For tax purposes, investing in Belgium can be beneficial.
Belgium has a very favourable holding regime. The holding is a normal Belgian company, taxed under the normal Belgian corporate tax regime. The main advantages of using a Belgian holding are the following:
- Incorporation of a new Belgian company in less than a week;
- No registration fees on capital contributions;
- No annual wealth or capital taxes;
- No taxation of realized capital gains on shares in most cases;
- 95% of qualifying dividends received can be deducted from the taxable basis;
- Interest expenses as well as any other costs relating to the acquisition and/or management of participations can be offset against any other income of the holding company;
- A very favourable double tax treaty network (e.g. Hong Kong);
- The exemption of withholding tax on dividends is not only applicable within the EU, but also for all countries with which Belgium has concluded a double tax treaty. Only a 10% participation is required and there are no limitations on benefits.
The newly introduced “notional interest deduction” (see above) made Belgian intragroup financing vehicles popular.
The following optimisation can be envisaged:
- A foreign parent company contributes intra-group advances to the Belgian financing vehicle;
- The Belgian financing vehicle gives loans to the other group companies;
- The interest received by the Belgian financing vehicle can be offset against the notional interest deduction. As such the effective tax rate of the financing vehicle will be less than 10%.
The Belgian tax authorities have set up a system for taxing foreign employees who work for employers which are part of an international group. The conditions are:
- Employee has a function which requires special knowledge or responsibility;
- They are detached by a foreign company to work in a Belgian subsidiary or permanent establishment;
- They stay only temporarily in Belgium, and their “centre of economic interests” stays outside Belgium;
- The application is filed within 6 months after arrival in Belgium.
If these conditions are met, the employee will have the following benefits:
- Income for work performed outside Belgium is not subject to Belgian tax, even if it is paid by a Belgian company or permanent establishment (“travel exclusion”);
- Additional tax-free allowances for international school costs, and one-time costs.
Latest version updated 20th December 2017