On 27 October 2017, according to a press release, on the proposal of the Minister of Finance, the government has approved the corporate tax reform. The corporate tax reform process would take place in two phases, 2018 and 2020.
Belgium will grant a 100% participation exemption on dividends (current 95%) as of 1 January 2018. Capital gains on shares will also be 100% exempt as of 2018. The separate tax rate of 0.412% on capital gains on shares (holding period more than 1 year) will be eliminated.
The conditions to benefit from the exemption will be brought in accordance with the participation exemption conditions. In addition to the subject-to-tax test and holding period 1 year, a minimum shareholding requirement of at least 10% or €2,500,000 will apply. This new requirement would not apply to shares held as coverage assets by insurance companies.
The draft law will now be sent to the State Council for further review and then be finalized and submitted to the Federal Parliament. The corporate tax reform is expected to be approved before end of this year.
