Belgian tax on investment accounts

January 28, 2021

IVO CLAEYS
Tax Partner
Kreston MDS, Belgium

A few years ago, the Belgian government introduced a new tax regime for holders of investment accounts with a combined value of more than €500,000. However, this tax was abolished when a judgement by the Belgian Constitutional Court found it discriminatory. On 2 November, the newly elected government has proposed a new tax on investment accounts, broadening its scope to address the concerns of the Constitutional Court.

Personal scope

Both physical and legal persons are subjected to the new tax on investment accounts. Investment accounts held by a legal structure (including a trust or foundation) are deemed to be held by the person who qualifies as the founder of that structure.

The tax applies to both residents and non-residents (physical persons as well as legal persons) holding a Belgian investment account, unless a double tax treaty prevents Belgium from levying tax on the assets of non-residents.

Material scope

The tax is aimed at investment accounts with an average value of more than €1 million during a given period. All financial assets held in the investment account are taken into account to determine the average value of the account, as opposed to the previous tax on investment accounts that excluded certain financial products. Life insurance contracts with an underlying investment account also seem to be in scope.

Shares are excluded, provided that they are not held in an investment account (e.g. registered shares) unless the anti-abuse rule applies (see section on anti-abuse rule).

Since the tax aims to subject the investment account to tax (and not the person holding it), it is not necessary to divide the value among all accountholders. However, this could lead to some strange consequences.

Tax rate

The investment accounts in scope are subjected to a yearly tax of 0.15% on the average value of the account, calculated based on its value at quarterly reference dates (31 December, 31 March, 30 June and 30 September).

Exemptions

Exemptions would apply for certain financial companies such as banks, insurance companies, pension funds, and so on.

Anti-abuse rule

A refutable presumption applies that splitting up accounts, converting financial assets and transferring assets to a foreign legal person are done with the intention to evade tax. Such actions, taken as from 30 October 2020 (i.e. the day that the initiative was leaked in the Belgian media), are neglected for purposes of the investment account tax.

Conclusion

Although the new tax on investment accounts has some similarities to the old one, the scope is much wider since it applies to physical persons as well as legal persons (both residents and non-residents). The first reference period will begin on the first day after publication in the Belgian Official Gazette (expected at the beginning of 2021) up to 30 September 2021.