BELGIUM Law and Practice Contributed by: Steven De Schrijver, Allegiance Law
independent public companies in December 2023. This strategic move involves establishing one entity for its traditional chemicals business and another dedicated to its high-technology materials and solutions. 5.2 Tax Consequences In Belgium, spin-off transactions can be struc- tured as tax-free transactions. For a movable pre-tax dividend in the form of shares of a new or existing company following the transfer of a business division, the following requirements must be met. • State resident – the transferee of the dividend must be a state resident, meaning that the exemption is intended for taxpayers subject to personal income tax. • Listed shares – the shares of the distributing company must be listed on a stock exchange of an EU member state under the conditions of Directive 2001/34/EC or of a third state with equivalent conditions of admission. • Dividend in the form of listed shares – the dividend must be paid in the form of shares of the acquiring company of the branch’s contribution, which are also listed on a stock exchange. • Contribution of a branch of activity – the com- pany being restructured must have trans- ferred part of its assets as part of a contribu- tion of a branch of activity to a newly formed company or an existing company, against the issue of shares issued by the acquiring com- pany of the contribution. • One and the same restructuring operation – the contribution of a branch of activity and the issue of shares must be the subject of one and the same restructuring operation. • Double taxation agreement – the transaction must take place in a state with which Belgium has concluded an agreement or convention
for the avoidance of double taxation that allows the exchange of information regarding tax matters. • Tax-neutral or tax-exempt – the restructuring operation must be considered tax-neutral or tax-exempt in the state where it takes place. 5.3 Spin-Off Followed by a Business Combination Although a spin-off followed by a business com- bination is technically permissible under Belgian law, it is important to note that such a sequence of transactions is not a standard practice in Bel- gium. 5.4 Timing and Tax Authority Ruling The execution of spin-offs necessitates meticu- lous preparation, encompassing operational, business, tax and legal considerations to ensure day-one readiness. As a result, the entire spin- off process typically extends over a minimum of one year. Although obtaining a ruling from the Belgian tax authorities is not mandatory before finalising a spin-off, such a ruling offers a level of assurance regarding the tax implications of a transaction that has not yet incurred fiscal con- sequences. 6. Acquisitions of Public (Exchange-Listed) Technology Companies 6.1 Stakebuilding A strategic approach for a potential bidder involves: • accumulating a stake in the target company; • offering various advantages such as signalling the seriousness of intentions to the target’s board; • reducing overall share acquisition costs; and
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