The tax on securities accounts is dead, long live the solidarity tax on securities accounts!

On 2 November 2020, the Belgian federal government reached an agreement on a draft law introducing a tax on securities accounts: the so-called "solidarity tax". With this tax the government aims at establishing "an equitable contribution to the individuals with the highest contributing capacity, with respect for entrepreneurship".  

This tax is a revamped version of the yearly tax on securities accounts that has been annulled by the Constitutional Court on 17 October 2017.

This new tax, which is still subject to the review of the Council of State, should enter into force as from the tenth day following its publication to the Belgian Official Gazette. The aim of the Government is to submit this draft law to the Parliament as soon as possible (at the latest by year-end).

Key features

The new tax is a yearly subscription tax on securities accounts with an average value of more than €1 million, whomever the account holder is (natural persons, legal entities, companies and legal arrangements subject to the so-called "Cayman Tax", associations), wherever their tax residency is located and whatever their rights on the account.

The type of financial instruments held on these accounts is irrelevant (shares, bonds, trackers, speeders, turbos, etc.) with the notable exception of nominative securities that are excluded in order to comply with the government's goal to ensure that this tax "respects entrepreneurship".

The scope of the tax is therefore very broad and should include securities accounts linked to Branch 23 life insurances.

The average value will be computed on a twelve-month period beginning on 1 October and ending on 30 September (except for the first taxable period which will start as from the entry into force of the law).

The tax rate will be 0.15% (as this was the case for the previous tax on securities accounts that has been annulled), but the tax will be limited to 10% of the difference between the tax base and the threshold of €1 million (in order to prevent that the collection of the tax would reduce the assets held below the threshold of €1 million).

As a principle, the tax will be collected by Belgian financial intermediaries (via their Belgian establishment or Belgian representative) offering securities accounts (e.g. banks, brokerage firms).

Specific anti-abuse measure

The draft law includes a general anti-abuse rule (which will apply to the entire Code of Various Duties and Taxes) that targets, concerning the tax on securities accounts, the following "abusive" situations:  (i) the split of a securities account or the transfer of securities to various accounts to avoid the threshold of €1 million; (ii) the conversion of financial instruments into nominative securities which are excluded from the scope of the tax; (iii) the placement of a securities account subject to the tax in a foreign legal entity which transfers the securities to a foreign securities account in order to avoid the tax; (iv) the placement of a securities account subject to the tax in a fund whose units are registered, in order to avoid the tax.

Concerning above-mentioned "abuses" relating to the tax, the anti-abuse provision will retroactively enter into force as from 30 October 2020 (cf. notice published in the Belgian Official Gazette of 4 November 2020 – French/Dutch).

Preliminary comments

With this "solidarity tax" the Government seems to have taken into account some of the objections of the Constitutional Court which led to the annulment of the previous tax on securities accounts. This is, for instance, why this tax takes the form of a subscription on any securities accounts (vs. a tax levied at the level of the account holders).

However, the tax still seems to have several weaknesses. For example, a discrimination might exist between nominative securities and other financial instruments as only the first are excluded from the scope of the tax. We are wondering whether such discrimination could be justified in the context of a tax taking the form of a subscription tax (and not a tax on those with the highest contributing capacity).

One may also wonder whether the threshold of €1 million is arbitrary and leads to a discrimination that cannot be justified, as this tax is a subscription tax (and not a tax on those with the highest contributing capacity).

In the near future, attention will probably turn again to the Constitutional Court!

In case of questions, please do not hesitate to Geoffroy Galéa and Alain Thilmany