EU tax Snippet Summer Series #3 Belgian Constitutional Court refers case on UTPR to CJEU – New York office Snippet

Background

In the EU, Pillar Two (P2) was implemented through a Directive (P2 Directive) that was approved by all EU Member States (𝐄𝐔 𝐌𝐒). The P2 Directive does not have direct effect and must be transposed into national law by each EU MS, such as Belgium.

Under the Belgian constitution, a constitutional review procedure allows any person with a legitimate interest to challenge legislation before the BCC within six months after its publication. In the case at hand (UTPR Case), the plaintiff claimed that the Belgian implementation of the UTPR infringed on fundamental rights protected under the Belgian constitution.

Belgian Court Case

On July 17, 2025, the BCC issued its initial judgment in the UTPR Case. It concluded that, since the Belgian UTPR legislation is based on the P2 Directive, any potential infringement of fundamental rights must be assessed at the EU level. The BCC therefore referred preliminary questions to the Court of Justice of the EU (CJEU), asking whether the UTPR violates:

▪️ the right to property;
▪️ the freedom to conduct a business;
▪️ the principle of equal treatment; and/or
▪️ the principle of fiscal territoriality.

At the core of these grounds for challenge lies a common question: is it compatible with fundamental rights for an entity to be taxed under the UTPR on profits earned by entities in other jurisdictions, without consideration of its own financial capacity?

Impact and next steps

The referral by the BCC to the CJEU confirms that the validity of the UTPR must be assessed at the EU level. If the CJEU annuls the UTPR provisions in the P2 Directive, EU MS would lose the legal basis for their national UTPR rules. The latter could then be repealed or challenged.

The CJEU proceedings will include written and oral phases and likely also an opinion from the Advocate General. Given the complexity of the case, a decision may take longer than the average 17.7 months of a CJEU case.

While the referral to the CJEU opens the door to potential amendment of the P2 Directive, the path forward is far from certain. The outcome and its timing will depend not only on the CJEU’s decision but also on how EU Member States choose to respond should the CJEU side with the plaintiff. For now, the UTPR remains in force and in-scope groups should stay prepared, while keeping a close eye on how the legal and political landscape may evolve.

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