The long awaited look-through tax, also referred to as the ‘Cayman tax’, has finally been adopted by the Belgian Federal Parliament on 24 July 2015. After the Program Law is published in the Belgian Official Journal, it will apply on income received, attributed or made payable by legal arrangements as of 1 January 2015.
The previous government already introduced an obligation for founders, beneficiaries and potential beneficiaries of ‘legal arrangements’ to report the existence of the legal arrangement in their annual tax return. This reporting obligation is now complemented by the Cayman Tax.
The Cayman Tax is essentially a look-through tax applicable to Belgian Personal Income Tax (“PIT”) and Belgian Legal Entities Tax (“LET”) by which income earned by a qualifying legal arrangement is attributed to the founder of such an arrangement as if the latter had received this income directly, and is taxed accordingly in his hands.
The Cayman Tax does not prohibit legal arrangements but aims at further discouraging their use by neutralising their possible tax benefits.
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