Royal Decree of 8 May 2018: Private Pricafs get a boost


Private Pricafs (Pricafs Privées / Private Privaks) are investment vehicles aimed at encouraging investments in risk capital and private equity. Due to certain regulatory features, the creation of Private Pricafs did not really take off since their appearance. To correct this situation, a Royal Decree including several adjustments on the regulatory side but also a new withholding tax exemption was adopted on 8 May 2018 and published in the Official Gazette of yesterday.

Private Pricafs in a nutshell

Basically, the main idea of the Private Pricaf is to allow a ‘quasi-transparency’ from a tax perspective in the hands of the investors, especially Belgian private individuals. Those investors indeed benefit from a withholding tax exemption on dividends distributed by the Private Pricaf when they are stemming from capital gains realized on shares, as if they would have directly realized the capital gains on shares.

New regime

As mentioned, Private Pricafs did not find the hoped-for-success so far (as indicates the -short- official list of existing Private Pricafs), which is partly due to some regulatory features, among which the minimum investment threshold of 100.000€ and the requirement of a minimum of 6 investors. Although the latter condition did not change, the Royal Decree adopted on 8 May 2018 provide several modifications from a regulatory perspective. This includes a decrease of the minimum investment threshold from 100.000€ to 25.000€ (knowing that the offering will have to remain private), the possibility to create compartments, less constraining registration and regularization processes and more possibilities in terms of investments (e.g. controlling shareholdings) and shareholders agreements.

On the tax side, a new withholding tax exemption is available for investors on dividends stemming from Belgian-sourced dividends which were subject to the withholding tax. This adjustment was deemed necessary to avoid a double taxation of those dividends since Belgian investment companies – which include Private Pricafs – cannot credit or get a reimbursement of the withholding tax since 2013 (when Belgian investment companies were put on an equal foot with foreign investment companies to end a discrimination).

Key takeaway

The Royal Decree of 8 May 2018 may create some opportunities for investors which are looking for a relatively light investment vehicle allowing a reduced friction from a tax perspective. While some regulatory features may still be a hurdle for certain investment structures (e.g. minimum number of investors), other recent tax developments may reinforce the attractiveness of the Private Pricaf.

Next to the opportunity assessment, the setup of a Private Pricaf should be handled with care, both from a regulatory and a tax perspective (e.g. transition of the current investment structure). With a strong and combined experience and expertise in regulatory and tax matters, PwC’s Financial Services Tax and Regulatory team can certainly accompany you at any stage of this reflection or project.