BELGIUM Law and Practice Contributed by: Alain Van Geel and Emilie Van Goidsenhoven, Tiberghien
double taxation through this combined approach but this aim is not always reached, due to the complexity. As of 1 January 2024, exemption from taxation upon distribution by the legal construct will no longer apply if the income received by the legal construct was not effectively taxed under the look-through taxation (ie, capital gains on shares). In addition, interposing an intermediary company (which is not a legal construct) will no longer prevent the application of the Cayman tax. Furthermore, an exit tax was introduced if the founder of the legal construct migrates to another country. The scope of application of other taxable events (seat transfer of the legal construct, etc) is enlarged. The founder can avoid pass-through treatment by showing that the legal construct (other than a trust) meets a substance test in the case of (among other requirements) the exercise of actual economic activi - ties, which may not involve the management of the private assets of (one of) the founder(s). The sub - stance requirements were further restricted as of 1 January 2024. The Cayman tax applies not only to offshore legal constructs, but also to companies and legal entities established within the EEA if such entities are not suf - ficiently taxed. Measures can be taken to anticipate the application of the Cayman tax. For this reason, it is important to seek advice before making investments or setting up foreign structures. 3.4 Tax Consequences of Fiduciary and Beneficiary Roles If a beneficiary or the donor of a trust serves as a fiduciary, they may be subject to the “Cayman tax” (see 3.3 Taxation of Trusts, Foundations and Similar Entities Located in Other Jurisdictions ).
panies, life insurance (under certain circumstances) and holding companies. Each of these methods can provide varying levels of asset protection, but the key focus is on shielding assets from creditors, minimising inheritance taxes and ensuring smooth wealth transfer across generations. These methods need to be analysed and adapted on a case-by-case basis to suit different family situations. A key limitation to planning can be the anti-abuse tax rules, under which the tax authorities may disregard legal acts where the taxpayer frustrates the objectives of the tax legislation without valid non-tax reasons. 4.2 Succession Planning In Belgium, whether the family business is an inde - pendent activity carried out as a private individual or a company, both legal forms offer the possibility of exemption from gift tax or a 0% rate. Specific rules apply in this respect in the Flemish Region, the Wal - loon Region and the Brussels-Capital Region. It is also possible to obtain a reduced rate of inherit - ance tax (3% or 7% in the Flemish Region and the Brussels-Capital Region, and 0% in the Walloon Region), provided certain conditions are met. For the commonly used planning techniques, see 2.6 Transfer of Assets: Vehicle and Planning Mecha- nisms . 4.3 Transfer of Partial Interest Where assets are transferred by donation or inher - itance, the parties are responsible for valuing them. The market value of the assets transferred must be determined. Certain adjustments and discounts may be applied, and the correctness of the values adopted must be demonstrated in the event of an audit by the authorities. For this reason, it is advisable to docu - ment the valuation of the assets properly at the time of transfer – for example, by using the services of an expert or an auditor. A minority stake will be valued with a discount for lack of control and/or illiquidity.
4. Family Business Planning 4.1 Asset Protection
In Belgium, the most popular method for asset protec - tion planning involves using family foundations, along with the strategic use of legal structures such as com -
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