Santa Claus has brought us a new tax framework for ELTIF investment funds to boost our Belgian economy !

Published


Some good news on the tax and economic fronts. Belgium is getting equipped with the appropriate investment vehicle for its long-term financing needs in private-public infrastructure, SMEs, digitalisation, greening of the economy, social projects, etc.

The draft law on various tax provisions currently before the parliament proposes to extend the tax regime of Belgian regulated investment companies to “European long-term investment funds” (ELTIF).

In view of the massive public-private investments that will have to be made over the next few years, it is indeed necessary, more than ever, to develop a regulatory and fiscal framework that facilitates public-private investment in the real economy (such as infrastructure and SMEs), and which matches with our ambitious economic recovery plans, being federal or regional. In terms of access to financial markets, the ELTIF positions Belgium next to other traditional fund locations such as Luxembourg.

The advantages of ELTIFs are not negligible. In addition to the advantage of benefiting from an efficient structure, and offering investors access to a wide range of assets (notably infrastructure assets and investments in SMEs), they benefit from a marketing passport within the European Union, allowing them to raise funds from Belgian investors but also from investors from other Member States. Furthermore, ELTIFs can raise long-term capital from professional and institutional investors as well as from retail investors and thus appeal to public savings.

The ELTIF Regulation does not govern the taxation of the investment fund, which is the exclusive competence of the Member States and that’s where Belgium has just posed a big step in introducing a specific tax framework for Belgian ELTIF.

The new ELTIF tax framework is essentially threefold:

  • Corporate tax neutrality of the investment company;
  • Avoidance of economic double taxation for resident corporate investors (under the dividend-received deduction regime);
  • Avoidance of economic double taxation for non-resident corporate investors (exemption of Belgian withholding tax) under similar circumstances as Belgian resident corporate investors (first time such a regime is foreseen for Belgian investment companies, the objective being to attract foreign investors).

For the remainder (taxation of individual investors, legal investors, subscription tax, stock exchange transaction tax, access to double tax treaties, etc.) the usual tax rules applicable to other regulated investment companies apply.

We can only warmly welcome this initiative and wish all the best to the development of ELTIFs in Belgium !

For more information about ELTIF in Belgium, visit our ELTIF dedicated webpage or contact the undersigned.

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