ETN vs ETF: is there a difference for Belgians?

You've probably heard that ETFs are great for building wealth. They're simple, diversified, and perfect for long-term investing.

But then you stumble across ETNs, and they seem to offer the same benefits with better tax treatment in Belgium. Lower transaction costs, no dividend taxes, and they track indexes just as well.

Here's the catch: ETNs and ETFs work completely differently under the hood. One is backed by real assets you actually own. The other is just a promise from a bank. And that difference could cost you everything if you pick wrong.

What is an ETF?

An ETF (short for exchange-traded fund) is a type of fund you can buy and sell on the stock market, just like a stock. Most ETFs follow an index, like the S&P 500 or MSCI World. That means the ETF owns all the assets in the index, like shares of Apple or Amazon, and when you buy an ETF, you own a small part of that mix.

You need a broker to buy ETFs, and you can trade them during market hours at whatever price the market sets. ETFs are popular because they combine two big advantages: they give you diversification (your money is spread across many companies), and they're easy to buy and sell. There’s usually no big minimum, you can often get started with just one share. And there are ETFs for pretty much every market or theme you can think of.

In Belgium, more and more people are discovering ETFs, especially those who want to manage their investments themselves. De Hangmatbelegger, written by Curvo co-founder Yoran, have helped spread the word.

In short, ETFs make it simple to invest in a wide market or sector.

What is an ETN?

An ETN (exchange-traded note) looks similar to an ETF at first glance. You buy and sell it on the stock exchange just like an ETF. But what you’re buying is very different. An ETN is a type of debt. It’s a promise from a bank or financial institution to pay you the return of a specific index or strategy in the future. You don’t actually own the assets in that index. Instead, you're relying on the bank to keep its word.

Some ETNs follow things that are harder to invest in through regular funds, like certain commodities or complicated trading strategies. They don’t pay out dividends or interest along the way. You only make (or lose) money when you sell the ETN or when it reaches its maturity date.

One benefit is that while you hold an ETN, there's usually no tax to pay on dividends, because there are none. But there's a big risk too. If the bank that issued the ETN goes bankrupt, you could lose everything, no matter how well the index performed. This is a key difference from ETFs, which actually hold the stocks or bonds in a separate fund.

Differences between an ETN and an ETF

ETNs and ETFs might both be bought and sold on the stock exchange, and they can follow the same index. But what’s inside them is very different. These differences matter. They affect the risk you’re taking, how much tax you might owe, and how the investment behaves. Here's a quick overview of the key differences:

Feature	ETN	ETF
Structure	Unsecured debt note issued by a bank, with no underlying assets held: a promise to pay index returns	Fund holding actual assets (stocks, bonds, etc.) in a portfolio. Regulated as a fund (UCITS in Europe)
Ownership	You own a debt obligation from the issuer. No claim on any underlying assets	You own shares of the fund and have a claim on the underlying holdings
Credit risk	Subject to issuer credit risk. If the bank fails, the note can become worthless	Virtually no credit risk. Fund assets are protected and held separately
Tracking performance	Promises to match the index return exactly (minus fees). No tracking error	Tracks index by holding assets. Small tracking error may occur
Income distributions	No dividends or interest. All gains paid at sale or maturity	May distribute dividends or interest unless it’s an accumulating ETF
Taxation (general)	No tax during holding. Capital gains tax possible at sale. Often untaxed if equity-only	30% dividend tax on distributions. Capital gains tax from 2026
Transaction costs (TOB)	Flat 0.12% TOB on each buy/sell	TOB ranges from 0.12% to 1.32% depending on the fund
Liquidity	Often less liquid. May have wider spreads and lower trading volume	Highly liquid, especially for major index ETFs. Tight spreads
Complexity	More complex. Structured as debt, may involve derivatives	Simpler structure. Holds assets directly
Use cases	Useful for niche exposures (commodities, crypto, volatility)	Ideal for broad, long-term diversified investing

As you can see from the table, ETFs and ETNs work in very different ways. With an ETF, you’re investing in real assets like stocks or bonds. With an ETN, you’re trusting a bank to pay you based on how an index performs. Let’s take a closer look at some of the key differences, especially around taxes and risks, which matter a lot if you're investing from Belgium.

Taxes for Belgian investors

Taxes can eat into your returns, so it’s good to know how ETFs and ETNs are treated in Belgium.

Transaction tax (TOB)‍

Every time you trade on the stock market in Belgium, you pay a tax called the TOB. For ETFs, this rate can be 0.12%, 0.35%, or even 1.32%. It depends on where the fund is based and whether it pays out dividends. For example, Belgian ETFs that reinvest dividends (accumulating ETFs) often get hit with the highest rate: 1.32%. But many foreign ETFs, even accumulating ones, are taxed at just 0.12%. It’s messy, and brokers don’t always agree. With ETNs, it’s simpler. They’re taxed at a flat 0.12%, no matter what. That’s the same rate as most bond trades. So in many cases, ETNs are cheaper to trade than some ETFs.

Dividend tax‍

In Belgium, dividends are taxed at 30%. If you hold an ETF that pays out dividends, you’ll lose 30% of that payout to taxes. That’s why most Belgian investors prefer accumulating ETFs that reinvest earnings. ETNs usually don’t pay out anything during their lifetime: no dividends, no interest. So while you hold an ETN, you don’t pay any dividend tax. That makes them tax-efficient in a similar way to accumulating ETFs.

At Curvo, we only use accumulating ETFs that automatically reinvest dividends for you. You don’t have to worry about reinvesting them yourself. It fits perfectly with a passive approach where you spend as little time as possible managing your investments. Every Curvo portfolio is built with long-term growth in mind.

Reynders tax

There’s a 30% tax on bond gains in funds or ETFs if the fund has more than 10% in bonds. This is called the Reynders tax. For example, if you sell an ETF that's half bonds, you’ll pay 15% tax on the total gain.This tax doesn’t apply to ETFs that only hold stocks. That’s why many Belgians stick to equity ETFs.

What about ETNs? If the ETN tracks only stocks or commodities, there's no Reynders tax. If it tracks bonds, the rules are less clear, since ETNs aren’t regular funds. In some cases, they might avoid the Reynders tax, but it depends, and it's rare for everyday investors to hold bond ETNs anyway.

Capital gains

Also, keep in mind that Belgium plans to introduce a 10% tax on stock gains in 2026. This could affect both ETFs and ETNs that hold stocks.

ETNs can be more tax-friendly in Belgium. They avoid dividend taxes and always get the lowest transaction tax. But with ETFs, you need to pick the right kind (like accumulating ones) and still might pay a higher TOB. That said, don’t base your whole investment strategy on taxes. ETNs come with more risk, which matters too.

One big advantage is when you invest through Curvo, is that you don’t pay the Belgian transaction tax (TOB) on buys or sells. That’s because the funds used in our portfolios are officially exempt. This means more of your money stays invested, especially if you're investing every month. It's one less tax to worry about.

Risks and other considerations

ETNs might look appealing at first, especially with some tax benefits. But they come with extra risks that ETFs don’t.

Credit risk: the big one

This is the biggest difference between ETFs and ETNs. With an ETF, you own real assets, like shares of companies, through the fund. Even if the ETF provider goes bankrupt, the investments are kept separate and safe. With an ETN, you don’t own anything. It’s just a promise from a bank to pay you based on how an index performs. If that bank goes bust, your money is at risk, even if the index goes up. This isn’t just theory: you probably remember when Lehman Brothers collapsed in 2008, their ETN holders lost money. So as a Belgian investor, you need to trust the issuer and be aware of their financial health. Big names like Barclays or UBS issue many ETNs, but no bank is 100% safe.

Liquidity risk: harder to buy and sell

Both ETFs and ETNs go up and down with the market. But ETNs can be harder to trade. Many of them don’t trade often, which means you might not get a fair price if you want to sell quickly. The price gap between buyers and sellers (called the spread) can be large, especially during stressful times.ETFs, on the other hand, are usually much easier to buy and sell. The most popular ones are traded all the time, with tighter spreads and more transparency.

Tracking accuracy: a small edge for ETNs

One thing ETNs do well is match the performance of the index exactly (minus fees). That’s because the issuer guarantees the return. ETFs can sometimes slightly underperform due to costs or how they’re built. But for most broad ETFs, like ones tracking the MSCI World, this difference is tiny. And it’s not worth the trade-off of adding credit risk. If you’re investing for the long term, a tiny tracking error is a lot safer than risking a bank default.

Complexity: ETNs are trickier

ETFs are easy to understand: they hold a mix of investments, and you own a piece of that. ETNs are more complicated. They’re debt products, and may include special rules or even risky features like leverage. Some may be callable or have early redemption rules. That’s why ETNs are often aimed at more advanced investors. If you’re building a simple, long-term portfolio (like most Belgian investors are), ETFs are usually the better and safer choice.

ETNs might make sense in special cases, like getting exposure to gold, oil, or even crypto if there’s no suitable ETF. But you need to understand the risks fully before jumping in.

Summary

ETFs and ETNs might look similar on the surface, but they're fundamentally different investments. ETFs give you real ownership in a diversified portfolio of assets, while ETNs are essentially IOUs from banks. For most Belgian investors building long-term wealth, ETFs offer the better combination of simplicity, safety, and tax efficiency.

The key is choosing the right type of ETF for your situation. Look for accumulating funds that reinvest dividends automatically, and check the transaction tax before you buy. Yes, ETNs might save you some tax in the short term, but that small benefit rarely justifies the credit risk you're taking on.

Remember, successful investing isn't about finding the perfect product with the lowest fees. It's about consistent, long-term investing in diversified assets you understand. Whether you choose ETFs or ETNs, the most important step is simply getting started and staying invested through market ups and downs.