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The Year to Come and Year in Review summarise a selection of major developments you should be aware of from 2021, and a selection of key developments expected in 2022.

Updates to

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key areas in 2021 and 2022

In 2021, although still influenced by Covid-related initiatives, the Belgian legislative landscape has continued to evolve towards further regulation and enforcement, leading for instance to increased antitrust enforcement, developments in data protection and heightened protection of certain contractual parties. 2022 will continue keeping us on our toes as key EU instruments are expected to be transposed into Belgian law, including the EU Whistleblowing Directive, the EU Preventive Restructuring Framework Directive and the EU Collective Redress Directive, and as far-reaching reforms are expected to be adopted, including the new Belgian law on obligations. Let our Year to Come/Year in Review publication introduce you to some of these (expected) key developments.

Florence Danis, Dispute Resolution Partner, Belgium 

Belgian law highlights in 2022

ESG

New rules in relation to sustainability will affect taxation, corporate governance, the financial and the real estate sector and cooperation between companies.

Antitrust & Foreign Investment

A Belgian federal foreign direct investment screening act is expected to be adopted.

Contract and Commercial

The law on obligations, Book 5 of the Civil Code, will be changed significantly.

The Belgian green and circular economy and competition law: The Belgian Competition Authority (BCA) has recognised the importance of an effective competition policy to stimulate innovation and technological developments, and the “greening” of the Belgian economy. In line with several initiatives in other Member States, the BCA announced it will provide guidance on when companies can cooperate in pursuit of sustainability objectives without harming competition. At the EU level the EC is expected to provide new guidance on sustainability agreements in early 2022.

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Belgian federal foreign direct investment screening regime: A Belgian federal foreign direct investment (FDI) screening act is likely to be adopted in 2022. The screening regime would enable the federal Government (and regions) to scrutinise envisaged investments in Belgian entities which are active in strategic sectors or in sectors affecting national security interests. This follows a recent roll-out of other national FDI regimes throughout the EU and the introduction of the EU FDI screening Regulation, which provides a FDI cooperation framework between national authorities. 

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Reform of the Belgian Civil Code – Book 5 (obligations): The Belgian law on obligations is set to change extensively in 2022. The reform of Book 5 of the Civil Code aims at (i) codifying existing concepts developed by case law and legal authors, (ii) restructuring the various regimes (sources, contracts, obligations), (iii) introducing new concepts such as hardship theory, anticipatory breach of contract, price reduction as a sanction for a (quantitative) partial execution of a contract and (iv) increasing the creditor’s unilateral activism to declare the contract null, to replace the debtor or to terminate the contract. The reform should be adopted during the first semester of 2022 and will come into force six months after its publication in the Official Gazette.

Revision of Belgian data protection legislation: The Belgian federal Government is currently revising various elements of the Belgian data protection legislation. The authority’s independence vis-à-vis other public authorities is expected to be reinforced. In addition, new legislation setting the legal framework for a “digital wallet” containing personal data about each citizen (e.g. their ID card and driver’s licence) is expected, given that the government intends to make it available to all citizens by 2023.

 

Belgian data retention legislation 2.0: Earlier this year, the Belgian Constitutional Court partly annulled the 2016 act on the collection and retention of electronic communications data. In line with the CJEU’s case law, the Court found that mass storage of data as a general preventive measure against terrorism and other serious crimes violates fundamental rights. In response, the Belgian Government approved a bill aimed at creating a new data retention regime. This bill is expected to be heavily debated next year, as various civil right organisations and cybersecurity experts have already denounced the risks it raises. Among others, providers of electronic communication services would be obliged to create a back door enabling public authorities to access end-to-end encrypted communications, sometimes even without any permission, search warrant or court order.

Implementation of the EU Collective Redress Directive: After much debate, the EU Collective Redress Directive was approved by the European Parliament on 24 November 2020. It aims to ensure that consumers have access to at least one effective and efficient representative action for obtaining injunctions and remedies for violations of general consumer protection rules, such as the rules on unfair terms in consumer contracts, unfair B2C practices and misleading advertising, as well as sector-specific consumer rules. Belgium needs to transpose the Directive by 25 December 2022 and it will be effective by 25 June 2023.
 
Implementation of the EU Whistleblowing Directive in Belgium: The EU Whistleblowing Directive is due to be transposed into Belgium law by 17 December 2021. Consequently, and once the law comes into force (expected mid-December/beginning of January), companies in Belgium with at least 250 employees will be immediately obliged to establish an internal reporting channel through which employees and contractors, amongst others, can report breaches of EU law. Companies that have between 50 and 249 employees will have until 17 December 2023 to comply with the new rules. Whistleblowers are protected against retaliation if they make a report or public disclosure. 

ESG Outlook: ESG continues to account for a significant part of Belgian legal developments. For a more in-depth analysis, look out for our Global ESG Outlook publication, available in January 2022.

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Sustainable Governance and Reporting: The EC is expected to publish a directive on the “sustainable corporate governance initiative” by the end of Q1 2022. The directive would impose on companies due diligence and reporting obligations covering the impact of their supply chains on human rights, the environment and governance. It would also impose a legal duty on directors to consider, and balance the interests of, a wide range of stakeholders in their decisions rather than focusing purely on shareholders’ interests. ESG considerations are also gaining momentum on the corporate reporting side, starting with the ESG reporting under the Taxonomy Regulation as of 2022 and, once adopted, the EU Corporate Sustainable Reporting Directive amending the Non-Financial Reporting Directive.

Surge in sustainable finance initiatives: ESG initiatives launched under the EU sustainable finance strategy will continue to develop in 2022 and beyond. Under the Sustainable Finance Disclosure Regulation, level 1 periodic reporting for financial market participants and advisors will kick in as of January 2022, with level 2 product and website disclosures applying from 1 January 2023. Delegated acts incorporating sustainability considerations into the funds (UCITS and AIFMD), financial markets (MiFID II) and insurance (Solvency II and IDD) frameworks are to come into force in August 2022. A number of initiatives are still at the early stages of the legislative process, including the EU Green Bond Standard, the Ecolabel for retail investment products, the ESG Solvency II insurance review and the prudential EU banking package. These developments will significantly impact the Belgian financial sector and issuers.

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Start of the Unified Patent Court’s operations: The unitary patent has been brought one step closer to its launch due to the ratification of the Protocol on Provisional Application of the Unified Patent Court Agreement by Germany and Slovenia. The remaining ratification of Austria is expected in the first quarter of 2022 and will mark the end of an arduous negotiation and ratification process. The UPC is expected to start its operations mid-2022. The implementation of the unitary patent will further harmonise European patent law thanks to its geographical reach and enforceability in up to 24 Member States. 
EU Preventive Restructuring Framework Directive: The EU Preventive Restructuring Framework Directive aims to close the gap between Member States’ existing restructuring and insolvency frameworks and is to be transposed into Belgian law by 17 July 2022. The Directive puts great emphasis on corporate rescues and aims to reduce the ability of shareholders and “out of the money” creditors to block a viable restructuring proposal. Recent reforms of the Belgian insolvency rules have anticipated several aspects of the Directive (for example early warnings). Further changes may be required in respect of stay on enforcement, the impact of the opening of judicial reorganisation proceedings on ongoing contractual arrangements and voting classes in respect of reorganisation plans. A new bill is being prepared.

New energy efficiency obligations for real estate in the Flemish region as of 1 January 2022: In Flanders, there is a new obligation to renovate non-residential buildings within five years of the notarial deed of sale or vesting of the long-term lease or right to build. The building will need to meet minimum energy performance levels within the five-year timeframe. This obligation will be imposed on the (new) owner of the building or on the long-term lessee or holder of the right to build. The Flemish Energy and Climate Agency (VEKA) can impose administrative fines in case of non-compliance.

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Joint ventures in real estate investments: The growing importance and use of joint ventures in real estate investments is expected to continue in 2022. Consequently, notifications to the competition authorities and the drafting of shareholders’ agreements will increasingly be part of real estate transactions. This results from the increased willingness of foreign investors to co-invest in Belgian properties and the keenness of Belgian real estate to attract those foreign investors.

EU tax developments: On 18 May 2021, the EC published its long-awaited Communication on Business Taxation for the 21st Century. Over the coming months, the EC will put forward proposals on, amongst others, the annual publication of the effective tax rate of Multinational Enterprises (MNEs) with operations in the EU, its battle against legal entities with no or minimal substance and economic activity, a specific allowance to stimulate equity-financed investments (so-called “DEBRA”) and the introduction of a common EU tax base for MNEs. In addition, the EC published its “Fit for 55” package which includes a number of tax measures to combat climate change (in particular, a reform of the Energy Taxation Directive).

Belgian budget plan: In its latest budget plan, the Belgian Government announced a series of new tax measures. These include, amongst others, a reform of the special tax regime for expats (e.g. by introducing a maximum duration), limitations on certain payroll tax exemptions (e.g. for qualified researchers and shift work), and an obligation to apply VAT to short term leases of apartments (Airbnb leases). Furthermore, the authorities aim to further increase the number of transfer pricing (TP) audits and the number of officials working in the TP audit team. Also, with respect to the application of R&D tax incentives, a tax audit wave is expected in 2022.

OECD BEPS 2.0: Under Pillar One of the OECD “Two-Pillar Solution”, certain taxing rights over the largest and most profitable MNEs would be re-allocated to “market” jurisdictions (i.e. where the MNE's users and customers are located). Under Pillar Two, MNE groups with a global turnover above EUR 750 million would become subject to a minimum effective tax rate of 15% in every jurisdiction where they are present. The OECD aims to implement these rules gradually as from 2023. The EC would prefer a consistent implementation of Pillar Two across all EU Member States.

A competitive digital transition: Competition authorities will continue to adapt to the needs of the digital economy. New rules on vertical agreements are to be released by 1 June 2022, aiming to clarify the rules in light of the platform economy and to harmonise rules on advertising restrictions and online sales channels. Read more… Additionally, the EC’s Digital Markets Act, which aspires to guarantee a level playing field in the digital space by imposing significant obligations on so-called “gatekeepers” (e.g., Amazon, Facebook) may be adopted as early as 2022. The BCA already voiced support for the proposal and announced it will be extra vigilant about data-abuses of competition facilitated by algorithms in the year to come.

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Belgian law highlights in 2021

Environment and Climate Change

The EU “Fit for 55” package proposes to amend various EU policies, aiming to reduce net greenhouse gas (GHG) emissions by at least 55% by 2030.

Restructuring and Insolvency

New insolvency law rules introduced a “pre-pack procedure”, offering a legal framework for the negotiation of agreements between debtors and creditors.

Real Estate

The new Civil Code on property law is better adapted to modern real estate projects.

Increased Belgian antitrust enforcement and change of BCA leadership: The Belgian Competition Authority (BCA) has brought two high-profile cases. In October, the BCA’s Prosecutor General announced its intention to prosecute, under the full infringement procedure, four cigarette manufacturers for alleged hub-and-spoke future pricing exchanges. The final decision is expected in early 2022. Earlier this year, the BCA’s Competition College fined cosmetics manufacturer Caudalie EUR 859,310 for unlawfully imposing minimum prices on its retailers and limiting active and passive sales in its selective distribution system of cosmetic products. Continued active enforcement is expected for 2022, when the BCA will have a new senior leadership team, with a new Prosecutor General (Damien Gerard, a well-known EC official, who started on 1 December 2021).

 

The EC expanding its merger control jurisdiction: The EC published ground-breaking new guidance on its referral mechanism under Article 22 of the EU Merger Regulation, facilitating its review of mergers falling below national merger control thresholds. This guidance aims to mitigate a perceived enforcement gap regarding acquisitions by incumbents of emerging competitors whose turnover does not reflect their potential value, especially in the tech and pharma industries. Currently, the EC is reviewing two deals (Illumina/Grail and Facebook/Kustomer) under the new policy. Belgian companies should pay increased attention when planning acquisitions of nascent competitors, especially in innovative industries or where the envisaged transaction value is high compared to the target’s turnover.

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Modernisation of Belgian property law: The reform of the Belgian Civil Code on property law (Book 3) came into force on 1 September 2021. The new Book 3 is better adapted to modern real estate projects. Notable changes include the introduction of three-dimensional real estate property, with the concept of volume included in the definition of right to build and the creation of a perpetual right to build for projects with public domain purposes or for complex and heterogeneous real estate comprising different volumes with independent and diverse uses and with no common parts.

New rules on late payments: On 1 February 2022, new rules on combating late payment in commercial transactions between undertakings or with public authorities will come into force in Belgium. Creditors are protected by a 30-day period within which claims should be paid if no deadline has been contractually fixed. This period could be extended to 60 days if justified in the circumstances of the commercial transaction. Therefore, any clause allowing the debtor to make payment after 60 days will be deemed to be unwritten.

Post-pandemic - vaccination strategy and telework: From an employment perspective, legislative measures in 2021 were still highly focused on Covid-19. While the vaccine resulted in less restrictions in day-to-day lives (e.g., through the introduction of the Covid Safe Ticket), employers cannot take action against employees based on their vaccination or test status. Hybrid working is now widely embedded, resulting in a focus on teleworking policies and questions relating to the social security status of an employee teleworking abroad.

Council of State approves US data transfer: For the first time since the judgment of the CJEU in the Schrems II case (C-311/18), Belgium’s highest administrative court, the Council of State, has confirmed the validity of data transfers to the US. In the context of a public procurement dispute, it held that companies can still validly transfer personal data to the US by relying on standard contractual clauses (SCC), provided that the Belgian data exporter also carries out an impact assessment for that transfer and implements appropriate supplementary measures (e.g. encryption, pseudonymisation etc.) based on the outcome of that assessment.

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CJEU judgment in Facebook/Belgian DPA on cross-border GDPR enforcement: The CJEU delivered a landmark ruling on cross-border GDPR enforcement in a case opposing the Belgian Data Protection Authority (DPA) and Facebook (C-645/19). While reiterating that, in principle, the lead DPA acts as the sole interlocutor in case of cross-border processing, it also confirmed that other concerned DPAs may be able to bring alleged infringements of the GDPR before their national courts under certain conditions (as foreseen by the GDPR). In so doing, the CJEU provided a broad interpretation of the DPAs’ powers under the GDPR.

Belgian power markets: On 30 April 2021, Elia was instructed by the federal Energy Minister to organise a capacity auction for the first delivery period (November 2025 - October 2026) of the Capacity Remuneration Mechanism (CRM). The CRM was subsequently approved by the EC under State aid rules and the first “T-4” auction took place in September and October 2021. With an adjusted aggregate capacity awarded of 4,447 MW, divided over forty projects and cleared at an average annual cost of 31,674 EUR/MW, the auction exceeded expectations. Gaining their permits in a timely way remains a bottleneck for some of these projects, especially in the Flemish Region, where several permit applications have recently been refused. The federal Government has also paved the way for an increase in offshore wind capacity by 2030 to 5.5-5.8GW (up from 2.3GW). Concessions for a new offshore wind zone are expected to be awarded, following a competitive tender process, from 2023 onwards. They will be accompanied by the construction of an offshore energy island and onshore network reinforcements.

EU “Fit for 55” package: On 14 July 2021, the EC published a package of proposals amending the EU’s climate, energy, land use, transport and taxation policies with a view to reducing net GHG emissions by at least 55% by 2030, as required by the EU Climate Law (the “Fit for 55” package). Further proposals are still expected in 2021. The carbon-intensive energy, transport and buildings sectors will be most heavily impacted by tougher climate regulation. In 2022, the EC’s proposals will be discussed during trialogue negotiations between the Council (i.e., the Member States) and the European Parliament before being approved.

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Cross-border distribution of funds: The Act of 4 July 2021 has introduced several changes to the existing Belgian UCITS and AIFM regimes in order to transpose the EU “Cross-Border Distribution of Funds” package (Directive 2019/1160 and Regulation 2019/1156) which came into force on 2 August 2021. The changes aim to harmonise rules on marketing of UCITS and retail AIFs and establish a harmonised pre-marketing regime for non-retail AIFs. Belgium has opted for a faithful transposition of the Directive with (almost) no gold-plating. A Royal Decree is still expected in respect of minor adjustments to existing marketing materials which will no longer be subject to prior FMSA approval.

New Belgian Financial Omnibus Act: At regular intervals, the Belgian legislator adopts so-called “omnibus” acts that are a compilation of amendments to financial legislation. The Act of 27 June 2021 “containing various financial provisions” is such an omnibus act which, apart from updating references to the recently adopted Belgian Companies and Associations Code across existing financial legislation, introduces some noteworthy changes in relation to (i) the governance of financial institutions, (ii) collective investment management and (iii) the use of blockchain technology.

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Transposition of the Copyright Digital Single Market (DSM) Directive 2019/790: Like most EU Member States, Belgium is still in the process of transposing the Copyright DSM Directive into national law. The main focus of the Directive is to enhance the EU copyright regime in light of the digital age. As the Directive was due to be transposed by 7 June 2021, the EC has issued letters of formal notice to Belgium and other defaulting Member States. However, it is still expected that Belgium will transpose the Directive this calendar year or in the first half of 2022.

B2B legislation: unfair contractual terms in M&A: New provisions in the Belgian Code of Economic Law which impact relations between businesses came into force on 1 December 2020. Although this new legal framework was not specifically targeted at M&A, its broad scope of application has a potentially far-reaching impact on transaction documentation.

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Reform of Belgian insolvency law: The Act of 21 March 2021, effective 26 March 2021, made several changes to Belgian insolvency laws. The Act, amongst others, introduces a “pre-pack procedure” that offers a legal framework for the negotiation of amicable or collective agreements between the debtor and its creditors under the supervision of a trustee, followed by accelerated judicial reorganisation proceedings. The changes aim to facilitate access of enterprises to judicial reorganisation proceedings and anticipate a more fundamental reform of Belgian insolvency law following the implementation of the EU Preventive Restructuring Directive, which is due by the summer of 2022.
 

Tax on securities accounts: On 26 February 2021, the new tax on securities accounts came into force. This tax of 0.15% is levied on the average value of financial instruments that are held on securities accounts with an average value of at least EUR 1,000,000 (with certain exemptions). In October 2021, administrative guidelines with respect to the tax were published, but many aspects remain unclear. Finally, several requests for annulment of the new tax were filed with the Constitutional Court. The judgment is expected late 2022/early 2023.

Excess profit rulings: In September 2021, the Court of Justice overruled the General Court of the EU deciding that the Belgian excess profit ruling system does constitute a state aid “scheme”. The case has been referred back to the General Court, which must now decide whether or not – based on the reasoning in the decision of the EC – the latter correctly established the existence of illegal State aid and whether a selective advantage has therefore been granted through this scheme.

Case law anti-abuse provisions: Over the past few years, there has been a sharp increase in the number of cases where the Belgian tax authorities have invoked the domestic and/or EU anti-abuse provisions to challenge certain tax planning strategies (with varying success). In this context, the Belgian courts have also applied the “EU principle of the prohibition abuse”. Hence, the need for thorough analysis of any tax structuring is becoming even more important.

Explore our Year to Come 2022 and Year in Review 2021 series across 20+ jurisdictions and a number of legal topics.

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