With its Law of February 17, 2021, Belgium introduced a new annual tax on securities accounts (hereafter: “ATSA”), which replaces the previously annulled tax on securities accounts that the Constitutional Court in 2019 declared to be unconstitutional. The new ATSA entered into force on February 26, 2021. However, the specific and general anti-avoidance rules have retroactive effect as from October 30, 2020.
Highlights of the new tax
The new tax applies to securities accounts that hold financial instruments with an average value exceeding 1 million EUR during a given tax year. The tax is levied on the securities account itself, and not on the account holder. Therefore, the number of account holders is irrelevant. All financial instruments registered in securities accounts are taxable, including shares, bonds, turbos and speeders, but also cash that is held in the same account.
The tax rate is 0.15%. The average value is calculated over a 12-months taxable period from October 1 to September 30 and is based on the value on four reference dates: December 31, March 31, June 30 and September 30. When securities accounts are opened or closed, or if a taxpayer moves to another jurisdiction where the double tax treaty covers the taxation of wealth (see below), only the applicable reference dates are taken into account.
Application
The tax applies to Belgian residents, including both individuals and legal entities (e.g. companies, associations, foundations, etc.), regardless of whether the securities account is held in Belgium or abroad. Permanent establishments of foreign companies are also considered to be Belgian residents. Non-resident individuals and legal entities are subject if the securities account is held in Belgium.
It is important to note that financial institutions and collective investment undertakings (such as credit institutions, insurance companies, investment companies, brokerage firms and pension institutions) benefit from an exemption for securities accounts attributable to their own professional activities.
For example, both Belgian and foreign investment funds (UCITS and AIFs) are in principle exempt from the ATSA with their securities accounts, regardless of the financial instruments held in the securities accounts.
The exemption applies on the condition that no third party has a direct or indirect claim on the value of the securities account. If a third party has such a claim, then the ATSA applies, except when the third party also benefits from the tax exemption (since it is also an exempted financial institution). According to the Belgian legislator, an investment in a collective fund (with or without legal personality), grants no direct claim to the investor on the value (i.e. the assets) of the securities account held by the fund, so that the fund does not lose its exemption. The exemption does not apply for a dedicated fund since, in that case, the investor is considered to have a direct claim on the value of the securities account held by the fund.
Insurance wrappers
Insurance companies are exempt from the ATSA regarding the securities accounts attributable to their professional activities. The exemption does not apply for the securities accounts they hold for or on behalf of their clients. According to the Belgian government, this is the case for branch 23 insurance policies, i.e. life insurance policies linked to one or more investment funds. Interestingly, the policyholder is considered to have a direct claim on the value of the securities account held by the insurance company. Therefore, the tax will apply indirectly to insurance wrappers issued by Belgian insurance companies. Insurance wrappers issued by foreign insurance companies will in principle remain out of scope, certainly if the securities account is held abroad.
Double tax treaties
In principle, the tax also applies to non-resident individuals and legal entities, if the securities account is held in Belgium. However, the application of a wealth tax clause in double tax treaties (“DTT”) may prevent Belgium from such taxation since the right to levy wealth taxes will in general be allocated to the residence state. For example, the DTT between Belgium and the Netherlands only allows the state of residence to tax the taxpayer’s wealth. In contrast, the DTT with France does not contain a clause concerning wealth taxes; therefore, Belgium can tax the securities account held in Belgium by a French resident.
The DTTs that cover both taxation on income and on wealth are, for example, between Belgium and the Netherlands, Germany, Hong Kong, Switzerland, Luxembourg, Spain and the United Kingdom. DTTs that solely cover taxes on income (and not on wealth) are, for example, those with France, Greece, Italy, Portugal and the United States of America.
Reporting and payment
Belgian financial intermediaries are responsible for declaring and paying the ATSA (this is also the case for non-residents’ accounts). Foreign financial intermediaries may (but are not obliged to) withhold the tax if they appoint a legal representative in Belgium to report the tax.
Financial intermediaries must pay the tax before 20 December following the tax year that ends in principle on 30 September. Belgian account holders with foreign securities accounts that are not yet reported by the foreign financial institution must file the tax declaration themselves within the same deadline as for their Belgian personal income tax returns.
If you wish to discuss these topics, please contact: Tiberghien, Brussels
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