The Belgian government has drafted a new bill to introduce a tax on securities accounts. This draft is currently being examined by the Belgian Parliament.
This is an annual tax to be inserted in the Code of Miscellaneous Duties and Taxes, which will be levied on securities accounts whose average value exceeds EUR 1,000,000.
Persons subject to taxation
The scope of this tax has been widely extended compared with the old tax on securities accounts.
The new tax applies not only to securities accounts held by natural persons but also those held by companies and other legal persons.
Securities accounts held by the founders of legal ‘constructions’ (such as trusts, foundations, etc.) are also included.
With regard to securities accounts held by Belgian residents, this tax applies to both Belgian and foreign securities accounts.
For non-residents, the tax applies only to Belgian securities accounts, provided it does not preclude double tax treaties.
Generally, non-residents who benefit from a double taxation treaty that also covers wealth taxes will escape this tax. For example, this would apply to the double tax treaty with the Netherlands but not the treaty with France.
Exclusions are in particular made for financial companies holding securities accounts for their own account.
This nevertheless means that securities accounts linked to a branch 23 life insurance contract will be subject to tax (assuming that the threshold of EUR 1,000,000 is reached, which will generally be the case) since the insurance company holds it on behalf of its policyholders and not for its own account.
We can therefore expect this tax to be passed on by the insurer to the policyholder even if the policyholder's investment falls below the EUR 1,000,000 threshold.
Financial instruments and cash balances
Financial instruments as well as cash invested in securities accounts are both included in the tax base.
Threshold of EUR 1,000,000
The tax will only be levied on securities accounts whose value exceeds EUR 1,000,000.
This value will generally be calculated over an annual period from 1 October to 30 September, taking into account the average value of assets on four specific dates: 31 December, 31 March, 30 June and 30 September.
If the account is opened or closed during the reference period, only the reference dates during which the account is open are taken into account.
Tax rate, ceiling and methods of levying the tax
The tax rate will be 0.15% per year.
However, the total tax amount will not exceed 10% of the difference between the taxable base and the threshold of EUR 1,000,000.
The tax will, in principle, be collected by intermediaries (e.g. banks) or, if there is no intermediary or the intermediary is established abroad and does not withhold the tax, by the taxpayer.
Joint ownership and multiple securities accounts
Surprisingly, if there are several holders the tax base cannot be prorated according to each holder’s rights. Likewise, usufruct/bare ownership dismemberment does not affect the tax base.
Consequently, if a securities account has an average value greater than EUR 1,000,000, whether it is held by one or by two holders does not affect the tax base while each joint holder is only entitled to the half of the account's holdings.
When a securities account has several holders, each holder can file the declaration on behalf of the others. In addition, each holder is jointly and severally liable for the payment of the tax, fines (which can be charged if there is no declaration, or for a late, inaccurate or incomplete declaration, or for late payment) and interest (for late payment)!
Conversely, if a person has several securities accounts, each with an average value of less than or equal to the EUR 1,000,000 threshold, the tax will not be levied even if the total value of the different accounts exceeds the threshold.
Each securities account is itself considered as a separate taxable object.
A general anti-abuse measure should be inserted in the Code of Miscellaneous Duties and Taxes. The measure’s wording is broad and similar to wording in some other tax codes.
The explanatory memorandum specifies, for example, that it would be abusive for a holder of listed securities held in a securities account to purchase additional listed securities by opting for registered securities or by placing them in a new securities account in order to avoid the tax.
However, the taxpayer can provide other reasons for this transaction.
In addition, there is a specific anti-abuse provision for the following two categories of transactions, if they took place after 30 October 2020: (i) dividing a securities account into several securities accounts held with the same intermediary and (ii) converting taxable financial instruments, held in a securities account, into registered financial instruments.
Entry into force and retroactivity of anti-abuse measures
The new tax will come into force the day after the law is published in the Belgian Official Gazette.
However, the general anti-abuse measure with regard to the tax on securities accounts as well as the specific measures concerning the two types of operations mentioned above will come into effect retroactively from 30 October 2020.
According to the government, 30 October 2020 is the date on which the media covered the government's intention to draft a new tax bill.
This retroactivity was announced in a notice published in November 2020 in the Belgian Official Gazette before the draft of bill had been made public.
The retroactive entry into force of this anti-abuse measure seems contrary to the principle of legal certainty because it impacts situations that were final when the law will be published.
Retroactivity may nevertheless be justified if it is essential in the public interest. In this case, the justifications for retroactivity presented in the explanatory memorandum do not seem to meet this criterion.
The Constitutional Court has also already ruled that a notice published in the Belgian Official Gazette announcing a modification of the tax law cannot, by its nature and in particular given its purely informative nature and without binding force, be a remedy for the legal uncertainty created by the retroactive effect of a legislative provision.
If the bill is passed without being modified, it is likely that the Constitutional Court will again rule against it, not only because of the retroactivity of certain measures but also on the basis of violating the principle of equality and non-discrimination.