Taxation of Capital Gains on Shares: A Complex and Controversial Reform

The taxation of capital gains on shares in Belgium is undergoing significant changes with the introduction of the 10% solidarity contribution. This measure replaces the previously proposed capital gains tax in the super-note and aims to tax capital gains realized on financial assets, including cryptocurrencies. However, only gains realized after the reform takes effect will be subject to this measure, raising questions about its implementation and the precise calculation of taxable capital gains.

A Basic Exemption and the End of Benefits for Long-Term Investors

A basic exemption of 10,000 euros is provided, ensuring that only the portion of capital gains exceeding this threshold is subject to the solidarity contribution. However, the previously granted exemption for shares held for more than ten years is abolished. This abolition penalizes long-term investors. Nevertheless, the Prime Minister recently announced that a ten-year period could be reinstated, leaving uncertainty about the final legislation.

Deduction of Losses: A Restrictive Framework

Losses can be deducted from taxable capital gains, but only in the year they are realized. There is no option to carry them forward to subsequent years, which is a major constraint for active investors in volatile markets. Those who suffer only losses in a given year will not be able to offset them with future gains, increasing their tax risk.

A Specific Regime for Entrepreneurs

Entrepreneurs who own at least 20% of a company's shares benefit from a permanent exemption on the first 1 million euros of realized capital gains. Beyond this threshold, a progressive tax scale applies:

• Between 1 million and 2.5 million euros: 1.25%
• Between 2.5 million and 5 million euros: 2.5%
• Between 5 million and 10 million euros: 5%
• Above 10 million euros: 10%

However, raising the threshold for significant participation from 5% to 20% raises questions. Shareholders holding less than 20% may no longer benefit from any exemption or may fall under an intermediate regime. This issue is particularly relevant for startup and SME founders who see their ownership diluted through successive fundraising rounds, even though their involvement in the company remains unchanged.

Political and Fiscal Uncertainty

Within the ruling coalition, opinions differ on how shareholders holding less than 20% should be treated. Some political parties advocate for a general tax rate of 10% after the 10,000-euro exemption. The MR defends a progressive scale similar to that for large participations, but this position has not yet been confirmed in the government agreement, adding legal uncertainty regarding the application of the reform.

Additionally, this solidarity contribution is added to the existing tax regimes on capital gains on shares, including:

• 33% + municipal tax in cases of abnormal management of private assets
• 16.5% for sales to a legal entity outside the European Economic Area

The lack of clarity on how these regimes interact could lead to double taxation, making capital gains taxation more complex and subject to additional fiscal reclassifications.

A Reform to Monitor Closely

The introduction of this solidarity contribution raises many questions, both regarding its impact on individual investors and the protection of entrepreneurs and startups. Clear legislation will be crucial to avoid ambiguities and ensure a more predictable tax environment. In the meantime, investors will need to remain particularly vigilant regarding regulatory developments to optimize their wealth and tax strategies.