Belgium’s neighbours offer dividend tax sweets, Belgium a bitter pill
The Netherlands abolishes dividend withholding tax and reforms the investment yield tax. France abolishes the wealth tax (a tax on the ‘rich’). Norway plans to substantially reduce its wealth tax. Even the United States is considering taxing investments less via fiscally transparent entities. Is Belgium hopelessly lagging behind in all this?
Nearly 7 months after the elections, a coalition government has, at long last, been formed around Mr. Rutte. In the Dutch coalition agreement it was decided, among other things, to lower the corporation tax to 21,00% and to abolish dividend withholding tax. The abolition of the dividend withholding tax is very important for foreign investors. Imagine that you, as an investor, hold shares in Shell and a dividend is paid out. On that sum, you would pay 15,00% Dutch dividend withholding tax (i.e. a withholding tax upon payment or attribution of dividends). In Belgium, that same dividend is subject to a withholding tax of 30,00% on the net amount received upper limit, i.e. after deducting Dutch withholding tax. The total tax burden is currently 35,50% and will, after the Dutch dividend tax is abolished, be 30,00% (in 2018, in Belgium, in a similar case, a tax burden of 50,30% would apply: 29,00% corporation tax and 30,00% withholding tax on the distributed net profit).
The new Dutch government also intends to lower the tax on people’s assets (savings, shares, bonds, etc., ….). They are thinking, for example, of increasing the exempted capital, this is the capital on which no investment yield (wealth) tax has to be paid (at present the first EUR 25 000,00), as well as an adjustment to the tax rate (30,00%) and/or the taxable basis (a notional return ranging from 2,80% to 5,40%).
The French president Emmanuel Macron has submitted his first budget proposal and has promised the French lower taxes. For instance, the solidarity wealth tax (Impôt de Solidarité sur la Fortune) is being abolished, to be replaced by a tax on property assets. Capital income (from investments) will, for its part, be taxed at a ‘flat’ tax rate of 30,00%.
The new government measures in Belgium were discussed at length in one of our previous blogs (see the news release on the summer agreement).
As to investment tax matters, we see that Belgium is taking an initiative that is at odds with developments in other European countries. Indeed, as from 1 January 2018, a ‘tax on securities accounts’ will be introduced which will affect private individuals from Belgium and abroad (see recent news title ‘tax on securities accounts’). It is quite odd that Belgium introduces a ‘tax on securities accounts’ whereas nearly all our neighbouring countries are busy either contemplating to phase out ‘wealth taxes’ or abolishing them altogether. Moreover, the ‘tax on securities accounts’ comes on top of the withholding tax (30,00%) on income from personal property and the tax on stock exchange transactions (which is also expected to increase). The reasons why our neighbours are phasing out or abolishing these taxes are obvious. Taxing the ‘rich’ leads to a capital exodus and hardly ever generates the projected taxable revenue. Furthermore, experts question the legality of such a ‘tax on securities accounts’ for residents from certain countries with which Belgium has signed tax treaties (such as the Netherlands, France and Luxembourg). In short, one can have serious doubts about the legality of the ‘tax on securities accounts’ in its current state. And if there is something that investors simply cannot live with, it is ambiguity and/or legal uncertainty about the tax contributions of their investment income!
It is time, in Belgium, to delineate and implement a consistent, equitable and balanced tax policy.
Hans Decleir – Frank De Langhe
