Reduced Belgian net asset tax rate soon also for foreign institutional funds

Olivier Hermand 27 June 2017


A recent bill of law on various financial and tax provisions aims at adapting the Belgian annual tax on undertakings for collective investment (the Belgian ‘Net Asset Tax’ or ‘NAT’), in particular at the level of the tax rate applicable to foreign institutional funds.

As a reminder, the Belgian NAT standard rate is currently 0.0925%. A reduced tax rate of 0.01% applies to undertakings for collective investment (UCIs) under Belgian law to the extent that their financial resources are collected exclusively from institutional or professional investors acting on their own behalf and whose securities can only be acquired by such investors. This reduced tax rate is not applicable to comparable foreign UCIs.

The Commission considers that the Belgian tax rules go against the freedom of establishment and the free movement of capital provided for by the European Union Treaties (articles 56 and 63 of the TFUE).

About four years ago already, on 26 September 2013, the European Commission officially asked Belgium to amend the Belgian NAT at the level of the applicable tax rates (MEMO/13/820). On 16 October 2014, the Commission announced it had decided to refer Belgium to the Court of Justice of the EU (IP-14-1144). Since then, radio silence from both the Commission and the Belgian government.

The Belgian government has finally decided to suggest an amendment to the Belgian legislation without waiting any longer for the Court of Justice’s decision (see the bill of law of 13 June 2017).

As soon as cast into law, the reduced tax rate of 0.01% is thus expected to apply to institutional units of foreign UCIs (provided such units are subject to the Belgian NAT of course).

On a side note, the bill of law also aims at correcting an overly broad extension of the Belgian NAT scope by article 20 of Program Act II of 3 August 2016 with respect to some non-publicly offered alternative investment companies under Belgian law.