Belgium extended tax-neutral rules to simplified sister mergers, removing the need to issue new shares.
Belgium’s Chamber of Representatives approved a law extending the country’s tax-neutral treatment to simplified sister mergers on 23 October 2025. The legislation, based on the EU Mobility Directive (2019/2121), amends the Income Tax Code and the Registration Duties Code and applies retroactively from 16 June 2023.
Under the new rules, simplified side-stream mergers no longer require the issuance of new shares to maintain tax neutrality. Previously, not issuing shares could trigger deemed dividend distributions of taxed and certain tax-free reserves, potentially resulting in withholding tax for shareholders. This is no longer the case, providing clarity on the corporate income tax treatment of transferred paid-up capital and reserves.
The law confirms that the absence of new shares does not affect registration duty neutrality for side-stream and parent-subsidiary mergers. This removes previous uncertainties and ensures that mergers can proceed without additional administrative or fiscal burdens.
Legally, simplified side-stream mergers remain subject to standard conditions: assets must transfer entirely to the acquiring company, which must be held by the same shareholder(s), and the merger cannot primarily aim at tax avoidance. Unlike regular mergers, no auditor’s report on share contributions is required, though notarial intervention is still necessary.
The change is expected to streamline corporate restructuring in Belgium, making simplified sister mergers more efficient and cost-effective while preserving full tax neutrality.
