Belgian tax return: partial exemption from the withholding tax on dividends

The Belgian legislator has introduced an exemption on the first €833 of certain dividends. Which dividends are covered by this exemption? Who can benefit from this exemption, and how can the tax advantage be claimed?

Withholding tax reclaim concerning the first €833 of ordinary dividends on shares or units

The Programme Act of 25 December 2017 includes a raft of measures aimed at supporting the real economy, in particular by encouraging direct investment in equities. To this end, the Belgian legislator has introduced an exemption on the first €833 of ordinary dividends paid by Belgian or foreign companies.

Which taxpayers can benefit from this exemption?

Anyone taxed as an individual in Belgium is eligible.

Which dividends are concerned?

Included:

The exemption concerns only ordinary dividends paid on shares of Belgian or foreign companies, including dividends from regulated real estate companies (SIR).  

Excluded:

• Returns of share capital, share premiums, of profit participation certificates, or the proceeds of liquidation or redemption, which from a tax perspective are treated as dividends, are not considered to be ordinary dividends and cannot benefit from this exemption.
• Dividends paid by collective investment schemes such as a SICAV, or dividends that pass through a mutual fund, are also excluded from the tax advantage.
• Dividends paid or received through a legal construct (and therefore taxable under the look-through approach at the investor level, applying the Cayman Islands tax) do not fall within the scope of this exemption either.

How much is the tax advantage?

The tax exemption is limited to €833 per taxpayer per year. If we consider that a dividend is normally subject to withholding tax calculated at the rate of 30%, this equates to an effective tax gain of €249.90 per taxpayer per year.

The amount of the tax advantage applies to every taxpayer. For a couple jointly holding direct investments in equities, each partner will be eligible for exemption on the first €833 of ordinary dividends, saving the couple €499.8 in tax. 

How to reclaim this tax? What other tax news is there concerning your Belgian tax return?

More information in the attached brochure:

Supported by our estate-planning experts, our advisers are here to assess and deal with the impact of tax developments on your personal situation.

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