Belgian Tax on Savings Income (art. 19bis BITC): important clarification from the Minister of Finance for certain AIFs


In answer to a recent parliamentary question, the Minister of Finance has shared his view on the extension of the scope of the Belgian Tax on Savings Income (art. 19bis BITC) to certain AIFs. According to him, if they were acquired before 1st January 2018, units of funds which hold investments that are not sufficiently liquid remain out of scope of the BTSI.

Initially, the scope of the BTSI was limited to UCITS with an European passport or established outside the EEA. As from 1st July 2013, UCITS without an European passport were included in the scope of the BTSI. Since then, there was some confusion about the application of the BTSI to other types of funds, including AIFs.

In a Practice Note dd. 25 October 2013, the Belgian Tax Administration has defined the notion of UCITS by reference to only two specific categories of ‘authorised investments’ as defined in the Belgian regulatory framework. On that basis, funds investing in other categories of ‘authorised investments’, such as financial instruments issued by private companies, were excluded from the scope of the BTSI.

In an addendum to this Practice Note (dd. 8 April 2016) – applicable as from 1st July 2016 -, the Belgian Tax Administration has removed this limitation in order to also include funds investing in private loans and debt instruments in the scope of the BTSI. The situation became clearer with the Program Law of 25 December 2017 which replaced the term UCITS by UCI. This law change – and this is important – is applicable to income paid or attributed in relation to units acquired as from 1st January 2018.

Nevertheless, the Belgian Tax Administration considered that this law change was only a confirmation of the previous situation and that, since 1st July 2016, units of UCITS (as broadly defined following the addendum to the Practice Note) acquired before 1st January 2018 were also potentially in scope of the BTSI.

The Minister of Finance does not seem to  agree with this approach. In his answer to a parliamentary question (dd. 13 February 2019), he recalled that, according to the explanatory statement, the objective of the law change was to include AIFs which do not exclusively invest in ‘transferable securities’ as defined in the Royal Decree of 12 November 2012. These ‘transferable securities’ include instruments which are negotiable and money market instruments which can be ceded in a short time frame and with a limited cost. In other words, funds which hold investments which are rather illiquid, which should include many private equity and hedge funds, do not exclusively hold such ‘transferable securities’.

According to the Minister of Finance, this means that only transactions on the shares of these funds acquired as from 1st January 2018 can potentially lead to the application of the BTSI, to the exclusion of transactions on the shares of these funds acquired before that date.

Key takeaway

The players (funds, asset managers, financial intermediaries, etc.) and taxpayers concerned should reassess their situation considering the position expressed by the Minister of Finance. Also, taxpayers which have unduly supported the BTSI should assess the opportunity to file refund requests. If the BTSI has taken the form of a Belgian WHT, the Belgian intermediaries could also intervene in the refund request process.