The law of 30 July 2013 introduced an obligation for Belgian resident individuals to declare whether they, their spouse, or their minor children are the founder, or the beneficiary of a "legal arrangement". A Royal Decree published in the Belgian State Gazette of 28 March, determined the form of the new tax return. A further Royal Decree of 19 March, published in the Belgian State Gazette of 2 April, lists the legal arrangements which are to be disclosed.
Legal arrangements
This disclosure obligation targets trusts, but also non-resident companies, corporations, associations, foundations, and so on that are located in tax havens, if the legal rights to the shares are held entirely or partially by a Belgian resident or if the beneficiary of the economic rights to the assets and capital is a Belgian resident.
A company is based in a tax haven if it is not subject to income tax or if it is subject to an income tax regime that is more advantageous than the Belgian tax regime for capital income and income from movables. For prior coverage see Doc 2013-17621). The list of such entities in tax havens and other countries has now been published.
1° Anjouan (Union of the Comoros) - International Business Company
2° Antigua and Barbuda - International Business Company
3° Anguilla - International Business Company
4° Aruba - Stichting Particulier Fonds
5° Bahamas - International Business Company
6° Bahamas - Foundation
7° Barbados - International Business Company
8° Barbados - International Society with Restricted Liability
9° Belize - International Business Company
10° Bermuda - Exempt Company
11° British Virgin Islands - Company
12° Brunei - International Business Company
13° Cayman Islands - Exempt Company
14° Cook Islands - International Company
15° Costa Rica - Company
16° Djibouti - Exempt Company
17° Dominica - International Business Company
18° Isle of Man - Company
19° French Polynesia - Société
20° Grenada - International Business Company
21° Guam - Company
22° Guatemala - Fundación
23° Guernsey - Company
24° Guernsey - Foundation
25° Hong Kong - Private Limited Company
26° Jersey - Company
27° Jersey - Foundation
28° Labuan (Malaysia) - Offshore Company
29° Libanon - Sociétés bénéficiant du régime des sociétés offshore
30° Liberia - Non-resident company
31° Liechtenstein - Stiftung
32° Liechtenstein - Anstalt
33° Luxembourg - Société de gestion Patrimoine Familiale
34° Macao - Fundação
35° Maledives - Company
36° Marshall Islands - International Business Company
37° Mauritius - Global Business Company category 1
38° Mauritius - Global Business Company category 2
39° Micronesia - Company
40° Monaco - Fondation
41° Montserrat - International Business Company
42° Nauru - Company
43° Nauru - Autres formes de sociétés négociées avec le gouvernement
44° Netherlands Antilles - Stichting Particulier Fonds
45° New Caledonia - Société
46° Niue - International business company
47° Northern Mariana Islands - Foreign sales corporation
48° Palau - Company
49° Panama - Fundación de interés privado
50° Panama - International Business Company
51° Saint Kitts and Nevis - Foundation
52° Saint Kitts and Nevis - Exempt Company
53° Saint Lucia - International Business Company
54° Saint Vincent and the Grenadines - International Business Company
55° Salomon Islands - Company
56° Samoa - International company
57° San Marino - Fondazione
58° Sao Tomé and Principe - International Business Company
59° Seychellen - International business company
60° Switzerland - Foundation
61° Turks and Caicos - Exempt Company
62° Tuvalu - Provident Fund
63° United Arab Emirates - Offshore Company
64° USA : State of Delaware - Limited Liability Company
65° USA : State of Wyoming - Limited Liability Company
66° US Virgin Islands - Exempt Company
67° Uruguay - Sociedad Anónima Financiera de Inversión
68° Vanuatu - Exempt Company
69° Vanuatu - International company
The list is based on the list in Annex 1 of the proposed directive amending the EU Savings Tax Directive (2003/48/EC (Com (2008) 727 final), p. 28), that does not only list legal bodies as legal arrangements, but also trusts.
The list is more complete than the list in annex I. It also lists companies in Delaware and Wyoming as well as the Luxembourg Société de Gestion de Patrimoine Familial (SPF). The Royal Decree justifies with the explanation that the SPF is used exclusively for the management of private assets and that its activity can only consist in the acquisition, management and sale of financial assets, excluding any commercial activity. The SPF is exempt from corporate income tax, and its shareholders who are not resident in Luxembourg are not exempt from withholding tax on dividends paid. The decree also refers to the the outcome of the 6th meeting of the Global Forum on Transparency and Exchange of Information in Jakarta on 21 and 22 November 2013 (for prior coverage see Doc 2013-27178,, and more specifically to the publication of the 'compliance ratings' for states and jurisdictions that are subject to both phases of the 'peer review'.
Disclosure obligation for founders and beneficiaries
The founder of a legal arrangement is not only an individual who has set it up outside his professional activity (the settlor), but also an individual who has transferred property or rights to a legal arrangement founded by a third party (that is, the person who has funded a trust settled by a third party). After the death of either of those founders, will be deemed to be the founders unless they can prove that they or their own heirs will not ever in any way benefit from any financial or other advantages granted by the legal arrangement.
If the legal arrangement is a company, the founder is the person who holds the shares or legal or economic rights to the assets and capital held by the legal arrangement.
In his tax return, the taxpayer will have to confirm whether the taxpayer, his spouse or civil partner, or minor children are the founder of a legal arrangement as defined in the income tax code or, as far as he is aware, that they are, in any way or at any time, the beneficiary or the potential beneficiary of such arrangement, and give the name of the person who is the founder or (potential) beneficiary.
The future: fiscal transparency of legal arrangements
The government was planning to introduce fiscal transparency for income tax purposes for founders of foreign legal arrangements and trusts with retroactive effect as of 1 January 2014. A first text has been circulated, but a bill has not been submitted to Parliament yet. The following is a summary of the proposal.
A Belgian resident founder would be deemed to be the owner of the assets, rights and funds owned by the foreign legal arrangements which they have set up, as well as of the income of such assets, rights and funds. The heirs of the founder will be assimilated to the founder; they will be deemed to the owner in proportion to their participation in the legal arrangement or in proportion to their share in the inheritance.
However, if the legal arrangement is set up in the form of a legal entity that is liable to an effective tax rate of 10% or more, the taxpayer will have to disclose the legal entity but he will not be liable to tax on its income.
The new rules would also introduce the notion of beneficiary; this will be the individual or the body corporate that, at any time or in any way, receives any benefit granted by the legal arrangement. The founder can also be the beneficiary.
For income tax purposes, the beneficiary will be taxed on any amounts or advantages which are the proceeds of assets, rights or funds that are in the possession of a legal arrangement and which he receives (outside his professional activity). The tax will be charged at a rate of 25% except in two situations. The first situation is if the founder has been taxed in Belgium on the income from the trust assets, or if the legal arrangement distributes the rights and funds that were transferred into the legal arrangement.
