{"id":3829,"date":"2025-04-10T11:00:50","date_gmt":"2025-04-10T09:00:50","guid":{"rendered":"https:\/\/denisemmanuelphilippetax.be\/?p=3829"},"modified":"2025-04-11T10:40:43","modified_gmt":"2025-04-11T08:40:43","slug":"investment-fund-managers-will-benefit-from-a-new-attractive-tax-regime-carried-interest-belgium-vs-luxembourg","status":"publish","type":"post","link":"https:\/\/denisemmanuelphilippetax.be\/en\/tax-news-en\/investment-fund-managers-will-benefit-from-a-new-attractive-tax-regime-carried-interest-belgium-vs-luxembourg\/","title":{"rendered":"Investment fund managers will benefit from a new attractive tax regime. Carried interest taxable at 25% : Belgium vs. Luxembourg"},"content":{"rendered":"

I had the pleasure of being interviewed by L’Echo (article of Philippe Galloy) with respect to the new tax regime of carried interest in Belgium (draft bill which is currently on the table of the government).<\/strong><\/p>\n

The qualification of carried interest income is subject to heavy discussions.
\nAccording to the draft bill, the carried interest income would be qualified as “movable income”, and not as professional income. This new regime would stimulate the activity of investment funds in Belgium.<\/p>\n

The parties of the coalition have agreed to tax carried interest income at the rate of 25% (initially : 20%).<\/p>\n

1. Exclusion of the qualification as employment income<\/strong><\/p>\n

Germany, Italy, and Spain have also implemented specific rules for the taxation of carried interest, different from those applicable to employment income.<\/p>\n

In France, an individual holder of carried interest securities may benefit from a preferential tax regime and be subject to the well-know \u201cflat tax\u201d of 30% (i.e., 12.8% of personal income tax and 17.2% of social contributions) provided that several conditions are fulfilled.<\/p>\n

Other jurisdictions such as the USA and Canada treat carried interest received by individuals as capital gains for tax purposes.<\/p>\n

2. Luxembourg<\/strong><\/p>\n

L’Echo has sought the opinion of the BELGIAN VENTURE CAPITAL & PRIVATE EQUITY ASSOCIATION ASBL, which has indicated that the Luxembourg regime would be more attractive.<\/p>\n

In Luxembourg, employees of Alternative Investment Fund Managers (AIFM) are taxable on their carried interest income as miscellaneous income (speculative gains) – and not as employment income – at the progressive income tax rates (marginal rate of 45.78%) – no social security contributions apply.<\/p>\n

Speculative gains may however be fully exempt under certain conditions. In a nutshell, if shares issued by an AIF (coupled with a carried interest entitlement) are transferred (e.g., upon a redemption of shares by the AIF) after a period of 6 months, the capital gain may be exempt (save if the shares represent a significant shareholding in a tax opaque AIF).<\/p>\n

3. Strict conditions – Luxembourg and Belgium<\/strong><\/p>\n

In order to benefit from such favourable tax regime, several conditions need to be met.<\/p>\n

In Belgium, the favourable regime would only apply to the excess \/ disproportionate return (compared to what a passive investor would obtain) received by an individual in connection with its professional activity for the carried interest vehicle (AIF) or the AIFM.<\/p>\n

In Luxembourg, the regime catches only employees of AIFs\/AIFMS.<\/p>\n

If carried interest are received in situations falling outside the scope of the specific rules (e.g., the fund is not an AIF), normal tax rules apply and a classification as employment income may in certain cases not be excluded.<\/p>\n

Denis-Emmanuel Philippe<\/em><\/strong><\/p>\n

Read also the article in L \u2018Echo<\/em><\/strong><\/p>\n