High Council of Finance disagrees with Belgian tax authorities on future tax treatment of stock options

Written by Nicolas de Limbourg 27 March 2013


The former Minister of Finance had instructed the Belgian tax authorities to draft a number of legislative measures to simplify the Belgian tax system. On 13 December 2012, a series of proposals were presented to the “fiscal and para-fiscal” division of the High Council of Finance (Hoge Raad van Financiën/Conseil Supérieur des Finances).

One of those proposals concerns the modification of the tax treatment of stock options in Belgium. The Belgian tax authorities argued that a) the current system is often used improperly, b) the actual value of the stock options usually exceeds the taxable (lump-sum) value (resulting in a rather low overall tax burden) and c) the value of non-quoted options can often not be determined unambiguously.

Therefore, the tax authorities have suggested modifying the Belgian legislation on the basis of the following principles:

  • the stock options should be taxed at the time of exercise or transfer of the options (instead of at the time of grant);
  • the taxable value of the stock option should be aligned with its actual value in the hands of the beneficiary.

In an opinion issued in February 2013, the High Council of Finance formally disagrees with the reasoning of the Belgian tax authorities. Although it recognises the complaints of the tax administration, the High Council does not pin much faith on the proposed measures.

Furthermore, it refers to the existing anti-abuse provisions which are available to the tax authorities in the case of improper use of the taxation rules. Finally, the High Council emphasizes that the general profile of the Belgian income tax system should be examined and that an overall view is advisable (rather than a piece by piece approach) when simplifying the Belgian tax system.

The above is unrelated to another proposal to change the stock options legislation, which we reported in our HRS Headline of 20 July 2012.  This proposal, which was an initiative of individual members of Parliament, is currently still pending in the first Chamber of Representatives.