximal protection, for instance by pledging to treat investments decently and fairly, to include a most-favoured-nation clause to prevent discrimination, to undertake to offer compensation in the event of measures being adopted that deprive people of income, to freely hand over earnings and to create a suitable legal framework within which any disputes over investments can be settled and the investor can call on international arbitration. Finally, the agreement also contains a social and an environmental clause.