No one likes them but everyone has to pay them: taxes. As investors, we also have to make our contributions that are necessary to live in a fair and equal society. Our goal is to explain the four taxes that are relevant to Belgian investors:
- tax on transactions
- tax on dividends
- tax on capital gains for bonds
- tax on investment accounts
The information presented here is up-to-date at the time of writing. However, every new government likes to make some changes to the tax system so it might be outdated by the time you’re reading this. Check at the top when this article was last updated, and please remember to do your own research!
Tax on transactions (“beurstaks” or “taxe boursière”)
There’s a tax on the transaction every time you buy or sell a security. The rules concerning the tax rate are complicated, also for ETFs. Even brokers are confused because they use different tax rates for the same ETF. Depending on the characteristics of the ETF, the transaction tax varies between 0.12% and 1.32%. We wrote a step-by-step guide to help you figure out the transaction tax for the ETFs in your portfolio. Besides the choice of ETFs, there is not strategy to reduce this tax. Since it’s a percentage of the transaction, buying more or less securities in one transaction isn’t going to affect the total amount of tax that you will end up paying.
Some brokers handle the transaction tax for you. But others, especially foreign brokers, don't. In that case, learn how to declare the transaction tax.
Tax on dividends (“roerende voorheffing” or “précompte mobilier”)
There’s a 30% tax on dividends that you perceive through shares that you hold. This tax is applicable to individual stocks but also to distributing funds.
The dividend tax is the main reason why accumulating funds are preferred over distributing funds. With accumulating funds, all dividends are directly reinvested into the fund, thereby bypassing this tax. Another benefit is that you don’t have to spend time on deciding how to reinvest the dividends. After all, when you are a passive investor, you want to spend the least amount of time possible managing your investments!
We go into more detail in our resource on how to invest in ETFs in Belgium.
Tax on capital gains for bonds (also called the Reynders-tax)
For funds that consist of at least 10% bonds, there is a 30% tax on the profits made when selling. For example, if you bought a bond at €100 and end up selling it later for €130, your net profit will only be €21. The other €9 will go to the Belgian state through this tax.
For funds that consist solely of bonds, the 30% tax rate will be applied to the full profit. For mixed funds, for instance that contain both bonds and stocks, the tax will only be applied to the bonds portion of the fund. Concretely, if you own a fund that consists of 50% bonds and 50% stocks, the effective tax rate on the profits will be 15% instead of the full 30%.
A consideration is that this tax gives more incentive to invest in stocks rather than bonds. This is contradicting with the common strategy of investing more in bonds as you get older, because of their reduced volatility. Something to ponder about!
Learn all about the Reynders tax and how to handle it in your yearly tax declaration.
Tax on investment accounts (“taks op effectenrekeningen” or “taxes sur les comptes-titres”)
In February 2021, the Belgian government introduced a tax on the wealthiest Belgian investors, as a 0.15% tax on any investment account of more than €1,000,000. Fortunately, the tax man looks at each account in isolation. So you can have several investment accounts which combined add up to more than €1,000,000, but you won't be liable for the tax as long as none exceeds €1,000,000 in value. There's a caveat though. If you divided an account of €1,000,000 across several accounts after the introduction of the tax in February 2021, the tax man considers that you're trying to evade taxes. Be careful!
The tax is automatically retained by Belgian financial institutions. For foreign accounts, you will have to declare and pay the tax yourself.
If you want to know more about the topic, we refer you Wikifin’s website in Dutch or French. Wikifin is maintained by the FSMA, which is the Belgian regulator for the financial sector. Their information is therefore trustworthy and independent.
Questions you may have
What taxes do I need to pay when investing in stocks?
You will be liable for the tax on transactions (TOB or "beurstaks" or "taxe boursière"). And if the stock pays out a dividend, you will have to pay the dividend tax.
But Belgium does not tax capital gains on stocks. So you don't need to declare any profits when you sell your stocks. Note that this principle does not apply if you actively buy and sell stocks frequently. In that case, the Belgian tax authorities might consider your stock market gains as professional income, making you pay high income taxes on your gains.