On February 25, 2021, a law establishing a new tax on securities accounts was published in the Belgian Official Gazette. securities accounts with effect from February 26, 2021, and an anti-abuse measure with retroactive effect from October 30, 2020!
Why this new tax on securities accounts?
Historically, TCT 2.0 has been presented as asolidarity contributionto "support new healthcare needs resulting from the global pandemic." TCT 2.0 "has apurely budgetary purpose and aims to make a visible contribution to maintaining social security, which, in crucial times, has protected the population of our country in terms of health and income."
However, if the car is second-hand (more than 6,000 km and more than 6 months old) and is purchased from a seller by a private individual, then the VAT payable will be that of the country in which the vehicle is purchased.
There are no import duties on any car imported into the EU. Vehicles sold outside the EU will therefore be subject to a 10% tax on their customs value.
What is the scope of this new tax on securities accounts?
Securities accounts, and more specifically"accounts to which financial instruments may be credited or from which financial instruments may be debited,regardless of whether they are held jointly or separately,"with an average value exceeding one million euros.
In terms of investment insurance contracts, it will not be the contract itself that will be tested at the €1 million limit, but ratherthe securities account held by the insurer, i.e.,the latter's portfolio(which generally exceeds €1 million).
Who is affected by this new tax on securities accounts?
Holders of securities accounts!
This applies to Belgian residents who hold Belgian or foreign securities accounts, as well as non-residents of Belgium who hold a Belgian securities account. There are two new developments to note here:
- The absence of distinction between natural persons and legal entities(except for the exemption referred to in Article 176/2, 6° CDTD)
- The assimilation of securities account ownership with that of a Branch 23 investment insurance contract("securities accounts held by insurance institutions as part of BR 23 insurance policies taken out with a policyholder are within the scope of application").
As the Branch 23 investment insurance isheldby theinsurance company, it is the latter that is nowliable for TCT 2.0.
How often will this tax be levied?
This is an annual tax with a 12-month reference period starting on October 1 and ending on September 30 of the following calendar year.
What is the rate of this new tax on securities accounts?
0.15% on the total securities account. (taking into account the reference periods of March 31, September 30, September 30, and December 31)
NB: The first period begins on the date the law comes into force, i.e. February 26, 2021, and ends on September 30, 2021.
Are (Belgian) customers with a Luxembourg investment insurance policy affected?
NO!
If the insurance company is established inLuxembourg, it does not fall within the scope of TCT 2.0 as long as acustodian bank established outside Belgium is used.
It should be noted that the Belgian-Luxembourg double taxation agreement also means that TCT 2.0 does not apply, even when a Belgian custodian bank is involved.
What anti-abuse measures are planned?
- The splitting of a securities account into several accounts held with the same intermediary so that the value of each account does not exceed €1,000,000.
- Conversion of taxable financial instruments into registered securities
- The legal act or set of legal acts carrying out the same transaction when the administration demonstrates by presumption or other means of evidence that there has been abuse.
In addition, the preparatory work for the law also provides that the following transactions could be classified as tax abuse:
- Opening a new securities account to ensure that the average value of each account does not exceed €1,000,000.
- The sale of securities in order to create zero values at certain reference points so that the average value does not exceed €1,000,000.
- The transfer of an existing securities account or investment insurance contract to an investment insurance contract taken out with a foreign company for the purpose of avoiding tax.
However, the latter situation can be fully justified and based on the legal and technical advantages of Luxembourg insurance contracts, namely the protection of the Triangle of Security and the Super Privilege of the policyholder, the open architecture and international wealth management expertise of the market, the protection of assets from creditors, and the optimization of financial income, etc. It will be up to the client, with our help, to demonstrate the objective reasons justifying this choice, which will undoubtedly be successful!
Our specialists advise you to take out a PLCI as a self-employed person with a company and to supplement this supplementary pension plan with an EIP. This will allow you to maximize your pension reserves and capitalize on numerous tax advantages.
Appeal for annulment?
It is important to note that many aspects of this new tax are constitutionally questionable, as was the case with the 2018 tax on securities accounts... The law will therefore most certainly be subject to an appeal for annulment! Wait and see...
