Investments

29 May 2018

2018 budget: Tax measures

In the 2018 budget, the Michel government introduced some tax measures which could have both a positive and a negative effect on investors. We will cover the ones that are most relevant to you as a customer.

Law of 7 February 2018 implementing a tax on securities accounts (MB 09.03.18). Came into force on 10 March 2018.

This is a tax of 0.15% owed by any private individual who is the (co-)holder of one or more securities accounts where the average (total) balance of the “taxable financial instruments” held on this/these account(s) is EUR 500,000 or above.

The tax is levied on securities accounts held in Belgium or abroad for private individuals resident in Belgium, and on securities accounts held in Belgium for private individuals who are not resident in Belgium (except residents of a State with which Belgium has signed a double tax treaty which confers the power to tax assets solely on the State of residence: for example, Luxembourg, the Netherlands and Germany).

“Taxable financial instruments” are the following instruments hold on securities accounts:

  • Shares in ordinary companies, Belgian or foreign, quoted or non-quoted, and certificates related to these shares,
  • Bonds, structured notes, OLOs (linear bonds), government bonds, etc., quoted or non-quoted, with no risk of capital loss and certificates related to these securities;
  • Savings bonds (bons de caisse / kasbons);
  • Warrants;
  • Units in contractual investment funds and shares in investment companies (SICAV / BEVEK) and trackers issued in that form.

The following products are not “taxable financial instruments”:

  • Derivative products (options, futures, swaps etc.),
  • Commodities (gold etc.),
  • Pension savings (Star fund for example),
  • Insurance policies (Classes 21 and 23, for example),
  • Bonds or structured notes with a risk of capital loss (for example, reverse convertible bonds).

The average balance of the “taxable financial instruments” held on a securities account is equal to the sum of the balances of these instruments established at various “reference points” in the “reference period” of the account, divided by the number of “reference points”.

Under the hypothesis that a private individual is the holder of two or more securities accounts, the average balances of those accounts for which the “reference periods” end on the same day have to be aggregated to verify whether the reference threshold of EUR 500,000 has been reached.

Under the hypothesis that a securities account has two or more co-holders, the law stipulates that the fraction of the “taxable financial instruments” allocated to each co-holder is presumed to be in proportion according to the number of co-holding private individuals (the principle of equal shares).

The 0.15% tax is due on the whole of the sum of the (total) average balance from the first eurocent.

Thus, for a Belgian investor with three securities accounts in Belgium and/or abroad on which “taxable financial instruments” are held of which the total average balance is EUR 1,000,000, the amount of tax is EUR 1,500.

With regard to (a) securities account(s) with a Belgian bank, the law is as follows:

  • If the reference threshold of EUR 500,000 is reached for this/these securities account(s), the tax has to be levied automatically (= without the (co-)holder’s authorisation) by the bank;
  • If the reference threshold of EUR 500,000 is not reached for this/these securities account(s), the (co-)holder can opt for the tax to be levied by the bank, no later than the last day of the second month following the end of the “reference period” of the securities account(s).

If the tax is not levied by the bank, it falls to the private individual to take fiscal responsibility in terms of declaring and paying the above-mentioned tax to the Belgian Treasury, under the hypothesis that the conditions under which it applies are met.

Programme Act of 25 December 2017 (MB 29.12.17). Amendment entered into force 1 January 2018.

Up until now, withholding tax (30%) has been due on capital gains from units or shares in “capitalisation funds” of which the portfolio consists of more than 25% of interest-bearing debt securities (bonds, cash, etc.). The threshold of 25% still applies for all units or shares in a “capitalisation fund” purchased up to 31 December 2017. For units or shares in a “capitalisation fund” purchased from 1 January 2018 onwards, a new threshold of 10% will apply. This means that capital gains from units or shares in a “capitalisation fund” which invests 15%, for example, in bonds, and which were purchased after 1st January 2018, will now be taxed.

A “capitalisation fund” which invests only in equities will not be affected by the new measures.

Programme Act of 25 December 2017 (MB 29.12.17). Amendment entered into force 8 January 2018.

Both TOB rates - 0.09% and 0.27% - have changed, rising respectively to 0.12% and 0.35% from 8 January 2018.

Programme Act of 25 December 2017 (MB 29.12.17). Amendment entered into force 1 January 2018.

The purchase/sale of units in contractual investment funds, either distribution or capitalisation, of a Member State (MS) of the European Economic Area (EEA) which is not registered with the FSMA is now liable to a TOB of 0.12% instead of 0.35% (0.27% up to and including 7 January 2018).

The purchase/sale of shares in investment companies (SICAV / BEVEK) either distribution or capitalisation, of an MS of the EEA which is not registered with the FSMA is now liable to a TOB of 0.12% instead of 0.35% (0.27% up to and including 7 January 2018).

Programme Act of 25 December 2017 (MB 29.12.17). Amendment entered into force 1 January 2018.

Exemption from tax in Belgium is now granted on a first tranche of EUR 640 (amount indexed for 2018 revenue) per year in dividends, Belgian or foreign, in favour of Belgian resident private individuals and non-resident private individuals. This represents a modest tax advantage of EUR 192 for the investor. The aim of the measure is to channel more savings into the real economy and to encourage investments.

NB: this tax exemption is only granted in the form of a refund of the mandatory withholding tax (30%) deducted at source on these dividends. To obtain this refund, the dividends for which the taxpayer wishes to claim this withholding tax refund must be stated in his tax return.

NB : this exemption will not apply for example to dividends received form investment companies (bevek/sicav) and to liquidation surpluses or repurchase surpluses paid by an ordinary company.

Proposed law on the reinforcement of economic growth and social cohesion (Parliamentary doc. No. 2922). This is a proposed law which, at the time this document was written, has not yet been voted on in Parliament and therefore has not yet been published in the MB or come into force.

Individuals saving for their pension will have two options:

  • They can continue to make fiscally advantageous savings of a maximum amount of EUR 960. In this case, the tax advantage remains 30% (meaning a maximum advantage of EUR 288).
  • Or they can save a maximum amount of EUR 1,230. The tax advantage is then 25% (EUR 307.50). The maximum tax advantage is EUR 19.50, if you are prepared to save an extra EUR 270.

In the absence of a legal text published to date, the possibility of saving up to the maximum of EUR 1,230 is not yet applicable.

How are investors taxed?
Here is an example:
  • Let’s take an investor who holds a securities account with a value of 1,000,000 euros. It consists of shares (with a value of 400,000 euros), eurobonds (with a value of 400,000 euros) and investment funds (with a value of 200,000 euros).
  • The investor carries out 10 transactions on her shares (each with a value of 5,000 euros).
  • She receives a gross dividend of 10,000 euros.
  • As of 2018 she decides to allocate 1,200 euros to her pension savings fund, instead of 940 euros.
Taxes paid 2017 2018
Taxes paid on securities account €0 €1.500
TStock exchange tax €135 €175
Withholding tax on the dividend €3.000 €2.812
Pension savings fund deduction €-282 €-300
Total €2.853 €4.187