Constitutional Court annuls securities tax ... for the future
As from 10 March 2018 your banker has to withhold a securities tax when the equity on your securities account amounts to 500.000 euro or more. The Constitutional Court annulled this tax early October 2019, but the Court allows the government to still collect the tax for 2019.
Tax on securities accounts
Since 10 March 2018 large equities should contribute additionally in avoiding budget deficits by the 'tax on securities accounts' or securities tax. The tax amounts to 0,15% and is due when the average value of the taxable financial instruments on your securities account(s) amount to 500.000 euro or more.
When you have such amount on one account, the bank should withhold the tax. In case you have several securities accounts, or you have securities accounts abroad, and the total amount of the investments is 500.000 euro or more, you should report and pay the tax yourself. You can also ask your bank to do so on your behalf.
Non-residents are also subject to this tax, but only for their Belgian securities accounts.
Which financial instruments?
It concerns (whether or not listed) shares, bonds, participation rights in collective investment funds and shares in investment companies, as well as saving certificates and warrants. One common condition: these should be on a securities account.
Do not qualify: real estate certificates, treasury bills, certificates of deposit and 'derived' financial products (such as options, swaps and futures) irrespective whether they are on a securities account or not. Registered shares which are not on a securities account, are not subject to the tax. This is not surprising, since otherwise you would pay the tax on the shares you have in your own company. Shares which are on a securities account (shares you bought as an investment) are however subject to the tax.
The Constitutional Court has annulled the tax early October for reasons of unconstitutionality. The Court finds that the government can introduce a tax on large equities. But it does not agree with the lead for the tax (taxable financial instruments on a securities account).
The Constitutional Court establishes that a securities account with financial instruments with an average value of more than 500.000 euro is not always taxable. For example, when you have mainly treasury bonds on your account. But also, when you have a financial instruments equity of more than 500.000 euro, but these are not all on a securities account, you are not subject to the tax.
In other words, large equities (500.000 euro investments) are not all taxed in the same way. The criterion (certain financial instruments on a securities account) is not pertinent and therefore the Court annuls the tax.
... as from 1 October 2019
In the past, we saw that when the Court annulled a tax, the annulment was applicable retroactively until the start of the tax. This means that the government should reimburse the tax which was illegally levied.
But this is not the case for the securities tax. And that is somewhat surprising. The taxable period for 2019 runs from 1 October 2018 until 30 September 2019. This means that banks, and maybe yourself as tax payer, should still do the necessary to withhold the tax, pay it or declare it (in case you as a tax payer has to do it yourself). Some tax payers should therefore file a return in 2020 for a tax which is considered unconstitutional by the Court in 2019.