On June 10, 2021, the Belgian tax administration has issued the Administrative Circular number 2021/C/56 regarding the Belgian Tax on Savings Income (“BTSI” hereafter – article 19bis of the Belgian Income Tax Code).
The main objective of the above-mentioned circular is to highlight methodological points regarding the Asset Test (i.e. percentage of the assets of an Undertaking for Collective Investment (“UCI” hereafter) invested in debt-related assets) and Belgian Taxable Income per Share (“BTIS” hereafter) computation required in the framework of the BTSI.
- The computation of an Asset Test is necessary on the one hand to assess whether a UCI is in the scope of the BTSI as only UCI with more than 10% (for shares of UCI and UCITS acquired since 1 January, 2018) or 25% (for shares of UCITS acquired before that date) of assets invested in debt-related assets are subject to the BTSI. On the other hand, the Asset Test is required to compute the taxable basis of the investor should no Belgian Taxable Income per Share (“BTIS”) be computed for one UCI.
- The BTIS tracks, upon each NAV (so, possibly, on a daily basis), the return of the debt-related assets of the fund: (i) unrealized return (e.g. unrealized capital gains or losses), (ii) realized return (e.g. capital gains or losses), (iii) income received (e.g. interest) and other income stemming from debt-related assets.
The New Administrative Circular has the merit of summarising, in one document, methodological points regarding the Asset Test and BTIS computations that may raise questions and have animated the management funds industry during the last years, notably regarding
- the rounding rules;
- the treatment of accessory cash held by “equity” funds;
- the applicability of the “Home country rule”;
- in case of funds of funds,
- the possibility to use, in the framework of the computation of the BTIS of the Top Fund, the BTIS as well as, in the absence of BTIS, the Asset Test of the Target Funds;
- the non-deductibility of (realized and unrealized) capital losses from the BTIS computed by the Top fund in case of Target Funds with unknown / non-computed Asset Test;
- and much more …
Our team is at your disposal if you were to need any clarifications around these rules very well known to us.
We also invite you to visit our dedicated webpage: Tax Fund Reporting Services.