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Agreement on the Budget 2018: most important changes for Financial Services industry

For your convenience, we have listed below these measures that are of particular relevance for the Financial Services industry. As the law proposal still needs to be drafted, further clarification and details will be issued over the next weeks.

New tax on securities accounts

An annual tax of 0.15% will be due on (Belgian and foreign) securities accounts as from EUR 500.000 (EUR 1.000.000 for couples).

A yearly average will need to be calculated in order to determine the taxable base. Shares, bonds and funds are in scope, but life insurance products and regulated pension savings products are excluded.

Payment of the tax by the financial institution will discharge the individual, who will however need to mention the existence of several securities accounts in his tax return.

Withholding taxes

The exemption of withholding tax on interest on regulated saving accounts is reduced form EUR 1.880 to EUR 940.

A new exemption on the first EUR 627 for income on shares (dividends) will be introduced. Withholding tax will be withheld at source and the individual will need to reclaim the exempt part via his tax return.

These exemptions might be further increased in future.

Capital decreases would be proportionally allocated to taxed reserves (retained earnings) and hence subject to withholding taxes.

Fund taxes

The 25% asset test which needs to be calculated in order to determine whether funds are in scope of the Belgian Savings Tax will be abolished for new investments as from 1st January 2018. Hence, all the collective investment institutions might fall within the scope of the Belgian Savings Tax (19bis ITC), irrespective of the above threshold and irrespective of their investment policy.

The withholding tax treatment of investments through contractual investment funds will be aligned to direct investments in investment companies.

Stock exchange tax

The stock exchange tax will be increased from 0.09% to 0.12% for bonds and from 0.27% to 0.35% for shares. This will apply as from 1st January 2018.

Corporate income taxes

The decrease of the corporate income tax rate, the reform of the notional interest deduction and the loss recuperation rules, the broadening of some R&D incentives and the introduction of a minimum taxable base and a tax consolidation as already referred to in our E-Tax flash of 26 July 2017 might impact financial institutions as well.

For the Financial Services industry, the following changes are however expected to be of particular relevance:

  • only provisions that are recorded to face obligations existing at year-end will be tax-deductible
  • the 0.4% tax on capital gains on shares will be abolished
  • a minimum participation threshold will be introduced for the exemption of capital gains on shares (but deviating rules for banks)
  • the interest deduction limitation rules (ATAD) as announced in the agreement would not apply to financial institutions

 

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Jos Goubert
Director

Tax Knowledge Dept.
Brussels

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