This is one hot topic for Belgian tax practitioners dealing with fund structuring involving (on top) Belgian individuals (HNWI).
1. Definition of “dedicated funds” qualifying as a legal construct
Since 2024, a fund (or a sub-fund) qualifies as a “legal construct” (“construction juridique” / “juridische constructie”) if “the rights in the fund (or the sub-fund) are held for more than 50% by one person or a number of related persons” (Article 2, §1er, 13°/1, (2) ITC).
2️. Belgian feeder fund – Luxembourg master fund (SICAV RAIF)
🔹 Let us assume that non-related Belgian individuals hold shares in a Belgian feeder vehicle, a non-regulated fund. The Belgian feeder holds in its turn 100% of the shares in a Luxembourg master fund, e.g. a Luxembourg SICAV RAIF.
🔹 According to a literal reading of Article 2, §1er, 13°/1, (2) ITC, the Luxembourg SICAV RAIF could potentially fall in the definition of “dedicated fund” (qualifying as a legal construct): the rights in the SICAV RAIF are indeed held for more than 50% by “one person”, i.e. the Belgian feeder fund.
🔅 This would imply that the Belgian individuals (on top of the Belgian feeder vehicle) could potentially be caught by the Cayman tax as “founders” of a legal construct (SICAV RAIF).
In this context, it is worthwhile stressing that the definition of “founder” of a legal construct has been recently significantly broadened. Individuals (Belgian tax residents) holding directly or indirectly the legal or economic rights of a legal construct, through a chain of intermediate constructions, may be qualified as “founders” (new Article 2, § 1, 14°, fourth indent of the ITC).
Not sure that this outcome was foreseen by the Belgian legislator…
3️. Qualification of the Belgian feeder fund as an intermediate construction
In these typical master-feeder fund structures, the qualification of the feeder fund as an “intermediate construction” is key.
⚠️ Tip for preventing headaches or painful migraines: managing to avoid the qualification of the feeder vehicle as an “intermediate construction”, by relying on the exception for non-dedicated UCITS/AIF laid down in Article 2, § 1er, 13°/1, alinéa 1 ITC. The intermediate construction will then become a “blocker”…
For more details (and nice structure charts!), see my article in the next issue of the RGFCP co-authored with Kevin Dorban.
Denis-Emmanuel Philippe
