Belgium: Increased withholding tax rate on liquidation bonuses
On 1 July 2013, the Belgian Parliament adopted the program Law of 28 June 2013 proposed by the Belgian Government.
One of the main measures introduced by the program Law is, effective
1 October 2014
an increase in the withholding tax rate applicable to liquidation bonuses paid as of 1 October 2014 from 10% to 25%.
A transitional period will allow the companies to distribute their taxed reserves to the shareholders at a withholding tax rate of 10% provided that the following conditions are met:
- The reserves have been approved by the General Meeting of shareholders on/before 31 March 2013.
- The amount so paid to the shareholders is immediately reinvested into the capital of the company.
- The contribution to the capital increase takes place during the financial year ending before 1 October 2014.
- The contribution to this capital increase is maintained by the company during a waiting period (see below). Any contribution reinvested into the capital of the company and being repaid before the end of the waiting period will be considered as a dividend taxable at a decreasing rate.
The waiting period is defined respectively as eight years for large companies, four years for small and medium-sized enterprises (SMEs), as of the date of the qualifying contribution, calculated from day to day.
The decreasing rates applicable in cases of repayment of capital after contribution are as follows:
For Large companies:
- From 1st year to 4th year inclusive: 15%;
- From 5th year to 6th year inclusive: 10%;
- From 7th year to 8th year inclusive: 5%;
- From 9th year: n/a.
For SMEs:
- From 1st year to 2nd year inclusive: 15%;
- During 3rd year: 10%;
- During 4th year: 5%;
- From 5th year: n/a.
Impact on customers
The impact of this measure is on the issuing company. However, shareholders should consult their legal and/or tax advisors to assess whether any action has to be taken.
Further information
For further information, customers may contact the Clearstream Banking1 Tax Help Desk on:
| Luxembourg | Frankfurt | |
| Email: | tax@clearstream.com | tax@clearstream.com |
| Telephone: | +352-243-32835 | +49-(0) 69-2 11-1 3821 |
| Fax: | +352-243-632835 | +49-(0) 69-2 11-61 3821 |
or Clearstream Banking Customer Service or their Relationship Officer.
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1. Clearstream Banking refers collectively to Clearstream Banking AG, registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500 (CBF) and Clearstream Banking S.A., registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Register of Commerce and Companies under number B-9248 (CBL).
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