Belgian Tax New Year's Letter: What did 2025 bring and what's in store for 2026?

The start of a new year is a time for wishing everyone a healthy and prosperous year. It’s also an opportunity to reflect on what’s happened and think about what’s to come.

In this newsletter, we share the latest highlights of the new Belgian capital gains tax. We also recap several Belgian tax measures implemented in the second half of 2025: the new carried interest regime, the exit tax for shareholders of emigrating companies, the tightened participation exemption, and the abolished quasi-automatic 10% tax increase for first-time mistakes.

Some other tax measures agreed in principle by the Belgian federal government in November 2025 still require implementation, including:

• the increase of the overall tax burden on dividend distributions made by SMEs from 15% to 18% (VVPRbis and liquidation reserve); and
• the doubling of the annual tax on securities accounts with a total value of more than EUR1 million from 0.15% to 0.30%;

For indirect tax measures, please refer to our recent monthly Indirect Tax alert: New Belgian budget framework for the period 2026-29 includes several indirect tax measures.

 

Belgium’s New Capital Gains Tax: Navigating the 2026 Reform

When the new Belgian federal government was formed last year, one of the flagship measures it announced was a new capital gains tax. On 19 December 2025, the official draft bill implementing this tax was finally published on the Chamber of Representatives website. This is set to be one of the major changes for 2026.

This comprehensive reform, effective as of 1 January 2026, constitutes a fundamental shift in Belgian personal income taxation. Capital gains realized within the “normal management of private wealth” will, for the first time, become taxable on a broad scale.

A patchwork of coexisting regimes

The new general capital gains tax (CGT) doesn’t replace existing specific tax regimes like the 33% taxation (+ municipal surcharges) for “abnormal” management or the 30% “Reynders Tax” on (broadly defined) debt funds. Instead, it’s layered on top of them. This creates a complex patchwork of rules that will exist side-by-side. The applicable tax treatment will depend on the nature of the transaction, the size of the shareholding, and the location of the counterparty.

Summary of the Belgian capital gains tax landscape (post-January 2026)

 

The sale of a substantial shareholding could result in an effective tax rate that ranges between 0% (if the capital gain doesn’t exceed EUR1 million) and 33% plus municipal surcharges (if the transaction is considered “abnormal” management of private wealth).

For capital gains from substantial shareholdings up to EUR10 million, the effective tax rate under the new capital gains tax regime could be up to 3.3% (assuming the transaction is considered “normal” management of private wealth and the buyer is located in the EEA).

Detailed scope and technical exclusions

The new regime targets Belgian tax-resident individuals and nonprofit organisations subject to legal entities’ tax (except those which can receive gifts entitling the donor to a tax reduction).

The definition of “financial assets” is broad, encompassing (among others) listed and unlisted shares, bonds, investment funds units, options, futures, contracts for differences, credit derivatives, crypto-assets, currency, investment gold, and certain insurance products.

Recent updates to the draft bill have provided further clarification by introducing technical exclusions. For instance, “monetary assets” held on qualifying payment accounts are explicitly excluded from the scope of the tax. Similarly, Branch 21 life insurance contracts that lack a savings or investment objective (outstanding balance insurance or funeral insurance) are now carved out from the definition of taxable assets.

The three categories of taxable gains

The legislation differentiates between three primary categories of gains realised within the scope of normal management of a private estate:

1. Internal Capital Gains (33%): When shares are transferred to a company controlled by the seller (alone or with relatives), the seller’s gains are taxed at a flat rate of 33% with no base exemption. This essentially confirms the current administrative position, targeting restructurings that aim to artificially step up the base cost of assets.
2. Substantial Shareholdings (Progressive Rates): For individuals holding at least 20% of a company’s capital, a progressive scale applies after a significant EUR1 million base exemption. As reflected in the table above, rates range from 1.25% to 10%. By way of exception, if a participation in a Belgian company is sold to a non-EEA resident entity, a specific flat rate of 16.5% applies; this is a partial modification of the current regime.
3. Other Financial Gains (10%): Other gains on financial assets like listed shares or crypto-assets are taxed at 10% once a EUR10,000 annual threshold is exceeded. Taxpayers can carry forward unused portions of this exemption (up to EUR1,000 per year) for a maximum of five years. This is a completely new category and the cornerstone of the new regime.

The gains covered must in principle be derived from transfers for valuable consideration (by contrast to gifts or inheritances for example), or in the case of insurance contracts, partial or total surrenders.

Valuation rules and the 31 December 2025 “Snapshot”

To avoid the tax having a retroactive impact, only gains accrued as of 1 January 2026 are caught. Assets acquired before this date must be valued as of 31 December 2025 to establish their “base cost.” For listed assets, the base cost is the last closing price of 2025.

For unlisted assets, the legislation provides several valuation options. Taxpayers can use the highest of a documented historical acquisition cost, a recent 2025 transaction value between independent parties, or a contractual formula valid on 1 January 2026. A standardized “Safe Harbor” formula (Equity + 4 x EBITDA) is also available for shares. Here, there’s the alternative to obtain a professional valuation from an independent auditor or chartered accountant, by a cutoff date which has now been set at 31 December 2027. The availability of this professional valuation option has also been extended to other financial assets where standard methods are inapplicable.

Under a transitional measure, for sales of financial assets until 31 December 2030, the acquisition value can be taken into account when it’s lower than the value as of 31 December 2025.

No deduction is available for expenses. Losses are only deductible when realised by the same taxpayer, during the same taxable period, on financial assets falling within the same sub-category of gains. So, for example, it’s not allowed to offset capital gains realised on the sale of a substantial holding with capital losses incurred on the disposal of crypto-assets.

Exemptions, compliance and exit tax

The final draft introduces vital relief measures, such as an exemption for fund reorganisations and an exemption for income already taxed under the “Cayman Tax” regime, to prevent double taxation. Additionally, gains realized when terminating joint ownership (indivision) are exempt if the situation results from a death, divorce or the end of a legal or factual cohabitation within the preceding three-years.

In respect of financial assets, the tax will primarily be collected via a 10% withholding tax applied by Belgian financial intermediaries. Taxpayers have an opt-out right to settle the tax via their annual tax return instead. However, for the period until the 10th day after publication of the final bill, because the bill won’t be adopted by 1 January 2026, taxpayers will be deemed to have opted-out of the withholding tax regime. During this transitional regime, taxpayers can instead opt in to the withholding system, by notifying their bank by 30 June 2026.

Finally, the bill introduces a DAC 6/MDR style reporting obligation for “promoters” for transactions involving internal capital gains or substantial participations, with reports due by the last day of February of the calendar year following that of the transaction.

Mobile taxpayers should also be wary of the new exit tax, which targets gains accrued while within the scope of the Belgian tax regime, if the assets are disposed of within two years of departure. An automatic deferment of payment is granted if the individual relocates to an EU/EEA member state or a treaty-partner country with mutual assistance agreements. For other relocations, deferment depends on providing sufficient security or collateral. Conversely, when a non-resident becomes a Belgian taxpayer, a “step-up” in basis is applied, meaning the base cost of their “imported” financial assets is revalued to their market value at the time of arrival.

Practical implications

• Individual investors and business owners should prioritise determining their 31 December 2025 valuation and document it appropriately. Where relevant, they’ll need to contact an independent accountant or auditor well in advance of the 2027 deadline.
• The new tax will need to be considered when structuring transactions involving individual investors and family business owners.
• Existing shareholding structures involving individuals should already be reviewed to identify and mitigate potential future tax exposures where possible.
• Investors with financial assets held via Belgian financial intermediaries should consider whether they want the CGT to be levied via withholding tax or to settle the CGT via their own tax return (opt-out).

 

Recap of measures implemented in 2025

Specific carried interest regime introduced for individual carry holders

The program law of 18 July 2025 introduced a long-anticipated tax regime for carried interest in Belgium. It’s aimed at enhancing legal certainty and strengthening Belgium’s position as a hub for private equity and venture capital activity.

Opinions differ as to whether these goals were achieved. The specific tax regime applies to carried interest paid or allocated from 29 July 2025 onwards. But income from funds already put into liquidation at that time, and which is being held in escrow, is grandfathered.

Under the new rules, income derived from carried interest by Belgian-resident individuals is classified as movable income and taxed at a flat rate of 25%, without any cost deduction over and above the acquisition value. This rate is intended to generate additional income for the state while remaining competitive compared to neighbouring jurisdictions. Importantly, income subject to the new regime is not subject to municipal surcharges, nor to Belgian employer or employee social security contributions.

The new regime applies exclusively to the “disproportionate” return – ie the excess return received by the carried interest holder in comparison to other “ordinary” investors in the same fund. The absence of a management fee is considered as “ordinary” return in this context. The legal form through which the return is received – such as dividends, capital gains, redemptions, or liquidation proceeds – is irrelevant, provided the income stems from the fund’s overall performance and the individual performs its activities for a carried interest vehicle or its manager.

A “carried interest vehicle” essentially refers to any Belgian or foreign alternative investment vehicle (cf. funds that don’t qualify as a UCITS under the European Directive 2009/65/EC or equivalent regulations for non-EU funds). Belgian carried interest vehicles are responsible for withholding the flat-rate tax on payments of carried interest to Belgian and non-resident beneficiaries (subject to the application of double tax treaties in the latter case).

Carried interest held through personal management companies is excluded from the new regime. Pre-existing rules remain applicable in that respect. However, from assessment year 2026 onward, such management companies are no longer permitted to allocate profits to a liquidation reserve if they hold a participation in a carried interest vehicle – though they can still benefit from the VVPRbis regime, which equally makes it possible to reduce the effective tax rate to 18% (under the new regime effective from 1 January 2026 onwards). Carried interest structured through qualifying stock options awarded under the Belgian Stock Option Law of 26 March 1999 is also explicitly excluded from the new regime.

Exit tax for shareholders of emigrating companies (and companies subject to assimilated reorganisations)

Effective 29 July 2025, Belgium extended the fiscal fiction that treats resident companies transferring their statutory seat or moving assets abroad as being liquidated. Henceforth, the fiction not only applies at the level of the emigrating or reorganised company, but also at the level of its shareholders.

Under Belgian corporate income tax rules, a resident company’s transfer of seat abroad is treated as a liquidation insofar as its assets and liabilities do not remain allocated to a Belgian permanent establishment. The same regime applies to cross-border reorganisations such as mergers or demergers. In such cases, the company is deemed to realize all assets exiting the Belgian tax scope, triggering taxation on latent capital gains and goodwill, unless specific exemptions or deductions apply (eg participation exemption).

However, these events arguably didn’t trigger any dividend taxation in the hands of shareholders, provided the emigration or reorganisation occurred with legal and accounting continuity – a view supported by both the Belgian Tax Ruling Commission and case law.

The program law of 18 July 2025 changed this. Since 29 July 2025, shareholders are considered to receive a deemed dividend in proportion to their entitlement to profit distributions. The total deemed dividends are equal to the excess of the fair market value of the company’s net assets leaving the Belgian tax net over the fiscally paid-in capital, reduced by the Belgian corporate tax due on any realized gains and current-year profits.

For shareholders that are resident individuals or legal entities, the deemed dividend is taxed at a rate of 30% (subject to available exemptions or reductions). Shareholders that are resident corporate taxpayers are taxed at the regular corporate income tax rate, subject to the application of the participation exemption and other deductions.

Non-resident shareholders are also affected. Importantly, in all cases, no withholding tax is levied at the time of the deemed distribution, meaning that shareholders must self-report the income in a Belgian income tax return.

To ensure compliance, the company must issue individual tax statements to shareholders, detailing the amount of the deemed dividend. Failure to do so may expose the company to the secret commissions tax, a punitive assessment of up to 100% of the undeclared amount.

Recognising the potential financial burden on shareholders, the new legislation allows for a five-year tax deferral of the tax due, when the assets are transferred to another EU or EEA country with which Belgium has a tax recovery agreement. In such cases, within two months of the tax assessment, shareholders may request application of the deferral.

The new regime comprises a relief mechanism to avoid double taxation. If, following its emigration or restructuring, the company distributes actual dividends stemming from the same assets that triggered the deemed dividend, shareholders can shelter the amounts already taxed. But in practice, linking future distributions to the assets originally transferred is expected to be complex and administratively burdensome.

Finally, it’s worth noting that significant doubts remain as to the conformity of certain features of the new regime with EU freedom of establishment and Belgian constitutional principles.

Tightening of the conditions for the Belgian Participation Exemption Regime (and related Withholding Tax Relief)

Another important measure implemented in 2025 was a tightening of the Belgian participation exemption and withholding tax (WHT) relief on dividends.

Generally, under prior rules, dividends received by a Belgian company were fully exempt from corporate income tax if three cumulative conditions were met:

• Minimum participation threshold: The receiving company holds at least 10% of the capital of the distributing entity or has invested a minimum of EUR2.5 million in acquisition value.
• Minimum holding period: The participation is held, or committed to be held, for an uninterrupted period of at least one year in full ownership.
• Subject-to-tax test: The distributing company (and any relevant underlying entity) is subject to a qualifying level of taxation and the arrangement isn’t abusive.

While these core principles remain intact, the minimum participation condition has now been tightened for participations based solely on the EUR2.5 million acquisition value (ie where the 10% ownership threshold isn’t met). For these investments, a new requirement applies: the participation must qualify as a “financial fixed asset” under Belgian accounting rules at the time the dividend is received. Specific guidance is provided in the explanatory memorandum with respect to companies which don’t apply Belgian GAAP, such as credit institutions and insurance companies. This additional criterion is imposed only for recipient companies that don’t qualify as an SME.

This amendment seeks to ensure that the exemption is reserved for long-term, strategic investments rather than short-term or speculative holdings. Notably, no changes were made for participations of 10% or more, given the need to remain compliant with the EU Parent-Subsidiary Directive and past rulings of the European Court of Justice.

Contrary to what had been initially suggested in the government agreement, the acquisition value threshold wasn’t increased to EUR4 million.

In parallel, Belgium also tightened the conditions for the WHT exemption available to non-resident companies under the Tate & Lyle regime. Belgian-sourced dividend distributions are in principle subject to a 30% withholding tax, but an exemption is available (subject to further conditions) where the shareholder is a foreign company:

• resident in the EEA or in a treaty jurisdiction with which Belgium has a tax treaty allowing exchange of information; and
• holding a participation with an acquisition value of at least EUR2.5 million but below 10%.

Going forward, the foreign recipient company – unless it qualifies as a small enterprise – also has to treat the participation as a financial fixed asset in line with the EU Accounting Directive or IFRS 10. This change ensures that the Belgian tax burden for resident and non-resident shareholders remains aligned.

As a result of the above changes, recipient companies – both Belgian and foreign – relying on the EUR2.5 million acquisition threshold should ensure that their participations meet the financial fixed asset condition wherever possible, and that appropriate accounting and documentation are in place to substantiate this classification.

The changes took effect from assessment year 2026 for corporate tax purposes and 29 July 2025 for WHT.

Abolishment of the quasi-automatic tax increase for first time mistakes made in good faith

Belgium reformed its income tax penalty practice by introducing a more lenient approach for first-time tax errors made in good faith, addressing growing concerns about the automatic imposition of tax increases during audits.

In practice, income tax audit teams in Belgium routinely applied a tax increase – typically 10% – for nearly all audit adjustments, even where taxpayers had made unintentional errors. This approach persisted despite more nuanced positions taken by the Belgian Constitutional Court and the Minister of Finance.

Consequences for corporate taxpayers especially could be substantial, as when a tax increase of at least 10% is applied following an audit, the amount of the tax adjustment constitutes a minimum taxable base. This means it couldn’t be offset by current-year losses or carried-forward tax attributes and generates an effective cash-out.

In this context, the program law of 18 July 2025 introduced a rebuttable presumption of good faith for first-time infringements. From 29 July 2025 (and arguably even retroactively), no income tax increase is to be imposed for an initial mistake if the error was made in good faith. Further, the taxpayer will be presumed to act in good faith, except:

• where the tax administration can demonstrate bad faith; or
• in the case of an ex officio assessment (eg when the taxpayer doesn’t file a tax return or files it late).

Despite this welcome reform, defining “good faith” will likely remain a point of contention. Moreover, the absence of tax increase only applies once per four-year period and the next infringement will be considered as a second infringement, at least with respect to cases where the same infringement is committed again after an audit.

For the avoidance of doubt, increases applied in the field of other taxes such as VAT and miscellaneous taxes and duties remain unaffected.