Are you an investor in Belgium who needs to declare the TOB (Tax on Stock Exchange Transactions) but doesn't know where to start? In this comprehensive guide, we will walk you through the process of handling your own TOB declaration. If you're investing with a broker that doesn't handle TOB, this can be quite the administrative burden. But we've got you covered. By the end of this article, you'll have all the knowledge and tools to confidently declare TOB on your own.
What is the TOB?
The TOB is a levy imposed on certain transactions involving financial instruments carried out on a Belgian stock exchange or through a Belgian intermediary. It was introduced in Belgium in 1927 and has undergone several changes since then.
It's an important aspect of investing in Belgium as it directly affects the cost of buying and selling stocks, bonds, derivatives, and other financial instruments. The tax rate varies depending on the type of transaction and the financial instrument involved. The primary purpose of the taxis to generate revenue for the Belgian government and regulate stock exchange activity. It also serves as a deterrent for high-frequency trading and excessive speculation.
Investors in Belgium are required to declare and pay the TOB on eligible transactions, ensuring compliance with the tax regulations. While many brokers handle the TOB declaration process on behalf of their clients, there are situations where you may need to handle it themselves.
How much is the TOB?
Calculating the TOB for your investments is a crucial step in the declaration process. We will provide a summary of the most frequent cases, but keep in mind that the calculation can vary depending on the type of financial instrument.
For the purpose of this guide, let's focus on calculating the TOB for an ETF (Exchange-Traded Fund). Preferably our ETF is registered in the European Economic Area (EEA) but not in Belgium. In that case, the TOB rate is 0.12% of the transaction value.
To calculate the TOB for an ETF transaction, follow these steps:
- Determine the transaction value: The transaction value is the total amount you spent or received when buying or selling the ETF. It includes the price of the ETF shares and any associated fees or commissions.
- Determine the TOB rate: The TOB rate can be 0.12%, 0.35% or 1.32%. Check our guide on determining the TOB rate for an ETF.
- Multiply the transaction value by the TOB rate: Take the transaction value and multiply it by the TOB rate to calculate the TOB amount payable. In our example, this is 0.0012 (0.12% expressed as a decimal). For example, if you bought an ETF for a transaction value of €10,000, the TOB calculation would be as follows: TOB = €10,000 x 0.0012 = €12. In this case, the TOB payable for the ETF transaction would be €12.
You need to repeat this process for every transaction (both buying and selling) you undertook for the period you want to declare TOB for. So it is possible that different transactions have a different TOB rate.
Things can get a little more complicated if you're investing in a foreign currency like the US Dollar. If that's the case then you'll have to convert the transaction value back to Euro using the official ECB exchange rates of the day the transaction took place.
Calculating the TOB is a cumbersome process, especially if you trade a lot. But remember, accurate calculation of the TOB is crucial for proper declaration and compliance with tax regulations. Taking the time to understand and calculate the TOB correctly will help ensure a smooth and accurate declaration process.
Do you have to declare the TOB?
When it comes to declaring TOB, the involvement of your broker plays a significant role. Some brokers handle the process on behalf of their clients, while others don't. It's important to understand your specific broker's approach to TOB and if you are required to handle the declaration yourself.
Many reputable brokers in Belgium take care of the TOB declaration process for their clients, just like Curvo does. They automatically calculate the TOB and deduct it from your transactions, simplifying the administrative burden for you. These brokers typically provide you with transaction statements or reports that detail the TOB amounts deducted.
However, some other brokers, especially foreign ones, do not handle the TOB for their Belgian customers. In this case, it becomes your responsibility to calculate and declare the TOB to the Belgian tax authorities.
It's worth noting that even if your broker handles TOB, it is still essential to review the accuracy of their calculations and ensure that the correct amounts are being deducted. Mistakes can occur, and ultimately, you are responsible for ensuring the accuracy of your TOB declarations.
Does your broker handle the TOB?
Choosing a broker
To help you choose a broker that handles the TOB or find alternatives, we have an article on the best brokers for ETF investing in Belgium. It provides an overview of brokers that specialise in serving Belgian investors, including their approach to taxes and other relevant considerations like ease of use, price and safety.
When to pay the TOB?
Understanding the deadlines and frequency of TOB payments is crucial to ensure compliance with the Belgian tax regulations.
As mentioned on the official website of the Federal Public Service of Finance:
The party placing the order and responsible for the TOB tax must make the payment no later than the last working day of the second month following the month in which the transaction was entered into or executed.
For example, if you traded during the months of July and August, you can make the payment in September for all trades your made during those two months. Additionally, you have the option to pay the tax in October for any trades you did in August. For more specific information regarding TOB payment deadlines and requirements, it is recommended to refer to the official guidelines provided by the Belgian tax authorities, which offers detailed instructions and clarifications regarding TOB payment obligations.
By understanding the timing and frequency of TOB payments, you can effectively plan your financial transactions and ensure compliance with the Belgian tax regulations. Remember, adhering to the payment deadlines is crucial to maintain a good standing and fulfil your tax obligations as an investor in Belgium. We explain below what you risk if you don't.
How to fill out the TOB declaration form
Once you understand the timing of TOB, the next step is to learn how to fill out the TOB declaration form accurately. The form requires specific information about your transactions, and providing the correct details is essential for proper TOB declaration.
First obtain the TOB declaration form. Visit the official website of the Belgian tax authorities to find the current version of the TOB declaration form. It is important to use the most up-to-date version to ensure compliance with the latest requirements.
Now follow the step-by-step instructions below to complete the TOB declaration form:
- Time period of declaration: Fill in the two months you want to declare TOB for.
- Personal information: Begin by entering your personal information in the designated sections of the form. This includes your name, address and national number.
- Transaction details: Fill in the details of your transactions subject to TOB in aggregate. Include the following information for each TOB rate:
a) Number of financial instruments.
b) Sum of transaction amount.
c) Tax to be paid by multiplying the result in (b) by the respective TOB rate.
- Total TOB amount: Sum up the TOB amounts for all the TOB rates and enter the total TOB amount in the designated section of the form.
- Declaration and signature: Read the declaration statement carefully, ensuring that all the information provided is accurate and complete. Sign and date the form to certify its authenticity.
Once you have filled out and signed the TOB declaration form, you can submit it according to the guidelines provided by the Belgian tax authorities. The form can be submitted electronically through email to [email protected] . Use "TOB declaration month X and month Y" in the subject line. You should receive a confirmation email within a couple of days.
You can also print the form out and send it by mail to:
Inningscentrum – Diverse Taksen
Koning Albert II-laan 33 bus 431
Underneath the table indicated with "3" you can see there is a similar table. That table is for when your TOB payments would exceed the maximum cap.
- 0.12% TOB rate cap: €1,300
- 0.35% TOB rate cap: €1,600
- 1.32% TOB rate cap: €4,000
Generally this table should remain empty as you would have to transact over €1,000,000 in the give time period in order to reach the cap.
The tables on the second page are designed for situations where you seek reimbursement under two circumstances:
- the tax paid exceeds the tax to which the transaction gives rise or,
- if the withdrawal, modification or improvement of the relevant stock exchange prices results in the annulment or modification of the original document issued. Refunds will only be issued for amounts exceeding €0.25.
Depending on any updates or changes to the form, there may be additional or modified fields to complete. Therefore, always refer to the official instructions provided by the Belgian tax authorities or seek professional advice to ensure accurate completion of the form.
tobcalc: useful tool to help you declare your TOB
To simplify the TOB declaration process, there is a website called tobcalc available that can assist you in generating the TOB declaration form based on your transaction data. The tool can help streamline the process and minimise the chances of errors in your TOB declaration. Keep in mind that it is still your responsibility to submit a correct form, so make sure to double check everything. Also remember to keep a copy of the completed TOB declaration form for your records, as it serves as evidence of your compliance with the TOB requirements.
What happens if you don't pay the TOB?
Paying the TOB is a legal obligation for investors in Belgium. Failure to comply with TOB requirements can lead to various consequences, including legal and financial implications. It's important to understand the potential consequences of not paying theTOB:
- Late filing: A fine of €50 per week with a maximum of €2,600 (equals to 52 weeks). It should be noted that a declaration must be filed every two months when taxable transactions have occurred.
- Incorrect or incomplete filing: Five times the evaded tax, with a minimum of €250.
- Late payment: Statutory late payment interest from the day the payment should have been made (7% per year).
It's important to understand that the consequences for not paying TOB can vary depending on the specific circumstances, and they're at the discretion of the tax authorities. We advise to consult a tax professional to fully understand the potential legal consequences and sanctions..
What to do if you forgot to pay?
Sometimes, despite your best intentions, you may forget to pay the TOB within the specified deadline. If you find yourself in this situation, it's crucial to take immediate action to rectify the oversight. Here's what you should do:
- Recognise the delay: As soon as you realise that you missed the TOB payment deadline, acknowledge the delay and understand the potential consequences of non-compliance. By addressing the situation promptly, you can minimise any further complications.
- Determine the outstanding amount: Calculate the total TOB amount that you failed to pay. This can be done by reviewing your transaction records and assessing the applicable tax rates based on the type of transactions you conducted.
- Contact the Belgian tax authorities: Reach out to the Belgian tax authorities to inform them about your missed TOB payment. It is recommended to contact the competent tax office responsible for TOB matters and explain the situation. Provide accurate details about the transactions and the amount of TOB owed. The tax authorities will guide you on the appropriate steps to rectify the issue. You can reach the Belgian Tax Authorities through phone (02 572 57 57) or email ([email protected]).
- Pay the outstanding TOB: Make the payment for the outstanding TOB as soon as possible. The tax authorities may provide instructions on how to submit the payment, including acceptable payment methods and any penalties or interest that may apply. Ensure that you respect their instructions and promptly settle the outstanding amount.
- Consider seeking professional advice: If you are uncertain about the appropriate course of action or require further guidance, it is advisable to consult a tax professional. They can provide personalized advice based on your specific circumstances and help you navigate the process of rectifying the missed TOB payment.
- Learn from the experience: Use the oversight as a learning opportunity. Take steps to prevent future delays by setting reminders for TOB payments, establishing an organized system for tracking your transactions, or exploring options to automate the TOB declaration and payment process.
It's important to note that the tax authorities may impose fines or interest on the outstanding TOB amount, depending on the circumstances. However, by promptly addressing the missed payment and demonstrating a willingness to rectify the situation, you can mitigate the potential consequences.
Several members of the /r/BEFire subreddit community have shared their experiences with forgetting their TOB declaration and payment. So far, it seems like the tax authorities have been lenient for their cases. Keep in mind that this does not offer any guarantee for your case though.
Remember, it is crucial to address any missed TOB payments promptly to maintain compliance with Belgian tax regulations. Timely action shows your commitment to fulfilling your tax obligations and helps avoid unnecessary complications in the future.
Should you do your own TOB declaration?
While handling your own TOB declaration may seem like a cost-effective and independent approach, it's important to consider the difficulties, administrative burden, and potential risks involved. Here are some factors to consider when deciding whether to handle your own TOB declaration:
- Complex calculation: The calculation of the TOB can be complex, especially if you engage in frequent or diverse transactions. Understanding the applicable tax rates, exemptions, and specific rules for different types of investments requires knowledge of the Belgian tax regulations. Errors in calculating the TOB can lead to inaccurate declarations and potential penalties.
- Time and administrative burden: Managing your own TOB declaration requires time and effort. You need to stay updated on the latest tax regulations, maintain detailed transaction records, and complete the necessary paperwork within the specified deadlines. This administrative burden can detract from your primary focus of managing your investments and achieving your financial goals.
- Risk of non-compliance: Mishandling TOB declarations can result in non-compliance with Belgian tax regulations. Failure to pay the correct amount or missing payment deadlines may lead to penalties, fines, or even legal consequences.
For these reasons, whether or not your broker declares the TOB for you can be a important factor in deciding on which broker to use.
No TOB with Curvo
Investing for your financial future is necessary, but can be quite daunting. On top of keeping up to date on all changes to taxes by the Belgian government, you also have to figure out what to invest in and with who. Curvo is built for people who realise they have to start investing, but they are not really sure where to start. All the complexities of investing are taken care, and you don't have to worry about any tax complexities.
An important benefit of Curvo is that your investments are exempt from the TOB. Indeed, some funds are exempt from the TOB, and the portfolios offered throught the Curvo app are composed of only these funds. Each portfolio is managed by NNEK, a Dutch investment firm supervised by the Dutch regulator (AFM). You eliminate the hassle and the administrative and fiscal risks of incorrectly declaring the TOB. Furthermore, this saves you time!
Handling your own TOB declaration may seem overwhelming, but with the right tools and resources, you can confidently manage your tax obligations. By following the steps outlined in this guide and considering options like Curvo, you can simplify the TOB declaration process and ensure compliance with Belgian tax regulations. Remember, Curvo is here to help you on your investment journey, providing a seamless experience and allowing you to concentrate on growing your wealth while spending your time on things that matter to you (and not your investments).
Questions you may have
How do I declare stock market gains?
There are no capital gains taxes in Belgium on stocks, so you don't have to declare anything. 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.
Learn more about all the taxes you need to know as a Belgian investor.