If you invest in the stock market and buy Apple, AB Inbev or Microsoft shares, you must not forget the taxman. When you buy shares, you pay tax. When you receive dividends or when you sell shares, you pay tax. You pay tax just for holding stocks.
You buy stocks
When you buy shares of listed companies, through a bank or a brokerage firm, you pay the stock exchange tax, officially known as the tax on stock exchange transactions (taxe sur les operations boursières / taks op de beursverrichtingen).
For listed shares, the rate is 0.35% of the purchase price. The tax is not due when you subscribe shares at the time they are issued for the first time, e.g. at an IPO.
If you buy via a Belgian bank or brokerage firm, they will withhold the tax and pay it to the tax office. Because overseas banks and brokers do not have to withhold the Belgian tax, you must pay the tax yourself, at the latest on the last working day of the second month following the transaction. Some banks, mostly Luxembourg banks with many Belgian clients, do, however, provide this service.
At the same time, you must complete the tax return for the stock exchange tax and send it to the Administration générale de la Fiscalité – Taxes diverses. You can send it by email to CPIC.TAXDIV@minfin.fed.be. They must receive the tax return at the latest on the day you pay the stock exchange tax.
There are penalties for filing late or paying late. In case of late payment, interest is due from the day the tax should have been paid. In addition, there is a penalty of €50 for every week the tax return is filed late, but you will not have to pay more than 52 weeks or €2,600.
Tax on dividends
When Apple pays you a dividend, you will receive the dividend via your bank or broker. Smaller companies can pay you the dividend yourself and deduct withholding tax at the standard rate of 30%. Some smaller companies can deduct a lower tax at 15% under certain conditions.
When you receive dividends via a Belgian bank or broker, the withholding tax will have been deducted before the dividend hits your account. The withholding tax deducted at source is the final tax; you do not even have to report the dividend in your annual income tax return. However, you can recover part of the withholding tax on dividends with a maximum of €812. To recover up to €244, you need to complete code 1437/2437.
In most countries, companies have to pay tax at source as well, and then you pay tax twice. The foreign withholding tax can be reduced to 15% under the double tax treaty between Belgium and the other country. To have the benefit of the reduced rate you need to file the forms required by the tax authorities of the other country and provide a certificate of residence from the Belgian tax authorities.
If you receive the dividend on an overseas bank account, the tax is not deducted at source and you must report the net dividend after deduction of the foreign withholding tax in your income tax return (code 1444/2444). The tax will be calculated at the fixed tax rate of 30% unless the tax calculated at the ordinary tax rates is less. If the tax is calculated at 30%, you cannot deduct any bank fees and other charges. If not, you can deduct these under code 1170/2170. No additional municipal tax is due.
The new tax on securities accounts
The government is introducing a new annual tax on securities accounts. A tax of 0.15% will be charged on securities and brokerage accounts worth more than €1 million. The new tax replaces a previous tax on securities accounts that was declared unconstitutional by the Constitutional Court. This time, there are no exceptions for certain financial instruments: shares, bonds, funds and derivatives.
The new tax is due on all securities or brokerage accounts held by Belgian residents, in Belgium and abroad. It is also due on Belgian accounts held by non-residents unless there are limits under the double tax treaty. The tax is due on securities account you hold personally, through a company or even through a trust.
The tax is calculated on the average value of the account on 31 December, 31 March, 30 June and 30 September. The tax is due on the total value of the account, not just on the tranche over €1 million. The bank will calculate the tax and deduct it from your bank account.
On overseas securities accounts, you will have to report and pay the tax yourself. The first time the tax will be due will be on 31 August 2022.
You sell listed stocks
For listed shares, the rate is also 0.35% of the sales price, even if you sell at a loss, and no, you cannot deduct the purchase price from the sales price. It is 0.35% of the price you sell the shares for.
When you sell shares of listed companies, the Belgian bank or brokerage firm will take the stock exchange tax from your account and pay the tax.
Overseas banks or brokers generally do not to withhold the Belgian stock exchange tax. You will have to pay the tax yourself and file the same tax return ; you must report both sales and purchases on the same tax return.
Capital gains tax
In general , capital gains are not taxed in Belgium. However, that is because you make capital gains in the normal management of your private assets, i.e. when you manage your portfolio “en bon père de famille”.
Capital gains tax is due when you manage your portfolio in an abnormal manner. This usually means speculation, when you invest large amounts in shares, when you borrow heavily or when you trade frequently. Capital gains from speculation are taxed at 33% (plus municipal tax), and losses cannot be deducted.
In some exceptional cases, the Belgian tax authorities will see trading shares as a professional activity; that could be the case for day-traders. In that case, the profits can be taxed as earnings at the ordinary tax rates.
The taxman really nibbles left and right at the return on your portfolio of shares.
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