A political agreement has been reached last Monday with respect to the details of the new tax of 10% on capital gains with respect to financial assets.

1. Limitation of the tax base of the Reynders tax ?

🔸 The so-called Reynders tax (art. 19bis ITC) provides for a taxation (in the form of “interest” taxed at 30%) of capital gains realised by Belgian resident individuals on units of capitalisation funds investing more than 10% in debts.

🔸 The tax base is called the Belgian “Taxable Income per Share” (“Belgian TIS”). The TIS currently consists of the following items : (i) interest and (ii) capital gains derived from the return on assets invested in debts (capped by the capital gain realised by the investor on the units of the fund). A “tax base by default” applies if no information is available.

🔆 According to several press reports, the parties of the arizona coalition would have decided to further limit the tax base to the interest component (i). This does not seem to be correct. The political agreement provides that Art. 19bis ITC would remain unchanged (including its tax base!).

2. Interaction between the Reynders tax and the new capital gains tax

🔸 As a result, capital gains on fund units (covered by the Reynders tax) could become subject to both the Reynders tax and the new capital gains tax of 10%.

▶️ Part of the capital gain (TIS) will then be taxed as “interest” (at the rate of 30%) under Art. 19bis ITC.
▶️ The remaining part of the capital gain would then be subject to the 10% capital gain tax (e.g., the part of the capital gain on the fund units derived from “capital gains on shares”).

🔸 In order to avoid that (part of) the capital gain would be subject to both taxes, the draft legal text (new Art. 96/2 ITC) provides for an exemption of the capital gains tax up to the amount (already) taxed as a movable income (such as the amount subject to the Reynders tax, taxable as an “interest”).

Denis-Emmanuel Philippe