What does today’s Belgian budget and tax-shift agreement mean?
Today, the Belgian government announced various tax measures of particular interest for the real estate and financial sectors.
The new measures include a new regime for institutional real estate funds, an increase of the normal withholding tax rate and taxation of short-term capital gains on listed shares.
Real Estate Investment Company
The Belgian tax and regulatory framework doesn’t currently provide for real estate investment vehicles suitable to institutional investors. The only Belgian real estate investment vehicle is the Belgian REIT, i.e. the Regulated Real Estate Company (RREC) (“société immobilière réglementée” or “gereglementeerde vastgoedvennootschap”) which is necessarily open to the public and listed, meaning it doesn’t constitute an appropriate investment vehicle for institutional investors.
To fill this gap, the government announced a new Real Estate Investment Company (REIC) regime, dedicated to institutional investors.
Withholding tax rate increase
The standard withholding tax rate applicable to dividend and interest income is currently 25%.
The government announced that this standard withholding tax rate would henceforth be increased to 27% (possibly reduced for foreign investors based on applicable double-tax treaties). Note that this tax increase won’t apply to interest income from regulated savings deposits, nor to dividends paid by SMEs.
Taxation of short-term capital gains on listed shares
Finally, the government provides for the taxation of capital gains realised by individuals on shares of listed companies held for a period of less than six months. Correspondingly, losses realised on such participations will be offset against the tax base.
The government didn’t mention during the press conference whether Belgian financial institutions will have to levy a Belgian withholding tax on the short-term capital gains, nor the tax rate that will be applicable.
The government announced other measures, including a VAT increase in the energy sector, increased excise duties (fuels, etc.), new revenue estimates with respect to the so-called Cayman tax (transparency taxation) and a new anti-tax fraud plan, etc.
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