New circular letter confirms income tax neutrality of AIFM Law

The Belgian tax administration has just published a new circular letter pertaining to the income tax treatment of investment companies. The circular letter (click here for the French version and here for the Dutch version) confirms that the Belgian AIFM Law of 19 April 2014 does not have any (adverse) impact on the income tax treatment of several types of Belgian investment vehicles, such e.g. as the SICAV/BEVEK, the SICAF/BEVAK, the private PRICAF/PRIVAK and the SIC/VBS.
 
As you may be aware, the AIFM Law created some mismatches in cross-references used in the Belgian Income Tax Code (ITC) on the one hand and in the regulatory framework applicable to several types of regulated investment entities on the other hand. This resulted in some uncertainty as to whether after the entry into force of the AIFM Law, these entities would continue to be subject to certain (favorable) tax provisions, such as the special corporate income tax regime provided by Article 185bis ITC and the general withholding tax exemption laid down in Article 116 RD/ITC. The attached circular letter now explicitly confirms that this is indeed the case.
 
The principle that the AIFM Law does not negatively impact the income tax treatment of e.g. the institutional SIC/VBS has already been confirmed by the Belgian Ruling Commission on various occasions. The present circular letter offers the advantage (i) that it confirms that the ‘income tax neutrality’ of the AIFM Law also applies to other investment company types, such as the SICAV/BEVEK, the SICAF/BEVAK and the private PRICAF/PRIVAK), and (ii) that, at least to a large extent, it takes away the need for investment companies to apply for their own individual tax ruling in order to obtain certainty on their income tax treatment.
 
For completeness’ sake, please note that the Belgian tax administration already confirmed several months ago that the AIFM Law also does not negatively impact the VAT treatment of Belgian regulated investment companies (please refer to one of Stibbe's earlier newsletters for more information on this topic).