A great jumpstart to 2022: Belgium adopts a new tax framework for ELTIFs


Before Christmas, there was good news on the tax and economic front: a draft law on various tax provisions proposing to extend the tax regime of Belgian regulated investment funds to “European long-term investment funds” (ELTIFs) was presented to parliament. 

The draft law was adopted yesterday, meaning that Belgium’s now well-equipped with the appropriate investment vehicle for the long-term financing of private-public infrastructure, small and medium-sized enterprises (SMEs), digitalisation, greening of the economy, social projects, etc.

ELTIFs are a great tool to facilitate public-private investment in the real economy (such as infrastructure and SMEs) and a perfect match with Belgium’s ambitious economic recovery plans. ELTIFs have gained a lot of traction over the past two years. In the aftermath of the COVID-19 crisis and the floods that hit southern Belgium (and elsewhere) in the summer, there’s an urgent need to invest capital into the recovery and transformation of the Belgian economy. Furthermore, in terms of access to financial markets, ELTIFs position Belgium next to other traditional fund locations, such as Luxembourg. 

The advantages of ELTIFs aren’t negligible. In addition to benefiting from an efficient structure and offering investors access to a wide range of assets (notably infrastructure assets, digitalisation and green transition projects and investments in SMEs), they benefit from a marketing passport within the European Union, allowing them to raise funds from Belgian investors as well as investors from other Member States. And ELTIFs can raise long-term capital from professional and institutional investors as well as from retail investors, thus making them attractive to public savings. 

Although the ELTIF regulatory framework directly stems from EU law without the need for implementation on the part of Member States, the taxation of investment funds remains in their control. That’s where Belgium’s just taken a big step in adopting a specific tax framework for Belgian ELTIFs

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 to those of Belgian resident corporate investors (this is the first time that such a regime has been 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 funds apply.

Now that the draft law’s been adopted, it’ll be published in the Belgian Monitor in the coming weeks. The new law will be applicable 10 days after its publication.  

We are very happy to have contributed to this major change in the asset management landscape for Belgium and look forward to the success of ELTIFs in Belgium!

Want to find out how you could take advantage of ELTIFs? Visit our dedicated ELTIF webpage.