Tax Circular confirms that negative interest does not qualify as income from capital

A Tax Circular of 8 June 2021 addresses the treatment for income tax purposes of so-called negative interest, in particular paid by deposit holders to credit institutions.

The Circular confirms that negative interest, i.e. the amounts paid by the “lender” (the deposit holder) to the “borrower” (the credit institution), do not qualify as an income from moveable assets or capitals, neither in the hands of the borrower nor in the hands of the lender. These negative interests are not subject to Belgian withholding tax. This position is also relevant for the EBITDA interest limitation rules. 

The Circular also indicates that negative interests cannot be deducted from other income from moveable assets/capitals for Belgian personal income tax purposes. For corporate income tax purposes, the negative interest should be tax deductible provided the generally applicable conditions are met.

Negative interest should, in our opinion, not be subject to VAT.

The full Circular Letter can be consulted via this link (Dutch) or this link (French).