BELGIUM Law and Practice Contributed by: Wim Aerts, Dorothée Vermeiren and Stijn Van Walleghem, Clifford Chance
tax authorities may deny the deductibility of the interest payments in the Belgian Borrower’s cor - porate income tax return. 4.4 Tax Incentives There are no tax incentives available for foreign private credit lenders lending in Belgium, but with regards to the generally applicable with - holding tax exemptions, please refer to 4.1 With- holding Tax . 4.5 Non-Bank Status There are no additional tax considerations nec - essary for non-bank lenders. Please see 4.1 Withholding Tax . Security is generally available over all assets of the obligors. Although very much dependent on the transaction, a typical security package consists of security over shares, security over various types of receivables (including bank accounts) and security over moveable assets (including intellectual property). Security over real estate assets is typically excluded in view of the costs associated with such security in Belgium. Other than security over real estate, which requires a notary-led process, there are limited formalities that apply to taking security in Belgium and any applicable formalities are not particularly time-consuming. Security is typically created so as to limit operational intrusiveness and unnecessary administrative burden. 5.2 Floating Charges and/or Similar Security Interests It is possible under Belgian law to create a pledge over all (or some) movable assets of a Belgian company or the “business” as a whole of 5. Guarantees and Security 5.1 Assets and Forms of Security
the Belgian company. While this is not technical - ly equivalent to an English law floating charge, such pledge would cover all present and future movable assets of a company, but not any real estate, and is perfected through the registration of such pledge in the Belgian National Pledge Register. Such registration is not possible for all types of assets (such as separate pledges of receivables and/or bank accounts) and pledges over movable assets based on dispossession are still possible under Belgian law. Overall, the authors do not see a real distinction in the terms of security given by banks and private credit pro - viders, although the former may typically expect a more comprehensive security package. 5.3 Downstream, Upstream and Cross- Stream Guarantees Corporate benefit considerations are the main considerations affecting upstream and/or cross- stream guarantees. Under Belgian law, each transaction entered into by a Belgian company needs to be in the interest of that Belgian com - pany; group interest alone is not sufficient and will only be taken into account where the group is integrated and it can therefore be established that the Belgian company will indirectly benefit from the transaction. Moreover, the risk associ - ated with the transaction should be proportional to the benefit received. While this is essentially a business judgement to be made by the directors, a practice has evolved where at least the propor - tionality is addressed by a guarantee limitation most often based on a percentage of net assets of the relevant obligor. These guarantee limita - tions are, however, not necessarily sufficient to ascertain corporate benefit, and other ways to increase corporate benefit (such as guarantee fees or direct borrowing) are possible. Please refer to 5.4 Restrictions on the Target , regard - ing financial assistance.
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