• Soon a new tax on securities accounts?

Soon a new tax on securities accounts?

06 November 2020

Following the annulment by the Constitutional Court of the tax on securities accounts introduced in 2018, the government has proposed to replace this tax by a similar measure. This measure is therefore part of the tax reforms announced by the new government.

In this context, the Council of Ministers recently approved a draft bill to introduce a new tax on securities accounts. This draft tax has great similarities with the previously annulled tax on securities accounts, but there are notable differences.

Which securities accounts are covered?

The new tax applies to securities accounts holding financial instruments with an average value exceeding  EUR 1,000,000. All financial instruments deposited on a securities account will be taxable, cash balances and registered securities being excluded from the scope of application.

The capacity of the holder of the securities account is irrelevant. The tax will, therefore, be payable by both natural persons and legal entities (companies, foundations, non-profit organisations). Through a fiction provision of fiscal transparency, securities accounts held by entities subject to the Cayman Tax will also be subject to this new tax, as if these securities accounts were held by the Belgian founders or beneficiaries of these entities. Finally, it would seem that the new tax also applies to class 23 life insurance policies in the form of personalised funds (fonds dédiés).   

 

How is the tax calculated?

The tax will be levied at the rate of 0.15% on the average value of the securities account calculated over a period of 12 months (from 1 October until 30 September of the following year), provided that this average value is greater than EUR 1,000,000.

The threshold of EUR 1,000,000 will be determined for each securities account separately, without it being necessary to consolidate all securities accounts belonging to the same account holder or to distribute the value of a securities account among multiple account holders. This method of calculating the tax could create unjustified discrimination between taxpayers. As an example, Mr. A and Ms. B would be subject to the tax because of the securities account of an average value of  EUR 1,500.000 of which they are holders, whereas the tax would not be due by Mr. C who has three separate securities accounts with an average value of EUR 500.000 per securities account.

A new anti-abuse provision is provided in order to make transactions that are mainly intended to avoid the application of this new tax, such as for instance the split of a securities account into several securities accounts (below the threshold of EUR 1,000,000) or the conversion of dematerialised financial instruments into registered securities, unenforceable against the tax authorities. Moreover, the anti-abuse provision should apply retroactively to the date on which the tax first appeared in the media (i.e. 30 October 2020 according to a notice published in the Belgian Official Gazette on 4 November 2020), in order to prevent taxpayers evading this law before it enters into force.

 

Belgian and foreign securities accounts?

The new tax applies to securities accounts opened with Belgian or foreign financial institutions. When the securities account is opened in Belgium, the Belgian financial institution will be responsible for the collection, declaration and payment of the tax. For foreign securities accounts, these obligations rest with the Belgian holder, unless he can demonstrate that the tax has been paid and declared by the foreign financial institution.

 

Tax applicable from 2021?

The first reference period to be taken into consideration for the application of the tax will be from the day of the entry into force of the law until 30 September 2021. The new tax on securities accounts should, in principle, apply for the first time in 2021.

However, the bill must first go through the legislative procedure and be submitted to the Council of State for a legality review. It cannot be ruled out that the Council of State will formulate numerous grievances, which would oblige the Minister of Finance to substantially modify the modalities of application of this new tax.

 

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