The parliament of Belgium approved a new tax on banks and insurance companies and will be effective as from assessment year 2016. The new tax will be imposed on credit institutions and insurance companies that exercise activities within the Belgian territory. The tax technically is a reduction of the otherwise available dividends-received deduction, notional interest deduction, and/or tax loss carry forward. This reduction results in an “effective cash-out” in the hands of the credit institutions and insurance companies—regardless of the dividends-received deduction, notional interest deduction, or tax losses (referred to as the “deductions”) otherwise available to them.
The deductions are reduced by the amount of the “debts to clients” multiplied by 2.37% (for AY 2016), and then multiplied by the notional interest deduction rate of the company for credit institutions. The deductions are reduced by the amount of the “technical provisions” multiplied by 1.88% (for AY 2016), and then multiplied by the notional interest deduction rate of the company for insurance companies.
