After lengthy negotiations, the Belgian government De Wever has been formed. The coalition agreement of January 31, 2025, includes several tax reforms.
For the investment sector, the introduction of a capital gains tax for individuals and the taxation of carried interest stand out, although these reforms come as no surprise. Good news is that the tax regime for the “investment company” (beleggingsvennootschap / société d’investissement), such as the Private Privak, remains intact. Moreover, the coalition agreement provides for the simplification of the regulations surrounding the Private Privak, which could make the vehicle even more attractive for the Belgian PE/VC sector in the future.
Here is a summary of some key points.
Introduction of a Capital Gains Tax on Shares – Impact on the Private Privak?
Currently, capital gains on shares and other financial assets are tax exempt, as long as they result from the “normal management of private wealth.” Speculative capital gains, however, are taxed at 33% (plus municipal surcharges).
The introduction of the capital gains tax (so-called “solidarity contribution”) in the coalition agreement means the definitive end of tax-free capital gains for private investors. In the future, these capital gains will be taxed at a fixed rate of 10%, with the exception of a tax-free amount of €10,000 (indexed annually) for each investor, per taxable period.
An exception applies to participations of at least 20%. The capital gains up to €1 million remain fully exempt, while amounts between €1 million and €10 million will be taxed progressively at rates from 1.25% to 5%. For capital gains above €10 million, the standard 10% rate applies. This exception regime has little to no relevance for fund investors.
Historical capital gains remain exempt. Earlier reform plans by Van Peteghem discussed the introduction of a reference point (‘ijkpunt’), whereby all relevant financial assets would be pinned down at market value on a certain date. In this context, it is advisable for taxpayers to prepare a file to substantiate the historical gain.
Capital losses on shares will be deductible in the tax period in which they were incurred (i.e., there will be no carryforward to future periods).
For the investors in the Private Privak, the introduction of the capital gains tax will have little immediate impact. Most Private Privak funds are structured to target (liquidation) dividends rather than capital gains on shares. However, it is not excluded that some funds may focus on exits through capital gains on shares. In such cases, opting for a personal or holding company for the investment may be beneficial. In this context, it is also noteworthy that the current VVPRbis regime remains unchanged.
Finally, the introduction of the capital gains tax will likely be accompanied by a reporting obligation under personal income tax. The tax authorities may use this as an opportunity to classify reported capital gains as speculative (taxable at 33%) rather than as capital gains from normal private wealth management (taxable at 10% according to the coalition agreement). This indirect effect may be intentional, as it aligns with the coalition agreement’s focus on increasing tax audits.
Easing of regulatory aspects for the Private Privak – ‘Investment Company’ tax regime remains intact
The coalition agreement states that the regulations surrounding the Private Privak will be eased in several areas, allowing more flexibility regarding duration, number of shareholders, and permitted investments.
Simplifications are also expected in terms of compliance, particularly concerning the UBO (Ultimate Beneficial Owner) obligations.
At the same time, the anticipated changes to the DBI (Dividend Received Deduction) regime should have no impact on the Private Privak, as the tax regime for the “investment company” remains intact in the coalition agreement.
The only expected fiscal adjustment is the abolition of the deduction for capital losses on shares for private investors in the Private Privak.
Carried Interest
The coalition agreement also indicates that the government intends to introduce a specific, competitive regime for carried interest, with a maximum tax rate of 30%.
This measure will likely apply to personal income tax, with historical plans and structures with management companies expected to be out of scope.
The introduction of this measure was anticipated within the sector and comes as no surprise. The advantage of this measure is that it provides legal certainty and eliminates the risk of reclassification of the carried interest as diversified income (33%) or even professional income (subject to progressive personal tax rates and social security contributions).
Conclusion
The anticipated taxation of capital gains on shares represents a fundamental change to the current exemption for private investors. An additional consideration is the documentation of historical capital gains. Investors who participate through a company may continue to apply the VVPRbis regime when distributing the proceeds from the company to themselves.
The introduction of a specific regime for the taxation of carried interest was expected and will offer legal certainty going forward. Existing plans and structures through management companies would remain outside the scope of the new tax.
No fiscal changes are anticipated for the Private Privak, apart from the removal of the deduction for capital losses on shares. This is in line with the coalition agreement, which states that the reform will be budget-neutral for the Private Privak. The intention to ease the regulations surrounding the Private Privak is encouraging, as some of the existing strict rules create unnecessary barriers.
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Last update: February 6, 2025