Financial Sector Contribution: (proposed) rates increases

Olivier Hermand 1 December 2015


On 26 November, the Belgian Government introduced a bill of law comprising, already, some changes to the brand-new Financial Sector Contribution (FSC) introduced by the Act of 10 August 2015.

As a reminder, the FSC is the result of the multiplication of three factors: “FSC = Qualifying Liabilities x FSC Rate x NID Rate”. It entails a reduction of the tax deductions which would normally offset the taxable profits of credit institutions and insurance undertakings. The impacted deductions are the tax losses carried forward, the dividends-received deduction and the notional interest deduction (NID).

The proposed changes are the following:

1) First, the Government proposes to change the FSC Rates for tax years 2016 and 2017:
The FSC rate is then set to increase, for tax year 2017, from 3.39% to 4.88% for credit institutions, and from 2.69% to 3.88% for insurance undertakings. However, as the NID rate decreases for tax year 2017, the combined “FSCxNID” rate is deemed, so far, to remain stable.The FSC rate would be increased, for tax year 2016, from 2.37% to 3.39% for credit institutions, and from 1.88% to 2.69% for insurance undertakings.

2) Second, the Government proposes to confirm in the wording of the law that companies managing an authorised centralized system of securities lending are not subject to the FSC (this exemption had already been proposed in the parliamentary debates leading to the August Program-Act, but was mistakenly not enacted).

The bill of law has still to be discussed, potentially amended and then adopted in committee and plenary session before being enacted.

The bill of law is accessible here.