Unlike most of Europe, Belgium does not have a standard capital gains tax for private individuals. This is set to change next year following agreement by the Federal Government coalition partners.
Across Europe, the tax on profits from capital varies. For example, it is set at 42% in Denmark, 34% in France, and 24% in the UK. There are also different rules on what financial assets are taxable.
Belgium's 0% rate will increase on 1 January to 10%, with the new so-called 'solidarity contribution' coming into force.
The introduction is aimed at raising funds to close Belgium's budget deficit, estimated to be just over €25bn at the federal level, or 4% of GDP, this year. Eurozone members are required to keep their budget deficits to within 3% of GDP.
Some political parties also see the introduction of a capital gains tax as the first step in shifting the burden of funding the state away from labour and towards other sources such as capital. Belgium has one of the highest personal income tax rates in Europe.
An official draft of the legislation to introduce the tax has not been published, but leaks have given some insight on what may be included.
What changes will the new tax bring?
The tax will apply to personal capital gains that exceed €10,000 each year. Individuals with no 'realised' capital gains for five years will have a higher threshold of €15,000 at the end of the five years.
The charge will be a tax on unlocked profits from financial assets such as crypto, shares, gold, and currencies. Crucially, it will apply to all Belgian tax residents on their capital gains around the world.
The changes do not apply to capital gains realised 'outside the normal management of personal private assets', i.e. speculative investments, which are already subject to a capital gains tax of 33%.
How are these changes likely to impact non-Belgians?
There are three key changes that non-Belgians who are tax resident should note. These are the non-retroactive scope, the foreign scope of the tax, and the exit tax.
Future 'gains' will be based on the value of the asset on December 31 2025. EY notes that "for individuals who become Belgian tax residents from 2026 onwards, the market value of their financial assets on the date of their arrival will be considered as the acquisition value."
In other words, anything that happens to the value of an asset before 1 January is not relevant for the tax. Additionally, anything that happens to the value before the date of arrival in Belgium is irrelevant.
Bart Van den Bussche from PwC Belgium told The Brussels Times that it is important for non-Belgians with foreign assets to take photos or screenshots "to keep track of the official valuation, so that you can prove the fair market value of the asset on 31 December."
Keeping track is important as capital gains of any financial assets outside Belgium are also subject to the tax. Van den Bussche said that "financial assets held outside Belgium, where gains are realised, need to be reported through income tax returns in Belgium."
For financial assets held within Belgium, financial intermediaries such as banks will withhold the tax when the gain is realised.
Another detail to emerge is the prospect of an exit tax. If a Belgian tax resident moves their tax residency, their financial assets will be treated as 'sold' and any gains realised since they were acquired (or since 31 December 2025) will be subject to the tax.
This assumption of sale will be applied even if the profit from the asset hasn't been realised.
Payment of this 'exit tax' can be deferred for 24 months until the asset is sold, if the move is to a country within the EU, EEA, or a country with which Belgium has a tax treaty. These countries would provide for the exchange of financial information, according to Van den Bussche. Britain and the USA are included in this list.
