Amendments to the Belgian stock exchange tax: Impacts for the
Luxembourg financial intermediaries
The 2017 state budget was adopted by the Belgian parliament on
22 December 2016. As part of the budgetary measures, the legislator
expanded the scope of the Belgian stock exchange tax (Taxe sur
les operations de bourse/Beurstaks) to cover transactions
executed by Belgian residents through non-Belgian financial
intermediaries. The amendment may have significant implications for
Luxembourg banks and brokers that maintain securities accounts or
execute financial transactions on behalf of Belgian residents.
Luxembourg fund managers whose funds are distributed to Belgian
residents are also affected.
The stock exchange tax was first introduced in 2007 and was
amended on several occasions over time. Prior to the adoption of
the 2017 budget, its scope covered transactions (i.e., purchases
and sales) on stocks and bonds as well as redemptions of
capitalization shares of collective investment vehicles (CIVs)
executed through Belgian financial intermediaries. The Belgian
residence of financial intermediaries was thus a key element for
determining whether a transaction was in scope of the Belgian stock
The applicable rates were respectively:
0.09% on bonds (capped at €650
0.27% on stocks (capped at €800
1.32% on redemptions of
capitalization shares of CIVs (capped at €2,000 per
The Belgian financial intermediaries were legally responsible
for tax collection (at source) and remittance to the Belgian tax
authorities. Since the tax liability was satisfied at source,
Belgian investors on whose behalf the tax was levied had no
declarative obligations with respect to the tax.
The new regime, applicable as of 1 January 2017, expands the
scope to cover transactions executed by Belgian residents
(individuals and entities) outside of Belgium. As an example, a
transaction executed through a Luxembourg bank or broker by a
Belgian tax resident is now subject to the Belgian stock exchange
The tax rates remain the same, however the maximum amounts have
been doubled to €1,300 for bonds, €1,600 for stocks and
€4,000 for capitalization shares of CIVs.
Acknowledging that non-Belgian financial intermediaries lack
sufficient nexus with Belgium to be compelled to comply with
Belgian tax laws, the legislator included a specific mechanism
requiring Belgian residents to self-assess and pay the correct
amount of tax.
Implications for Luxembourg financial institutions
Luxembourg banks and brokers that execute transactions on behalf
of Belgian residents may opt to act as withholding agents for the
purposes of the stock exchange tax. This regime is optional and
should be assessed in light of operational, commercial, and
risk-related implications. Luxembourg banks and brokers will
therefore have two options:
Withholding responsibility assumed:
In such a case, Luxembourg financial institutions will be
responsible for calculating, collecting, and depositing the tax
with the Belgian tax authorities. It is worth noting that
Luxembourg financial institutions may also designate a Belgian
representative that will be jointly liable to declaring and paying
Withholding responsibility not
assumed: In the event that Luxembourg financial institutions decide
not to act as withholding agents, it will be up to Belgian
investors to spontaneously calculate, declare, and pay the tax
within the prescribed timelines. Failure to do so may result in
penalties or late interest payments at the level of the Belgian
In any case, since many Luxembourg banks provide tax reporting
services to their foreign account holders (in order to facilitate
the completion of tax returns in their home country), those banks
may find it useful to inform their Belgian clients about the change
and start including the relevant stock exchange tax information in
the reporting package sent to their Belgian clients.
It is also worth mentioning that the Belgian tax authorities
will be able to control compliance with the new regime since they
will receive the relevant information under the Common Reporting
Luxembourg-domiciled funds distributed in Belgium typically
disclose Belgian tax information, including information on the
Belgian stock exchange tax, in the so-called "Belgian
addenda." Consequently, the managers of those funds may
consider updating the tax disclosures to reflect the new
Since Belgium is one of the ten EU Member States that are
planning to adopt a harmonized financial transaction tax (FTT), it
remains to be seen whether and to which extent that FTT will
supersede the stock exchange tax.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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