Formerly, capital gains on a company’s shares made by a company were exempt from tax, provided two conditions were met: (1) a taxation condition and (2) a holding period condition.
As of 1 January 2018, eligibility for the exemption now requires a third condition: a holding requirement of at least 10% of the company’s capital or at least EUR 2.5 million of investment value in the capital.
Moreover, the participation and holding condition for exemption does not apply when the shares are held by an investment company or by the collective investment organization called “Private PRICAF”.
With regard to unpaid subscribed shares, the total investment value will include the total amount of subscribed shares, even if unpaid.
To sum up, as of 1 January 2018, the conditions for exemption from capital gains tax on shares will be lined up on the dividend received deduction. Three conditions will be required: (1) the distributing company must not be established in a tax haven (a taxation condition), (2) the shares must be held for at least one year and (3) there is a minimum holding requirement of at least 10% of, or EUR 2.5 million participation in, the capital of the company.
When all conditions are met, the capital gain is fully exempted.
If the one-year holding period is not met, but the other conditions are met, capital gains will be taxed at 25%.
When the tax or minimum holding requirement is not met, capital gains will be taxed at the normal rate of 29.58% (i.e. normal Belgium corporate tax rate as of 1 January 2018). Note that the normal rate will decrease to 25% as of 2020.
Finally, the special rate of 0.412% for non-SMEs was abolished on 1 January 2018.