Extended scope of application: Belgian establishments of non-residents
The new annual tax on securities accounts (TSA) is also applicable to securities accounts held either in Belgium or abroad of which the account holder is a Belgian establishment of a non-resident and the accounts are part of this establishment’s business property.
The TSA targets the following securities accounts:
- Securities accounts held either in Belgium or abroad, of which the account holder is a Belgian resident. The tax is not limited to natural persons residing in Belgium, but also applies to companies and other legal entities (subject to the tax on legal entities) that are established in Belgium;
- Securities accounts held by non-residents (both natural persons and legal persons) if the securities account is held in Belgium. Non-residents can avoid the application of the TSA if the applicable double tax treaty attributes the right to tax wealth to the state of residence (eg the Netherlands); and
- Securities accounts held either in Belgium or abroad by a Belgian establishment of a non-resident, insofar these securities accounts are part of the establishment’s business property and the applicable double tax treaty attributes the right to tax to Belgium.
What is a Belgian establishment?
A Belgian establishment can be defined as a fixed place of business through which business activities of a foreign entity are (partially) carried out in Belgium. It concerns, for example, an office or a place of management.
This amendment extends the scope of application of the TSA to securities accounts that are in fact linked to a Belgian establishment and therefore are economically part of the establishment’s assets, regardless whether the account is held in Belgium or abroad. The actual application of the TSA in respect to the Belgian establishment however requires that the right to tax is attributed to Belgium by the applicable double tax treaty, that generally includes a less extended definition of “permanent establishment”. A (eg financial) preparatory or supporting activity carried out by a foreign business through its Belgian office, for example, will be considered as a Belgian establishment, whereas it does not meet the treaty definition of 'permanent establishment' and in which case Belgium is therefore not entitled to levy the TSA on the assets of the establishment.
Multiple account holders – clarification?
In a previous article, we noted that the draft bill does not specify how a securities account will be taxed when there are multiple account holders and at least one account holder can invoke a double tax treaty.
The adopted draft bill adds that a reference period ends at the moment the only “or last” account holder becomes a resident of a state with which Belgium concluded a double tax treaty on the basis of which Belgium is no longer entitled to tax the wealth.
In our opinion, the addition “or last” does not clarify this matter, on the contrary…
Entry into force
The new TSA will enter into force on the day following the publication in the Belgian Official Gazette, with exception of the anti-abuse provision that will already sort effect as of 30 October 2020.
To be continued?
Belgian parliament made only limited changes to the TSA in the adopted draft bill.
It remains to be seen whether this TSA 2.0 (as opposed to the TSA 1.0) will pass the Constitutional Court’s test…
We will keep you informed of further developments!