Jambon's proposal for implementing capital gains tax on financial assets

Just over two months after the Government Agreement, the finance minister presented his first proposal for a new capital gains tax in Belgium (the “solidarity contribution”) to his Arizona partners.

General

In line with the government agreement, a capital gains tax of 10% would be introduced on financial assets. The new draft regime would apply to individuals (personal income tax) and non-profit entities (legal entities tax) as of 1 January 2026, with a step-up for historical capital gains that have accrued before 31 December 2025.

The definition of ‘financial assets’ would include four categories: a) financial instruments, b) certain insurance contracts, c) crypto-assets, and d) currency (including investment gold). Financial instruments would be broadly defined in the proposal with reference to financial legislation. Alternative investments, such as art, remain out of scope.

The new regime would only apply to capital gains resulting from a transfer for consideration (made for payment). This means that any other transfers (e.g. donations) would remain out of scope. However, the proposal provides for three situations in which a transfer for consideration would be deemed to take place:

• In the context of life insurance contracts and capitalisation transactions, (only) transactions involving the payment of capital during life and contractual surrender values. The death benefit or a change between investment funds or insurance would not trigger any capital gains tax.

• When the taxpayer transfers his tax residence or primary assets location abroad. A new exit tax upon emigration of the taxpayer would be introduced.

• Any transfer to a non-resident taxpayer (including gifts to a non-resident beneficiary).

On the other hand, all capital gains realised as a result of contribution transactions would be fully exempt from the new regime.

Broadly speaking three new categories of capital gains tax on financial assets would be introduced.

a) A specific regime with an increased 33% rate for internal capital gains when shares are sold to a company which the seller controls (alone or with family members).

b) A special regime for substantial interests when the taxpayer (alone or with family members) has a participation of 20% of shares or profit shares in a company, resulting in an annual exemption of a first tranche of EUR 1 million in capital gains (indexed amount for tax year 2027), and reduced rates of 1.25%, 2.25% and 5% up to EUR 10 million.

c) A general regime of 10% with an annually exempt amount of EUR 10,000 and a full exemption after 10 years (for assets held for over 10 years). This is a residual category that only applies if a) or b) do not apply, meaning that those under the specific and special regimes cannot benefit from the 10 years exemption.

Points of attention

Family buy-outs

Currently the sale of a shareholding to the holding company of family members can remain tax-free under certain conditions in exit scenarios (confirmed by the ruling practice, for example, when valid arguments such as arranging the family’s succession and the intended future investment policy exist). Based on the draft Memorandum of Understanding, it seems that companies controlled by family members, but not by the taxpayer himself, would not trigger the specific regime. Even if the legislator would clarify this, these family buy-outs would still be covered by the special or general regimes, thus increasing the cost and need for financing.

Impact on estate planning

While, in principle, the new capital gains tax would only target transfers for consideration and cross-border gifts of financial assets (e.g. gifts to children living abroad), it would also apply when there is a change of residence. Considering that the capital gains tax would be due by the bare owner, a child living and working abroad after receiving a prior donation in bare ownership could therefore, in some cases, trigger the tax.

Valuation and step-up

For non-listed financial assets, specific rules are provided to determine the value as of 31 December 2025, in order to claim the step-up for the gains that have previously accrued. These include i.e. rules based on transfers between independent parties (including incorporations or capital increases) occurring in 2025 and shareholders' equity increased by an amount of 4x the EBITDA. However, a report drawn up by an auditor or certified accountant would also be considered an acceptable valuation method, but note that taxpayers would only have until 31 December 2026 to have such a valuation report drawn up.

What’s next?

The proposal remains open to political discussions and amendments. Certain aspects of the proposal, such as the exemption for capital gains on financial assets (excluding sales to controlled companies and significant interests) held for over 10 years, are expected to be subjects of considerable debate.

Furthermore, there are several unresolved issues, including:

• The interaction with the tax provisions on share redemptions, which are capital gains that may subsequently be reclassified as dividends, could result in potential double taxation.

• The cumulative effect of exit taxes in the Cayman tax, corporate taxation, and capital gains tax and whether these are compatible with EU laws.

• The characterisation of contributions to a civil law company without legal personality (maatschap/société simple).

We will continue to monitor all new developments closely.