Navigating carried interest in Belgium

Yes.

The Programme Law of 18 July 2025 introduced a dedicated tax framework for carried interest in Belgium, with the aim of providing greater clarity on the tax treatment of such income within the investment fund industry. Under this framework, carried interest received by individuals, including foreign tax residents where the income is taxable in Belgium, is treated as movable income and is subject to a flat tax rate of 25%. Such income cannot be requalified as professional income.

The regime applies to what is qualified as a “disproportionate” return, meaning the portion of the return that exceeds the proportional return that an ordinary investor would have obtained. The beneficiary must generally make a personal investment and be exposed to a genuine risk of loss. The regime covers profit distributions during the life of the vehicle, capital gains, share buy-back bonuses and liquidation bonuses. Income relating to shares acquired through the exercise of stock options governed by the Law of 26 March 1999 is, however, expressly excluded from this framework.

The regime applies to individuals who carry out activities, directly or indirectly, for a carried interest vehicle or its manager, as well as to individuals related to such persons. By contrast, companies, such as management companies or “CarryCos”, are excluded from this specific regime and remain subject to the ordinary corporate income tax rules. 

The regime applies to income derived from a “carried interest vehicle”, defined as any Belgian or foreign collective investment undertaking that meets the criteria of an alternative investment fund (AIF/OPCA). Entities qualifying as UCITS are specifically excluded.

No. Since the law classifies such income as movable income and expressly excludes its requalification as professional income, it should not be subject to social security contributions.

A final withholding tax of 25% must in principle be withheld by the debtor at the time of payment or attribution. Where the fund is a foreign vehicle related to a Belgian entity for which the beneficiary performs activities, a legal fiction deems that Belgian entity to be the debtor of the withholding tax. In addition, small companies whose shareholders qualify as carried interest beneficiaries are prohibited from constituting a liquidation reserve for any taxable period during which they hold shares or units in a carried interest vehicle, including the entire taxable period in which those shares or units are definitively disposed of, in order to prevent a near-total tax exemption through intermediary structures. Finally, despite the introduction of the 25% tax rate, certain corporate structures may, in some cases, remain more tax-efficient by benefiting from the dividends received deduction or the participation exemption at corporate level, combined with a reduced withholding tax rate upon the subsequent distribution of dividends to the individual shareholder.