On 25 January 2013, the Belgian tax administration published a circular letter on the Belgian tax regime of structured products characterised by an uncertain return on investment given the variation of the coupons or the modalities of reimbursement at term.
Are in scope of this circular the securities whose return is linked to the evolution of underlying products (shares, stock market index, etc.). These securities usually foresee a return on investment directly or indirectly calculated in reference to the evolution or the performance of one or multiple underlying products.
The circular letter confirms that income produced by these securities is from a Belgian tax perspective considered as interest from fixed-income securities (normally taxable at a 25% withholding tax rate). It is also confirmed that the potential uncertainties regarding the return on investment of the securities in scope does not have any impact on their income qualification (i.e. interest). The circular letter also brings some clarification as regards the qualification of income in case of intermediary transactions (i.e. sale between two coupons’ dates), the payment of withholding tax and the obligation of Belgian investors to declare interest stemming from fixed-income foreign securities transferred between two coupons’ dates in their personal tax return.
All in all, this circular letter brings some clarity with respect to some practical issues. But hopefully, this is just the beginning as specific questions around structured products remain unanswered.
We stay at your disposal should you need assistance or have any queries in this respect.