On 27 October 2022 the Belgian Constitutional Court issued a long-awaited judgement on the annual tax on securities accounts.[1] The Court cancels the specific anti-abuse measures and the retroactive application of the general anti-abuse measure.[2] Though, the Court dismisses the remaining grievances of taxpayers and rules that the tax as such is compatible with the principles of equality and non-discrimination.

Specific anti-abuse measures

The legislator introduced for two situations an irrefutable presumption of tax abuse to tackle obvious tax avoidance behavior. In its judgement, the Court now annuls these specific anti-abuse measures[3].

It concerned situations whereby accountholders try to avoid or reduce the tax by:

  • Splitting the securities account into several accounts with the same financial institution, whereby securities that are held on one account are transferred to one or more other accounts, in order to remain under the 1 Mio EUR threshold per account; or
  • Converting (dematerialized) securities held on a securities account into nominative instruments that are not held on a securities account and which are directly registered with the issuer.

In application of these provisions, the financial intermediary (e.g. a bank) had to calculate the taxable base as if the operation (i.e. a split or conversion) did not take place.

Retroactivity of general anti-abuse measure

Besides the specific anti-abuse measures, the legislation also contains a (rebuttable) general anti-abuse provision enabling the tax authorities to tackle a transaction or a series of transactions that results in a lower taxable base. In contrast to the specific anti-abuse measures, the general anti-abuse measure is though rebuttable. This means that the taxpayer can provide counterproof by demonstrating other qualifying and sufficiently important reasons to justify its actions (which result in a lower taxable base).

The Court judged that the retroactive implementation of this ‘general anti-abuse’ measure should be annulled. This retroactivity aimed to avoid that taxpayers would take anticipative actions in the period between the announcement of the tax (30/10/2020) and the entry into force of the law on 26/02/2021.

KPMG observations

The most important message is that the annual tax on securities accounts remains in place.

The Court only intervenes at the level of the anti-abuse measures, whereby we believe that the overall impact (for financial intermediaries and taxpayers) hereof are limited:

  • Indeed, only the specific anti-abuse measures were annulled, while the general anti-abuse measure of art. 202 CVDT remains an effective instrument to tackle tax abuse. Hence, for example, also a split or conversion may still qualify as tax abuse under the general anti-abuse provision.
  • Furthermore, most financial institutions are subject to the law of 2 June 2021[4], whereby their Fiscal Prevention Policy should still prevent any cooperation with clients (intending) to avoid the annual tax on securities accounts. By systematically enabling or assisting clients to avoid the annual tax on securities accounts, the institution could be accused of the implementation of a ‘special tax fraud mechanism’ (as mentioned in the NBB circular letter 2121_16), with as potential consequence administrative sanctions from its regulator and even criminal prosecution of the employees involved herein.

In case of further questions, please do not hesitate to contact your KPMG adviser.

  1. Case 138/2022 dd. 27.10.2022. The Constitutional Court ensures i.a. that the different legislators in Belgium respect the fundamental rights enshrined in the Constitution.
  2. The legislator introduced anti-abuse measures applicable to transactions carried out as of 30 October 2020, while the law on the annual tax on securities accounts only entered into force as of 26 February 2021 (i.e. with retroactive effect).
  3. I.e. two irrefutable presumptions of tax abuse which were included in art. 2014 of the Belgian code of various duties and taxes (CVDT). See also our previous flash on the specific anti-abuse measures.
  4. Law containing various financial provisions on combating fraud.