24 January 2017 / news

Extension of Belgian tax on stock exchange transactions

The Programme Law of 25 December 2016, published in the Belgian Official Gazette on 29 December 2016, has extended the existing Belgian tax on stock exchange transactions ( “TSET”). As from 1 January 2017, also certain stock exchange transactions, that are entered into or carried out by intermediaries established outside Belgium, are targeted by the Belgian TSET. In addition, the limits of the TSET have been doubled.

Recently, a preliminary bill has been submitted to parliament that will increase the tax rate applicable to certain stock exchange transactions as from 1 January 2018.

1. Legislation applicable as from January 1, 2017

Up to and including 31 December 2016, Belgium applied the TSET only to stock exchange transactions entered into or carried out in Belgium.

As from 1 January 2017, stock exchange transactions entered into and carried out by foreign intermediaries, by order of Belgian residents, are also targeted by the Belgian TSET.

1.1 Extended scope

Stock exchange transactions entered into or carried out by an intermediary established abroad are considered to have been entered into or carried out in Belgium if the order to this transaction was directly or indirectly given by:

(1) Either a natural person having its habitual residence in Belgium;
(2) Either a legal entity on behalf of its registered office or establishment in Belgium.

In addition, the Programme Law of 25 December 2016 doubled the limits of the TSET, to a maximum of 4.000 EUR per transaction. The rates have not been adjusted:

Underlying stock Tax rate Limit
Bonds 0,09% 1.300 EUR
Shares 0,27% 1.600 EUR
Capitalizing shares 1,32% 4.000 EUR

1.2 Payment of the TSET and reporting obligation

The TSET due must be paid to the competent Belgian tax administration. A declaration form needs to be submitted regarding the TSET due.

If the TSET is not paid by the deadline, interest falls due. Fines are payable if the declaration was submitted late. The extended legislation reduces the applicable fines for stock exchange transactions entered into our carried out through a foreign intermediary between 1 January 2017 up to and including 31 December 2017.

Belgian intermediaries still need to pay the TSET due on behalf of the ordering clients. They must also submit a declaration form on behalf of the ordering clients. When the transaction is carried out through a Belgian intermediary, the TSET is payable on the last working day of the month following the transaction.

Intermediaries established abroad can request the Belgian Minister of Finance to recognize a liable representative in Belgium, in order to take over the obligation to pay the TSET on behalf of the ordering clients. Intermediaries established abroad are not obliged to do so. If no liable representative of the foreign intermediary has been recognized, the ordering client must pay the TSET due and submit a declaration form.

If the ordering client is the person liable for the payment of the tax, the TSET must be paid on the last working day of the second month following the month in which the transaction was entered into or carried out. It can be argued that this deadline also applies to cases in which the ordering client enters into a transaction through an intermediary established outside Belgium and this foreign intermediary has a recognized liable representative who pays the tax on behalf of the ordering client.

In any event, all intermediaries must provide the ordering client with a list, including (amongst others) the amount of the transaction and the amount of the TSET due.

2. Expected legislation

As part of the announced Belgian taxshift, the Belgian government submitted a preliminary bill to parliament that will increase the tax rate on certain stock exchange transactions. The limits of the TSET will not be extended. If the preliminary bill is adopted by Belgian parliament, the following tax rates will apply:

Underlying stock Tax rate Limit
Bonds 0,12% 1.300 EUR
Shares 0,35% 1.600 EUR
Capitalizing shares 1,32% 4.000 EUR

It is expected that this new legislation will enter into force as from 1 January 2018.

 

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