A new securities tax is born
On last 4 November, the government surprised friends and enemies with a notice in the Belgian Official Gazette. This notice concerns the introduction of an annual tax on securities accounts. It came down to surprising the tax payers.
On 2 November 2020, the council of ministers approved a preliminary draft of the law introducing an annual tax on securities accounts. This preliminary draft should still follow the legal procedure, but through the notice in the Belgian Official Gazette, the government could fix the implementation date on 30 October 2020.
This so-called 'announcement principle' was already used in the past for tax increases. By doing so, the government avoids that tax payers make arrangements as soon as they are aware of the general principles of the new legislation.
The annual tax will be levied on all securities accounts held by individuals (residents and non-residents) and by legal entities subject to corporate tax, legal personalities tax or non-resident tax.
This tax is therefore also potentially due by e.g. universities and labor unions.
The taxable base of this tax is the average value of the taxable financial instruments which are kept in the securities account. The tax is only due if the average value exceeds 1.000.000 euro.
If this 1.000.000 is reached, a 0,15% tax is due on 1.000.000. Above, the rate is 10%.
The program law will also contain provisions avoiding that the tax payers escape by using certain tricks.
The tax authorities can ignore splitting-up a security account. This concerns moving securities to one of more accounts with the same financial institution or to accounts with another financial intermediary in order to avoid that the total value of securities on one account reaches 1 million euro.
Also, opening securities accounts whereby you spread out the securities over accounts with the same financial intermediary or with other financial intermediaries falls within the scope of this provision.
Also, when you convert shares, bonds or other financial instruments into registered securities (so they are no longer held on a securities account) in order to avoid the tax, this can also be ignored by the tax authorities.
Finally, the tax authorities will monitor that you do not transfer your securities account to a foreign legal entity, which places the securities on a foreign securities account or that you harbor the securities account in a fund with registered shares.
The legislator supposes that in these cases you made this transaction in order to avoid the tax, but you can prove that you did so (transfer, split, transfer abroad, ..) for another reason.
By announcing that the new tax will be applicable as from 30 October 2020, the government wants to avoid that the tax payers anticipate tax avoidance.
The date of 30 October 2020 was chosen because at this date there was extensive communication over this tax in the media.
Almost exactly one year before the announcement of this tax, the Constitutional Court annulled the securities tax which was introduced in 2018.
The old securities tax was levied on securities accounts (locally and abroad) and amounted to 0,15% of the average value of the taxable financial instruments on that securities account, to the extent that this value exceeded 500.000 euro.
There were a number of 'securities' which were exempt of this tax, such as real estate certificates, treasury bills, registered shares, ...
The Constitutional Court annulled this securities tax for two reasons. First, because certain investments (such as derivatives) were not in scope (and there was no objective and reasonable cause for this) and because foreign banks in Belgium should appoint a 'responsible representative' for the collection of the tax (which was an obstacle for foreign banks entering the Belgian financial market).
The Minister of Finance assured that these problems will be dealt with in the new program law. The new tax is somehow old wine in new bottles. The question is whether the new bottles close better than the old ones ...