Wealth Management - Belgium: tax measures under the government agreement

After more than seven months of complex negotiations, the parties comprising the Arizona coalition finally reached an agreement on Friday 31 January. Although an agreement in principle has been reached, it should be highlighted that the exact details still need to be defined in a parliamentary bill to be debated and then subject to a vote. Regarding implementation, although no specific timeframe has yet been set, the government has indicated that measures could come into force in 2026.

An overview of the main tax measures concerning your assets is outlined below:

1. Solidarity contribution

The government is planning to implement a capital gains tax of 10% on financial capital gains, including those generated by crypto-assets, for physical persons resident in Belgium. It should be noted that the measure will not be retroactively applicable and that capital gains existing prior to the measure coming into force will be protected. The starting point for the calculation of the taxable capital gain will therefore be the date that the law comes into force. Capital losses will be deductible, but only for the current year and exclusively on taxed capital gains and therefore excluding all other types of income (transferable securities, etc.). An exemption will be granted for the first €10,000 of capital gains.

For shareholdings of over 20%, capital gains taxation will be progressive, with an exemption for the first million euros. The progressive tax bands are as follows:

• €1 - 2.5m: 1.25%
• €2.5 - 5m: 2.5%
• €5 - 10m: 5%
• Over €10m: 10%

The method for collecting the tax (by tax declaration or through a withholding tax deducted by banks) has not yet been specified.

2. An annual tax of 0.15% on securities accounts

Although an increase in this tax to 0.25% was proposed in previous drafts, it will finally not be applied. However, a study will be carried out to assess the various methods used to avoid taxation on securities accounts.

3. Changes to the participation exemption regime and the so called “DRD-SICAV” (Dividend received deduction fund)

In the context of the RDT regime, the deduction of income from shareholdings becomes an exemption. The shareholding threshold, currently €2.5m, will be increased to €4m, but only for large companies, defined by the following criteria under Article 2 §1, 4°/1 of the Belgian income tax code (CIR):

• Fewer than 250 employees
• Turnover of below €50m
• Balance sheet of below €43m

A company will be considered as a large company if it exceeds more than one of these three criteria for two consecutive financial years. The criteria must be analysed on a consolidated basis. In addition, for a company to be eligible to this regime, the shareholding must be recorded as a fixed financial asset, which seems surprising given that this condition had been introduced and then removed in 2011, at the request of the European Commission.

For DRR -SICAV, two adjustments are planned:

• Capital gains upon redemption will be taxed at 5%. The government does not specify whether previous capital gains are protected.
• In the case of dividend distributions, the securities withholding tax of 30% levied by the DRD SICAV can only be deducted from corporate tax paid by the benefitting company if the manager receives remuneration of at least €50,000 (indexed) per year.

4. Liquidation reserve regime

The aim is to harmonise taxation on dividends from the liquidation reserve with VVPRbis dividends. The tax rate will be raised from 5% to 6.5%, increasing the effective tax rate to 15% vs 13.64% currently. In addition, the dividend distribution waiting period will be shortened from 5 to 3 years.

5. Carried interest

Currently, carried interest is subject to variable taxation depending on structure. Carried interest can be taxed as dividends (30%) or as income (under the progressive personal income tax rate bands). A new specific regime will be set up, with a minimum tax of 30%, in order to make Belgium more competitive in the private equity funds market compared to its neighbours.

6. Real estate taxation

Mortgage interest will no longer be deductible from real estate income, making property taxation purely regional.

7. Exit tax

Currently, the transfer of a Belgian company’s registered offices abroad is treated as a fictitious liquidation, resulting in the taxation of unrealised capital gains at company level. In the future, this type of transfer may also trigger taxation for shareholders, as if they were receiving a liquidation bonus. The compatibility of this measure with European law appears uncertain, particularly for registered offices transfers within the EEE.

Although much of the information remains unclear and further details should be announced, this agreement provides an initial clear view of the tax measures planned for the coming years. We will be closely monitoring all developments, and we will keep you informed. Meanwhile, we are of course available for any questions.