Draft bill unveils first details on Belgian capital gains tax

The Belgian federal government is currently negotiating the implementation of a capital gains tax, in line with last year's governmental agreement. Minister of Finance Jan Jambon prepared a first draft bill to serve as a starting point for negotiations in the Council of Ministers. The leaked draft bill revealed several elements of the Belgian capital gains tax, although – as expected – other coalition partners have been expressing clear resistance on a number of points.

The proposed measure will introduce a capital gains tax of 10% on future capital gains derived from a wide variety of financial assets, including listed and non-listed shares, bonds, derivatives, investment funds and ETFs, certain insurance products (branch 21, 23 and 26 and Luxembourg branch 6), currency assets, and crypto assets. An explicit exemption is foreseen for capital gains from shares in qualifying startups, pension funds, pension savings funds and certain group insurances. Only capital gains accumulated from 1 January 2026 will be targeted.

Importantly, the new tax applies not only to individuals acting for private purposes, but also to associations and nonprofit organisations subject to legal entities' tax, and to equivalent categories of non-residents.

To avoid double taxation, the government will abolish the “Reynders tax” on the transfer of units in funds with underlying investments of at least 10% in bonds or other debt products. The same goes for the taxation of capital gains on transferring a significant share participation to a non-EEA resident entity (minimum participation threshold of 25% in the course of the five preceding years).

For in-scope assets, it appears that the new capital gains tax will exclude the application of taxation as miscellaneous income on the basis that the relevant transaction is speculative or otherwise exceeds the limits of the normal management of the taxpayer's private estate. On the other hand, the draft bill specifically provides for taxation at 33% of a gain on a controlling equity participation upon a sale to a holding controlled by the taxpayer with related parties (“internal capital gains”). All contributions of shares benefit from an exemption.

Separately, to compensate for introducing the capital gains tax, the insurance premium tax for covered insurance products will be lowered from 2% to 0.7%.

To protect small investors, the draft bill provides for a tax-exempt de minimis threshold of EUR10,000. Any amount exceeding this threshold will be subject to the 10% capital gains tax, although capital losses incurred during the same taxable period can be deducted within certain categories of assets. A temporary exemption (rollover regime) would apply for switches between fund share classes or compartments, or in case of fund reorganisations.

For investors realizing a capital gain on a “substantial participation” of at least 20% in a company, the following progressive tax rates will apply:

• < EUR1 million: exempt
• EUR1 million – EUR2 million: 1.25%
• EUR2.5 million – EUR5 million: 2.25%
• EUR5 million – EUR10 million: 5%
• > EUR10 million: 10%

According to the draft bill, the 20% minimum participation requirement will be calculated quite broadly, taking into account participations held by (up until) fourth degree relatives and considering any participation held during the past ten years. So a dilution of a participation would only impact the capital gains taxation after ten years.

Surprisingly, the draft bill introduces an exemption for certain categories of financial assets held for an uninterrupted period of at least ten years. This specific exemption wasn’t included in the final version of the government agreement, but made a comeback during the debate that ensued in the press. As expected, this exemption is sparking resistance from other government parties and a vigorous debate.

The collection of the capital gains tax will be partly modelled on Belgian withholding taxes. Financial intermediaries will in principle have to withhold the capital gains tax at source, resulting in burdensome new compliance rules for financial institutions and banks. Taxpayers wanting to benefit from an exemption will need to claim via an income declaration in their annual personal income tax return.

To mitigate potential tax avoidance, a new exit tax regime will be introduced. The draft bill stipulates that a transfer of the taxpayer's residence or a gift of financial assets to a non-resident taxpayer are assimilated to a realization of latent capital gains, triggering the capital gains tax (with the benefit of spread taxation). For insurance products, a (partial) surrender is assimilated to a transfer for consideration and the gain is calculated as the difference between the surrender value and the total premiums paid.

The new capital gains regime is to enter into force on 1 January 2026. Given the premise that historical capital gains should be exempted, financial assets need to be valued at the moment the capital gains tax enters into force. The draft bill clarifies that the weighted average method applies to determine the acquisition value of multiple financial assets of “the same nature” held by a taxpayer. For the remainder, according to the draft bill, non-listed financial assets should be valued at the highest of the:

• effective historical acquisition value
• transaction value in 2025: If the asset was acquired from an unrelated third party in the course of 2025, the transaction value will serve as the reference.
• contractual valuation formula: If a contract or an offer of options relating to the assets contains a valuation formula, that formula will be used.
• shares in private companies: Taxpayers are given a choice between two valuation methods:
• a professional valuation of the company as of 31 December 2025, prepared by a company auditor or a certified accounting professional; or
• a standardized formula, under which the company’s value is determined as the sum of its equity and four times its EBITDA.

These valuation rules aim to ensure a consistent determination of exempt historical gains. But it’s expected that many businesses will have to engage with accounting professionals to avoid future taxation of purported capital gains that are in fact inexistent.