Taxation of Capital Gains on Financial Assets: New Leak from the Arizona Government?

You might remember that the coalition agreement, known as the "Arizona agreement" which led to the formation of the new Belgian government, contained a comprehensive tax chapter, notably including the introduction of taxation of capital gains on financial assets.

Already extensively discussed, commented on and detailed, we thought we knew the main points. However, a first draft of the text was widely leaked, first on social media (perhaps the trend of the moment...), before being picked up by the press.

It must be noted that it brings its share of surprises, sometimes happy, more often less so.

Below you will find some comments on the most salient aspects, structured as follows:

• Taxation of capital gains on financial assets.
• Exit tax.
• Accompanying measures.
• Some reflections.

1. Taxation of capital gains on financial assets

1.1. Context

For personal income tax purposes, capital gains on shares are taxed either as professional income (progressive rates and social contributions) or as miscellaneous income when these gains are considered speculative or abnormal (fixed rate of 33%).

Otherwise, these capital gains are not taxed when they fall under the normal management of private assets.

The reform proposal, which is scheduled to come into force on 1 January 2026, provides that capital gains on "financial assets" realised in the normal management of private assets will be taxed, which marks a departure from the tax system in place since the Act of 20 November 1962.

1.2. Targeted individuals

The taxation proposal targets private individuals and entities subject to legal entities income tax (non-profit organisations and foundations).

1.3. Targeted financial assets

The taxation project targets "financial assets", a broadly defined concept that includes the following assets: financial instruments, crypto-assets and currencies (including investment gold).

Also considered as financial assets are savings insurance contracts (branches 21 and 26) and investment insurance contracts (branch 23), provided they are not taxable as income from movable property or professional income at the time of redemption – as well as similar foreign insurance policies.

Pension funds, pension savings and group insurance are not targeted.

1.4. Targeted transactions

The taxation project targets the "transfer for consideration" of financial assets.

For the insurance contracts in question, the liquidation of capital and surrender values related to life insurance contracts and capitalisation operations are treated as a transfer for consideration. Payments to beneficiaries in the event of death or changes in investment funds within the insurance policies do not trigger capital gains tax.

1.5. Applicable rates

Principle

Exceptions apart, the rate is 10%, with an exemption for the first €10,000.

Financial assets held for 10 years continuously benefit from an exemption.

First exception – significant holdings

The rates for significant holdings apply to transfers for consideration of shares, units and profit shares in the case of significant holdings if, at any time during the 10 years preceding the transfer, the transferor, alone or with their spouse (and their families up to the fourth degree), has owned at least 20% of the shares, units or profit shares.

Second exception – internal capital gains

The text provides a specific rate for internal capital gains / majority intra-family leveraged buyouts.

As a result, a rate of 33% is applicable to transfers for consideration of shares, units and profit shares to a transferee over whom the transferor has direct or indirect control, alone or with their spouse (and their families up to the second degree).

This measure confirms – and even toughens – the position of the “Service des Décisions Anticipées” (SDA), which accepts the non-taxation of certain capital gains realised when the transfer of securities is part of an intergenerational transmission.

1.6. Computation of the taxable base

Computation of capital gains

In principle, the capital gain corresponds to the positive difference between the price received for the disposed financial assets and their acquisition value. By exception, for the targeted life insurance contracts, the capital gain corresponds to the positive difference between the capital or the redemption value paid and the total premiums paid.

The acquisition value is set as of 31 December 2025. The text then provides that when the acquisition value is higher than the value as of 31 December 2025, the acquisition value is retained as long as it is demonstrated by the taxpayer (this principle also applies to listed financial assets). The aim is to exempt so-called historical capital gains.

To determine the acquisition value of financial assets as of 31 December 2025, the following methods are provided depending on the cases:

• Unlisted financial assets (the taxpayer has a very large number of methods to determine the acquisition value): equity increased by an amount equal to four times EBITDA or determination of the value in a report prepared by a company auditor or a certified accountant no later than 31 December 2026. Alternative methods also exist by reference to a value used in certain transfers, formations or capital increases in 2025 or in certain contracts or contractual offers of put options (effective as of 1 January 2026).
• Listed financial assets: the acquisition value in principle corresponds to the last closing price of the year 2025.
• Stock options and shares acquired at a reduced price: the acquisition value of the underlying share is determined by reference to the value at the time of exercising the stock option, and the acquisition value of the stock option corresponds to the market value at the time the stock option can be exercised. For shares acquired at a reduced price, the acquisition value corresponds to the value of the share or share-equivalent instrument at the time of acquisition.

Other rules for determining the acquisition value can be summarised as follows:

• Belgian capital gains only: the acquisition value is determined on the first day of liability for personal income tax for new residents. In the case of "acquisition" of a financial asset "otherwise than for consideration" from a non-resident, the acquisition value is determined on the day of acquisition of the asset.
• Weighted average method: application of the weighted average in the case of holding multiple financial assets of the same nature.
• Temporary exemption in the case of capital gains on shares or units of an investment company: in the case of new shares or units received in exchange (redemption, merger, split).
• Contribution operations: all capital gains realised on contributions are exempt (regardless of whether or not the conditions of the Merger Directive are met). As already applicable, a taxed capital reserve is formed at the level of the holding company upon the contribution, and a withholding tax of 30% is payable on any subsequent dividend distribution.

Finally, the "price received" corresponds to the consideration received, whatever its form. By exception, for donations to a non-resident and the transfer of residence abroad, the price received corresponds to the value of the financial asset at the time of the donation or transfer.

Limited consideration of capital losses

Capital losses realised on sales can be offset against capital gains realised during the same taxable period, without carry forward to capital gains realised in subsequent years.

1.7. Collection methods

The tax should be directly withheld by Belgian financial intermediaries in the form of a withholding tax for non-significant participations (and through the tax return in other cases).

2. Exit tax

2.1. Context

In 2024, Belgium introduced an exit tax on "legal constructions", particularly in the case emigration of the founder.

The exit tax consists of a "fictional distribution" of "undistributed profits" taxed at 30%. This tax only applies to "legal constructions", particularly low-taxed foreign companies (1% or 15% depending on whether they are located within or outside the European Economic Area).

Today, Belgium is currently considering an exit tax on all capital gains on financial assets, including those relating to shares in companies that are subject to a normal tax regime.

2.2. Principle

The proposed taxation includes an exit tax in two situations: in the case of a transfer of residence (or the seat of wealth) abroad and for "any transfer to a non-resident", which likely includes donations.

A possibility of staggered taxation over five years is provided in the case of a transfer of residence or financial assets within the European Economic Area.

3. Accompanying measures

3.1. Abolition of the tax on the portion of interest on the sale of shares in certain collective investment undertakings (known as the "Reynders tax" or "19bis tax")

Following a European directive on the taxation of savings, Belgium introduced taxation of interest included in capital gains on the sale of units in investment funds with more than 10% debt claims.

To avoid further complicating an already complex matter, the 30% tax on a narrow base (interest alone) has been abandoned in favour of a proposed tax on a broader base (capital gains), limited for the time being to 10%.

The new tax provides for an exemption for so-called historical capital gains by setting, with some exceptions, the acquisition value as of 31 December 2025. In this context, the text does not provide for transitional measures to tax the share of interest generated before the application of the new capital gains tax.

3.2. Reduction of the tax on insurance premiums

As previously mentioned, life insurance contracts are subject to the new capital gains tax. In return, the tax on the premiums of these insurances, which currently stands at 2%, is reduced to 0.7%.

4. Some reflections

These new measures raise many questions and reflections.

How to articulate this new tax with the so-called "Cayman tax" or transparency tax?

When the residence of a founder and sole individual shareholder of a low-taxed company qualified as a "legal construction" is transferred, is it necessary to pay both the Cayman tax (30%) and the capital gains tax (10%)? The text does not rule this out.

Is this tax proposal in line with Belgium's international obligations?

In its double taxation treaties, Belgium generally grants the right to tax capital gains to the state considered as the state of tax residence at the time the capital gain is realised. The proposed taxation is not in line with Belgium's international obligations.

Belgium had already been condemned for a similar provision that established a fictitious payment or attribution of pensions the day before the transfer of residence abroad when these pensions were paid or attributed to the company director after his move. In doing so, Belgium did not interpret the international treaties it had signed in good faith. This provision is no longer applicable within the European Economic Area, nor when a double taxation treaty can be invoked.

Even more surprisingly, the proposed taxation aims to amend Article 90, 9° CIR/92 by establishing the taxation of capital gains on shares, particularly when a resident donates (considered as a transfer for consideration...) to a non-resident, while a donation to a resident is not taxed. This Article 90, 9° (formerly 67, 8° and 67ter CIR/64) has undergone many versions. One of them provided for taxation of certain capital gains on major holdings, but only if the purchaser was a foreign company, and not if it was a Belgian company. At the time, the European Court of Justice condemned Belgium for violating European law

Is the difference in treatment between a purely internal Belgian donation and one granted to a non-resident logical?

When transferring residence abroad or donating to a non-resident, an exit tax is levied. However, upon the subsequent sale of financial assets, it is not certain that a capital gain will ultimately be realised, and there are no provisions allowing for the refund of the tax.

Internal situations are therefore subject to a tax levied on a real taxable base, while situations involving a non-resident result in taxation on a fictitious taxable base, raising questions of equal treatment and proportionality. 

Does the text (clearly) address all situations?

A few grey areas remain. We discuss some examples below.

• In the case of a donation made by a non-resident (to a resident), the acquisition value is the value on the day of the donation. However, in the case of a donation between two residents followed by a sale made by the recipient, the text does not explicitly provide the acquisition value to be retained ... although we understand that it is the value in the hands of the initial donor.

In this example, suppose a non-resident and a resident each acquired a share of the same company for €10 on 31 December 2025. The value of the share rises to €100 on 30 June 2026.

The resident and the non-resident each donate their share to a Belgian resident on 30 June 2026.

The acquisition value of the share initially held by the resident donor is €10, while the acquisition value of the share initially held by the non-resident donor is €100.

On 30 June 2026, the Belgian resident recipient then sells these two shares at €90. He realises a taxable capital gain on one of them (€80) and a loss on the other (€10).

• The issue of donations (or inheritances) with charges is also not addressed: what is the "value of the financial asset" when such a donation has been made with charges?
   
• In the case of a purely internal Belgian succession, the text also does not address the issues of succession and the calculation of the taxable base in the hands of the heir who plans to sell financial assets received in inheritance. In the case of succession with non-resident heirs, the text does not explicitly state whether the terms "any transfer to a non-resident taxpayer", which triggers the exit tax, include transfers as a result of death. However, we understand that an inheritance is not, in principle, a transfer (unlike a gift).
   
• The issue of whether or not to consider certain ancillary transaction costs is not addressed (whether in the case of the exit tax or in other cases covered by the proposed taxation).
   
• No specific provision is made for the dismemberment of property. What happens, for example, in the case of a donation in dismemberment of property, particularly when the donor reserves a usufruct allowing him to benefit from any capital gains (Article 3.148 of the new Civil Code allowing, in certain cases, a functional right of disposition in favour of the usufructuary; formerly "quasi-usufruit" in French)?

Whether organised or not, this leak will have repercussions, including for certain taxpayers. It reveals elements about the intentions of its authors, who stress the importance of anticipating future effects today.