On 31 October 2020, the Council of Ministers approved a draft bill introducing a new annual tax on securities accounts in the Code of Various Duties and Taxes (CVDT). The Council of State is being requested to give its opinion on the draft bill. The Government intends to submit the bill to Parliament by year-end.
In a nutshell, the tax is an annual tax on the holding of a securities account, levied at the rate of 0.15% on the average value of the account in excess of EUR 1.000.000.
We summarise below the key features of the upcoming tax. These features are likely to evolve during the legislative process.
Scope of Application
The tax applies to securities accounts as such and therefore in principle concerns all securities accounts, whomever the account holder is – natural person, company, legal entity, “legal arrangement” in the meaning of the Cayman Tax or de facto association – whatever its tax residency status – resident or non-resident – and its legal rights on the account (full ownership, bare ownership, usufruct).
However, the tax is not due on securities accounts held by specific types of financial institutions in the course of their own business activities, i.e. (sic) “exclusively for their own account”.
Residents are taxable on securities accounts held in Belgium or abroad; non-residents are taxable on securities accounts held in Belgium only (and provided the double tax treaty concluded with its country of residence allows such wealth taxation)
The tax is levied on securities accounts with an average value of taxable financial instruments in excess of EUR 1 million.
The nature of the financial instruments held on the securities account is irrelevant, only the total value of the securities account is.
To compute the “average value” of the securities account, the reference period is a period of twelve successive months beginning on 1st October and ending on 30th September of the following year. The tax is due on the first day following the end of the reference period. Specific rules apply for securities account closure and tax residency changes:
- The reference period ends early if the securities account is closed. Consequently, the deadlines for declaration and payment are triggered upon closure of a securities account.
- The same applies if the sole account holder, who is resident in Belgium, becomes resident in a Country with which Belgium has concluded a double tax treaty with the effect that the power to tax an asset is attributed to the other Country (e.g. the Netherlands). Consequently, the deadlines for declaration and payment are triggered upon a tax residency change.
The last day of each quarter of the reference period is a benchmark and the taxable base is the sum of the value of the financial instruments at the benchmarks divided by the number of such benchmarks.
Tax Rate and Ceiling
The tax rate is set at 0.15 p.c.
Where applicable, the amount of the tax is limited to 10 p.c. of the difference between the tax base and the threshold of EUR 1,000,000. In this way, the government wishes to prevent the collection of the tax from causing the assets to fall below the threshold of EUR 1,000,000.
Declaration and Payment
The tax is collected indirectly, i.e. through a financial intermediary (i.e. any intermediary which offers securities accounts: credit institutions, brokerage firms, investment firms).
Belgian intermediaries must levy the tax, i.e. intermediaries constituted in accordance with Belgian law, intermediaries established in Belgium, and intermediaries not established in Belgium which have appointed a responsible representative.
- Belgian intermediaries shall file a declaration with the competent office, and shall pay the tax, no later than the 20th day of the 3rd month following the end of the reference period.
If the intermediary does not declare and collect the tax, this obligation falls back on the account holder. If a securities account is held by several holders, each holder is jointly and severally liable for the declaration and payment of the tax.
- In the cases where the holder is liable, the latter shall file an electronic declaration, no later than the last day provided for the submission of the personal income tax return. A paper filing can be accepted in specific cases.
Sanctions and procedures for tax audits are foreseen.
A general anti-abuse rule (GAAR) is introduced in the CVDT.
Specific anti-abuse rules are also introduced with respect to the tax on securities accounts which covers, among others, the following situations:
- The split of securities accounts by which securities are moved between securities accounts with the same financial intermediary or to securities accounts with another financial intermediary in order to prevent the total value of the securities on an account from exceeding the threshold of EUR 1.000.000;
- The opening of securities accounts by which securities are distributed between accounts with the same financial intermediary or with another financial intermediary in order to prevent the total value of the securities in an account from exceeding the threshold of EUR 1.000.000;
- The conversion of shares, bonds or other financial instruments into registered securities so that they are no longer held on a securities account, in order to avoid the tax;
- The placement of a securities account subject to tax in a foreign legal person which transfers the securities to a foreign securities account, in order to avoid the tax;
- The placement of a securities account subject to tax in a fund in which the units are registered, in order to avoid the tax.
These anti-abuse rules would retroactively apply as from 30th October 2020 so as to counter restructuring of portfolios to avoid the tax before the law enters into force (“effets d’anticipation”/”anticipatieve effecten”)
A refund procedure is foreseen in case of overpayment.
Do not hesitate to contact the undersigned if you require additional information.
- Belgian tax reform
- Estate and succession planning
- Financial Services Tax & Regulatory
- Personal income tax