As Belgian investors, we're fortunate to enjoy tax-free capital gains on our stock investments. But when we started investing ourselves, we quickly realised that the Belgian tax system isn't always so straightforward.
From transaction taxes to dividend taxes, and even taxes on certain types of funds, navigating the Belgian tax landscape can feel like solving a complex puzzle. And if you're using a foreign broker, you might find yourself responsible for calculating and declaring some of these taxes on your own.
So, how can you, as a Belgian investor, make sense of all this and ensure you're staying compliant while maximising your returns? Let's break it down.
The information presented here is up-to-date at the time of writing. But, each new government likes to make some changes to the tax system. So, it might be outdated when you read this. Check at the top when this article was last updated, and please remember to do your own research!
Taxes for Belgian investors
Tax on transactions (“beurstaks” or “taxe boursière”)
There's a tax on every securities transaction. This happens when you buy or sell a security (like a stock, bond, or ETF). It's called the tax on stock-exchange transactions, or TOB. The tax rate is between 0.12% and 1.32% of the transaction amount. But determining the exact tax rate for a stock or ETF is complicated. In fact, it confuses even brokers as they sometimes use different tax rates for the same ETF. For instance, Bolero charges a 1.32% tax rate for the VWCE ETF whereas DEGIRO uses a 0.12% tax rate. Learn more about the TOB.
Belgian brokers handle the transaction tax for you. But many 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 not only applicable to individual stocks, but also to distributing funds and ETFs.
The dividend tax is the main reason that we think accumulating funds are better suited than distributing funds for most investors. With accumulating funds, the fund automatically reinvests all dividends. This bypasses the dividend tax. Another benefit is that you don’t have to spend time on deciding how to reinvest the dividends. After all, if you are a passive investor, you want to spend the least time managing your investments! For these reasons, the portfolios available through Curvo invest only in accumulating funds.
Tax on capital gains for bond funds (the Reynders-tax)
For funds and ETFs 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 the Reynders tax.
Funds that only consist of bonds will incur a 30% tax rate on their entire profit. For mixed funds, such as those that contain both bonds and stocks, the tax applies only to the bond part of the fund. So, if you own a fund of 50% bonds and 50% stocks, the tax rate on the profits will be 15%, not the full 30%. But there's a caveat. The Belgian tax authorities require the fund provider to publish certain documents. Most foreign providers don't as Belgium is a small market for them. So in practice, you'll likely still pay the full 30%. This applies to for instance the Vanguard LifeStrategy ETFs.
Belgian brokers withhold and declare the Reynders tax for you. But foreign brokers don't. In that case, you'll have to calculate and declare the tax yourself every year. That's why, when you invest through Curvo, we give you detailed step-by-step instructions. They come when it's time to declare your taxes. We think it's important that you're in order with the administration!
Tax on investment accounts (“taks op effectenrekeningen” or “taxe sur les comptes-titres”)
In February 2021, the Belgian government introduced a tax on the richest Belgian investors. It is a 0.15% tax on investment accounts over €1,000,000. Fortunately, the tax man looks at each account in isolation. You can have several investment accounts that together can add up to over €1,000,000. But, you won't owe the tax if none is worth over €1,000,000. There's a caveat though. If you divided a €1,000,000 account after the tax started in February 2021, the tax man sees it as tax evasion. Be careful!
Belgian financial institutions withhold the tax for you. For foreign accounts, you will have to declare and pay the tax yourself.
Capital gains on stocks are not taxed
Belgium doesn't tax profits derived from stocks. This includes funds and ETFs that invest only in stocks. For example, the popular IWDA ETF. Or, the stock funds in the portfolios available through Curvo. If you buy an ETF today at €100 and sell it 20 years from now at €300, you get to keep the entire €200 profit.
This is a huge advantage when investing for the long term! And it's a little under-appreciated. After all, most countries have a capital gains tax. For instance, France taxes profits at 30%, regardless of the source of the profits. On many fronts, Belgium isn't great for taxes. But it is great for investing in stocks and stock ETFs.
This rule has an exception: if the capital gain is speculative, the tax rate is 33%. Do you take big risks to gain a lot in a short period of time? Do you buy and sell a lot at short notice? Or do you borrow to invest? In that case, the taxman may deem that you're speculating and tax your gains at 33%. But, if you're a buy-and-hold investor and don't trade excessively, you don't need to worry.
Learning more
We have in-depth resources on the transaction tax and the Reynders tax. We also refer you Wikifin’s website in Dutch or French. The FSMA, the Belgian regulator for the financial sector, maintains Wikifin. Their information is trustworthy and independent.
Conclusion
Understanding the tax implications of investing in Belgium is crucial for maximising your returns and staying compliant. While we enjoy tax-free capital gains on stocks, it's important to be aware of other taxes like the TOB, dividend tax, and the Reynders tax. By choosing the right types of investment, such as accumulating ETFs, and staying informed about your tax obligations, you can make the most of Belgium's investor-friendly tax system. Remember, if you're using a foreign broker, you may need to handle some tax calculations yourself. As you continue your investment journey, consider exploring tools like Curvo that simplify the process and help you navigate these tax complexities.