The participation exemption applies to shareholders with at least 10% ownership or investments of EUR 2.5 million, provided the latter qualify as fixed financial assets.
Belgium’s Ministry of Finance has released Circular 2025/C/63 on 3 October 2025, offering guidance on the financial asset condition tied to the participation exemption, also known as the dividends received deduction.
This update follows changes approved in July 2025.
Under the framework, the participation exemption applies if a shareholder holds at least 10% ownership in a company or if the investment amounts to a minimum of EUR 2.5 million. However, the recent amendment specifies that the EUR 2.5 million investment must qualify as fixed financial assets. Small businesses are exempt from this additional requirement.
The Circular further explains that fixed financial assets include equity holdings that establish a stable connection between the shareholder and the investee company. This encompasses shares in controlled or related companies, shares in companies with a participating interest, and even shares in other businesses where there is no control or participation rights, provided the holding supports the shareholder’s own business activities.
Claims for the participation exemption without meeting the 10% ownership threshold generally involve minority holdings without control or participation rights. To qualify, the participation must demonstrate a lasting, strategic link and be held long-term rather than for short-term investment gains. Examples include acquiring a minority stake with plans to increase it, holding shares in complementary businesses to enhance offerings, or investing in technologically relevant companies to support the shareholder’s operations.
The fixed financial asset condition applies to capital gains and dividend exemptions for non-residents from 2026, with an anti-abuse rule disregarding unjustified changes to the financial year closing date from 3 February 2025 onwards.
Earlier, Belgium’s Chamber of Deputies reviewed a draft law submitted on 3 July 2025 to implement measures outlined in the government’s April 2025 tax reform policy note. The key proposals in the draft include introducing a separate 5% tax on capital gains, participation exemption for group contributions, revised deductions, and statute of limitation rules.
