BELGIUM Trends and Developments Contributed by: An Weyn and Aurore Sultus, Arteo Law
As is the case in other states, the Belgian federal gov - ernment has adopted tax reforms involving different tax measures, with the aim of shifting the tax burden from labour to wealth and consumption. This article will highlight some of the tax measures that have made an impact in the area of private wealth. It will also give a brief overview of the applicable inher - itance and gift tax rules, and summarise the impact of an important judgment of the Belgian Constitutional Court in the area of Cayman tax. Finally, there will be a brief discussion of some trust-related tax aspects. Summary of New Rules Introduced Pursuant to Tax Reforms Taxation of capital gains on financial assets realised by Belgian tax resident individuals Belgium has long been one of the few European coun - tries not to tax capital gains realised by individual tax - payers. Indeed, capital gains realised by Belgian tax resident individuals were historically not subject to income tax in Belgium insofar as they were realised outside the scope of any professional activity and in the course of the normal management of the taxpay - er’s private wealth. The consequence of this was that capital gains remained largely outside the scope of income tax, with the exception of certain capital gains realised in the context of abnormal management, such as in the case of speculative trading transactions or the sale of a participation in one holding company to another holding company of which the seller is the sole shareholder. The new capital gains tax regime now fundamentally changes the landscape for individual investors, family business owners and families, altering how they are taxed on their financial assets. The new regime will apply to capital gains realised as of 1 January 2026; capital gains accrued as of 31 December 2025 will remain exempt. For individuals moving abroad, the newly introduced exit taxation rules will need to be taken into consideration. Individu - als moving to Belgium will benefit from an automatic step-up in basis.
General scope of application Under the new rules, capital gains on financial assets realised outside the scope of any professional activity and in the course of the normal management of the taxpayer’s private wealth are now subject to income tax when realised upon a transfer for consideration. Capital gains arising from a professional activity remain taxed as professional income (at progressive rates of up to 50%), in accordance with existing rules. Similarly, capital gains originating from abnormal or speculative management continue to be taxed under the previous rules (33%). Capital gains on real estate and other non-financial assets (eg, artwork) are not targeted by the new tax measures. Three different types of capital gains Under the new regime, three categories of capital gains are distinguished. Each type has its own tax rate and specific rules for exemptions. • Capital gains realised upon the transfer to a com - pany that is controlled by the taxpayer, either alone or together with the taxpayer’s close relatives, are taxable at a rate of 33%. • Capital gains realised upon a sale to a third party of a substantial participation (ie, at least 20%, assessed individually per shareholder-taxpayer) are taxable at a rate of 10% above EUR10 million. The first EUR1 million of capital gain is exempt (maxi - mum amount over a rolling period of five years). Beyond this exempt amount, capital gains are tax - able at the following progressive rates: 1.25% up to EUR2.5 million; 2.5% between EUR2.5 million and EUR5 million; 5% between EUR5 million and EUR10 million; and 10% above EUR10 million. As an exception, when shares are sold to a legal entity situated outside the European Economic Area, the capital gain is taxable at the rate of 16.5%. This category will typically apply to capital gains real - ised by entrepreneurs and shareholders of family- controlled entities if they meet the 20% minimum participation threshold. • Capital gains realised on financial assets that do not fall in one of the two above categories are taxable at a rate of 10%. The first EUR10,000
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