Fund Taxation Alert 2025-11

The Belgian federal government has approved a draft law introducing a tax on capital gains from financial assets, aligning with the coalition agreement. The draft law will be sent to the Council of State for legal vetting, with parliamentary adoption expected by September 2025 at the earliest. The new rules are set to take effect from 1 January 2026.

Applicability: The new capital gains tax will apply to individuals subject to Belgian personal income tax and not-for-profit entities (legal entities subject to Belgian legal entities taxation, excluding those recognized for tax-deductible donations). Companies and non-residents of Belgium will not be subject to this tax, meaning that it won’t be applicable to investment funds, both domestic and foreign.

Taxable Transfers: The law aims to tax all transfers of financial assets outside of professional activities and within the normal management of private assets as miscellaneous income. It is noteworthy that transfers of shares and other financial assets outside normal management will still incur a tax rate of 33%.

The draft law includes the following financial assets:

• Financial instruments (e.g., shares, bonds, money market instruments)
• Saving or investment insurance contracts
• Crypto-assets
• Currencies (including investment gold)

• Internal Capital Gains:
  Taxed at 33% for transfers (sales) of shares and profit certificates to buyers controlled by the seller or their family.
  
  
• Significant Interest Transfers (participations of at least 20%) taxed on a sliding scale:
  • First EUR 1 million (over 5 years): Exempt
  • EUR 1 million to EUR 2.5 million: 1.25%
  • EUR 2.5 million to EUR 5 million: 2.5%
  • EUR 5 million to EUR 10 million: 5%
  • Above EUR 10 million: 10%

In the case of a transfer to non-EEA entities, a single rate of 16.5% applies (with also the first EUR 1 million being exempt).

• Other transfers of financial assets: 10%, where the first 10,000 EUR (subject to annual indexation) will be exempt. If the exemption is not used, an additional exemption of maximum 1,000 EUR can be claimed in the next year for five years in a row, resulting in a possible maximum exemption of 15,000 EUR after five years.

Temporary Exemptions:

• Capital gains from shares in an investment company or participation rights in an investment fund due to mergers or demergers.
• Capital gains from participation rights in a contractual investment fund converted into an investment company.

The exemption will be maintained if the received shares are held.

Permanent Exemptions:

• Certain capital gains from the contribution of shares.
• Capital gains on financial assets benefiting from tax reductions for long-term savings (e.g. second and third pillar pensions).
• Capital gains on financial assets already taxable as movable or professional income or subject to long-term savings tax, e.g. income already subject to ‘Reynders tax’.

For further details, you can access the Tax Flash of KPMG Tax, Legal and Accountancy (KPMG Belgium) here: Federal government approves draft law capital gains tax - KPMG Belgium.

The Belgian Constitutional Court has, together with a preceding decision of the Belgian Cour de Cassation created legal uncertainty as to the statute of limitations for initiating legal proceedings related to excess withholding tax (“WHT”). As per the Court’s decision on 13 March 2025, judicial claims must be filed within five years from 1 January of the year in which the dividend or interest income was paid, in accordance with Article 368 of the Belgian Income Tax Code.

It is important to note that submitting a standard reclaim with the Belgian Tax Administration will no longer pause or extend this five-year period.

For further details, you can access the Belgian Constitutional Court’s decision here.

Regarding the new Capital Gains Tax law, non-residents of Belgium (e.g. Luxembourg SICAVs) will not be subject to the new capital gains tax. 

As for the court cases, we are expecting a significant impact to cases where the five-year statute of limitations for dividends is nearing its end. As a reminder, the five-year statute of limitation starts at the beginning of the year in which the WHT has been suffered.

Given the increasingly burdensome administrative reclaim process imposed by Belgian tax authorities, which now includes additional requirements and requests for information, this situation might force non-resident claimants to initiate court legal proceedings to secure their rightful refunds.

This shift toward litigation not only highlights the challenges faced by claimants but also underscores the urgency of taking legal action to avoid losing their claims altogether.

Should you have any questions/comments, please do not hesitate to contact us.