This Thursday 1 February 2018, the Belgian parliament adopted a bill implementing the tax on securities accounts. As a reminder, this tax is a 0.15% withholding tax on securities accounts amounting to at least €500,000 that will be assessed for the first time in October 2018.
The tax should contribute 250 million euros to the State’s annual budget.
The tax will enter into force the following day after publication of the law in the Moniteur belge (Belgian official journal) expected before the end of the month of February.
The tax on securities accounts will impact everyone who has at least €500,000 in assets on deposit in a securities account. The tax will apply to all Belgian residents regardless of where their assets are deposited in the world and non-Belgian residents – and European civil servants – who hold assets in securities portfolios in Belgium. This tax will be calculated on the total value of the assets held in the taxpayer’s account(s).
- Assets impacted
Assets impacted include funds including trackers or ETFs, listed and unlisted bonds, bills, warrants, bond and share certificates and listed and unlisted shares held in securities accounts.
The value of unlisted shares will be the market value or, if there is no market value, the estimated valued in accordance with the MiFID regulation.
However, registered shares (but also registered bonds and funds) will not be subject to the tax to protect small and medium-sized businesses. Savings-retirement funds, life insurance policies, time deposits, options and cash will also not be subject to the tax.
Nevertheless, the lawmaker adopted anti-abuse measures to prevent the taxpayer from conducting some transactions (conversion of securities into registered securities to avoid the effects of the future tax or the formation of a company to hold the securities) with the sole purpose of avoiding being subject to the new tax.
- Reference period
The reference period is the period factored in to calculate the basis of the tax, i.e. the value of the securities account. As a rule, this period runs for one calendar year, but not a civil year, i.e., from 1 October to 30 September. Since the law is expected to enter into force during February, the first reference period will run for slightly more than seven months.
During this reference period, several reference dates will be set to determine a statement of the securities account to prevent investors from selling securities with the sole purpose of avoiding the tax. For the first withholding, the reference dates will be 31 March, 30 June and 30 September 2018.
For the 2019 withholding, the reference dates will be 31 December, 31 March, 30 June and 30 September 2019 with a withholding in October 2019.
- Collection of the tax
The tax will be withheld at source by Belgian intermediaries which will automatically notify the holders of securities accounts (and therefore including account holders whose portfolio value is lower than €500,000). Customers must authorise their Belgian financial institution(s) to withhold the tax at source or deny the authorisation. The purpose of the generalisation of the withholding at source is to prevent taxpayers hiding behind several securities accounts totalling €500,000 to avoid payment of the tax.
For accounts held abroad, the withholding tax will be withheld via the personal income tax return.
- Recourse for cancellation expected
Since the announcement of the bill on the tax on securities accounts last summer, many have spoken out against this new tax. The Conseil d’État (Council of State) was very critical regarding aspects of the tax that could violate the principle of equality such as for example, the difference in treatment between an investor with €499,999 in his securities account (not subject to the tax) and an investor holding €500,000 (in scope).
Recourse for cancellation before the Constitutional Court could be lodged within 6 months as from the publication of the law by any person proving that he is impacted by the tax. Nevertheless, since the proceeding takes from one to two years before a judgement is issued, it is obvious that the 2018 tax will be withheld beginning October 2018 in spite of it many flaws !