Belgium - New Tax on Securities Accounts

On 3 February 2021, the Commission of Finance and Budget approved the final text of the amended bill introducing a Tax on Securities Accounts (“TSA”). It is expected that the bill will be adopted by Parliament soon.

The TSA will take the form of an annual levy of 0.15% on taxable financial instruments held on a securities account with an average value of EUR 1,000,000 or more during the reference period.

Click here to find a note which discusses the features of the Tax which are relevant for corporates and financial institutions, as well as the clarifications given by the Minister of Finance.

Key takeaways

  • The TSA has a very broad scope applying to securities accounts held worldwide by Belgian residents and Belgian establishments (corporates and individuals). It also applies to securities accounts held by non-residents with Belgian financial intermediaries (but not with their foreign establishments).This is unless the application of the TSA is prevented by the applicable Tax Treaty.
  • The TSA applies not only to shares, but also to - among others - bonds and derivatives which are held on a securities account. Corporates should thus assess whether any of their hedging contracts risk falling in scope.  In addition, corporates and financial institutions should verify how their securities accounts are legally structured and determine whether or not cash recorded on these accounts may be in scope.
  • The legislator only provided limited exclusions from the TSA, notably for financial instruments held for their own account by some financial enterprises (including certain regulated investment funds and pension funds). The own account requirement should be analysed in cases where the financial enterprise holds the taxable financial instruments as part of a hedging or derivatives position.  Foreign financial enterprises should assess to which extent they can benefit from the exclusions, some of which are defined by reference to Belgian financial law. Securities accounts held by intra-group banks/treasury centres are still in scope.  Own shares held by listed companies on a securities account, for instance in the framework of equity incentive plans, also remain in scope.
  • The TSA is accompanied by retroactive anti-abuse provisions. This includes a specific anti-abuse provision pursuant to which the conversion of dematerialised (taxable) financial instruments into registered ones as of 30 October 2020 is disregarded, without any opportunity for rebuttal by the taxpayer. The (retroactive) enforcement of the aforementioned anti-abuse provisions by the financial intermediaries who are liable for the payment of the TSA also raises many questions.
  • It remains questionable whether the TSA in its current design will withstand the scrutiny of the Constitutional Court, for instance as concerns the anti-abuse provisions and the exclusions.