The Belgian legislator has introduced an exemption on the first €800 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 €800 of ordinary dividends on shares or units
The Programme Act of 25 December 2017 includes a whole series 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 €800 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?
The exemption concerns only those ordinary dividends emanating from the shares of Belgian or foreign companies, including dividends paid by regulated real estate companies (SIR).
- Repayments of share capital, of any share premium, 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?
For income received in 2019 (taxed in 2020), the tax exemption is increased to €800 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 €240 per taxpayer per year.
How to reclaim this tax?
More information in the attached brochure:
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