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Advantages of Belgian Holding Companies
Capital gains on shares are fully exempt for Belgian companies. This exemption is not subject to a minimum holding period or a minimum participation threshold. However, it is required that the company whose shares are held is subject to a standard corporate tax regime.
A holding company is a company whose purpose is to acquire, hold in portfolio, and manage financial participations in other companies, and thus, through these participations, ensure the control and management of companies.
It may also engage in other activities, such as commercial, industrial, or real estate activities.
A holding company also aims to structure and streamline the organization and financing of a group of companies.
Finally, many holdings are created to ensure shareholder stability, control, and transferability.
The following lines are intended to provide a brief overview of the regime.
Our activities include both bookkeeping and tax and financial optimization advice.
Licensing and Special Control
None
Capital Duty
None
Wealth or Capital Tax
None
Inbound Dividends Regime: Dividends paid to the Belgian holding
Withholding Tax
Within Europe: None if the Belgian holding owns at least 10% of the participation and holds it for at least 1 year (EU Directive).
Outside Europe: Belgium’s extensive network of double tax treaties allows for the reduction of foreign withholding taxes.
Belgian Taxation of the Dividend
In principle, the taxable base is limited to 5% of the dividend received, which is equivalent to a maximum tax of 1.77%.
To benefit from this regime, certain conditions must be met: the participation must be at least 10% or have an acquisition value of €2,500,000; it must be held for at least 1 year; and the dividends must not come from tax havens or companies subject to a significantly more advantageous tax regime (e.g., tax rate < 15%).
Outbound Dividends Regime: Dividends paid by the Belgian holding – Withholding Tax
To a company
None if the parent company is based in Europe (EU Directive) or in a country with which Belgium has signed a double tax treaty, provided that the Belgian parent’s participation is at least 10% and is held for at least 1 year.
To a Belgian resident individual
Withholding tax of 15% or 25%.
To a non-resident individual
Withholding tax of 15% or 25%, but possible reductions under double tax treaties (case-by-case).
Tax on the Sale of Shares or Participations (Capital Gains)
Realized by the holding
None (0%), except:
0.412% tax if the selling company is not an SME*
25.75% tax if the sold participation was acquired less than 1 year ago
25.75% to 33.99% tax if the participations are in companies established in tax havens or subject to a significantly more advantageous tax regime
A company is considered an SME if it does not exceed more than one of the following three criteria:
Average annual number of employees: 50
Annual turnover excluding VAT: €7.3 million
Total balance sheet: €3.65 million
A company is never considered an SME if it employs more than 100 people.
Linked companies are consolidated for the calculation of these criteria.
Realized by the shareholders of the holding
None, except in specific situations.
Deduction of Interest Paid by the Belgian Holding
Unlimited, except for the application of the thin capitalization rule concerning interest on certain loans.
The rule applies when the debt-to-equity ratio exceeds 5:1. Interest related to the excess portion is non-deductible from the taxable base.
This rule concerns debts to:
Companies that are lightly or not taxed (tax havens or preferential tax regimes)
Group companies to which the debtor belongs
Exceptions and specific rules exist for group treasury companies / cash pooling.
Loss Carryforward
Unlimited, without time limitation
Notional Interest Deduction
Note: The calculation of the notional interest deduction is not favorable to holdings because participations are excluded from the calculation base, reducing the deduction.
However, holdings are often used to optimize notional interest deduction in other companies, such as in financing companies capitalized by the holding.
Royalties
It is possible to limit the taxable base to 20% of the patent royalty amount, equivalent to a maximum tax of 5.88% of the royalty.
In certain cases, it is possible to credit foreign taxes against Belgian tax (QFIE system).
Corporate Taxation in Belgium
Entities subject to corporate income tax include companies, associations, organizations, and establishments that:
Have legal personality
Have their registered office, main establishment, or headquarters of management or administration in Belgium
Engage in business activities or profit-making operations.
Companies subject to corporate income tax (ISOC) must file a tax return once a year. The corporate income tax system is based on the principle that all company income is taken into account, including worldwide income, whether or not the company is considered a resident company.
Different Corporate Tax Rates in Belgium
Corporate tax depends on turnover. It is important to note that a Belgian company is taxed on its worldwide income, whether or not it is a resident company. Corporate taxation is as follows:
| Company income (EUR) | Tax rate |
|---|---|
| 0 to 25,000 | 24.98% |
| 25,001 to 90,000 | 31.98% |
| 90,001 to 322,500 | 35.54% |
| Base rate | 33.99% + a 3% surtax |
Expatriation to Belgium – Residence Permit
Citizens of the European Union may settle freely in Belgium, provided they can demonstrate sufficient financial resources.
It is necessary to submit an application for residence to the local Municipality of residence for registration in the population register, providing the following documents:
A valid national identity card or passport
A certificate of residence or a copy of the rental lease or property deed
The family record book
A certificate of employment or proof of financial resources
4 passport-sized photographs
A renewable 3-month residence card is first issued, followed by a residence card for nationals of a Member State of the European Community, valid for 5 years and also renewable.