Capital gains tax: confirmations from the circular

For reference: the new law introduces three regimes: a regime taxing internal capital gains (A), a regime taxing capital gains on substantial shareholdings (B) and, finally, a residual category taxing capital gains on financial assets that do not fall under the first two regimes (C).

1. Optimisation is not abuse

The circular states this unequivocally: taxpayers are free to determine when they realise their capital gains and losses, and optimising the use of the available exemptions in doing so cannot be considered abuse. Realising capital losses, spreading realisations over several taxable periods and gradually building up the exempt amounts therefore fall within normal management.

This confirmation is reinforced by another: the capital gain declared under the tax regime is presumed to be correct, since Article 339 BITC92 requires the tax authorities to use the tax return and the information provided as the basis for calculating the tax. The tax return will only be corrected if the tax authorities demonstrate abnormal management or speculation, with the burden of proof resting on them. The application of the 33% rate is therefore the exception, not the rule.

2. The taxpayer: the bare owner, in an interpretation consistent with civil law

Article 92, §3, a) BITC92 designates the owner or bare owner of the transferred assets. The circular confirms that the usufructuary is not a taxpayer within the meaning of the regime: when an asset is held in split ownership, the realised capital gain is allocated entirely to the bare owner.

This has three consequences, all consistent with the civil-law logic of split ownership:

• the transfer of the usufruct alone by the usufructuary is not taxable: such a transaction may take place without the knowledge or consent of the bare owner and is therefore not taxable in the latter's hands;
• the termination of the usufruct, particularly upon death, as well as the conversion of the usufruct into a sum of money, do not constitute realisations;
• where the full owner transfers only the usufruct, the capital gain is taxable in their hands, as the remaining bare owner.

The more notable confirmation concerns the "title and finance" arrangement. Where an asset is separate property pursuant to Article 2.3.19, 5° of the new Civil Code, it is treated for tax purposes as separate property, even if it was financed with common funds: the assessment is made exclusively in the hands of the taxpayer who holds the title, irrespective of the fact that the economic value of the shares is deemed to belong to the common estate.

The reasoning follows the civil-law analysis exactly. Pursuant to Articles 2.3.22 and 2.3.43, §3, 1° of the new Civil Code, the other spouse's "patrimonial claim" can only be exercised when the matrimonial property regime is dissolved: it does not confer a right to half of the shares in kind, since the shares themselves, unlike their value, do not form part of the estate to be divided. The circular draws a tax conclusion from this: for the assessment of the 20% threshold for substantial shareholdings as well, the assessment is made at the level of the holder of the security.

3. Interests in a simple partnership are securities

Interests in a simple partnership fall within the transferable securities referred to in Article 2, 1°, a) of the Act of 2 August 2002 and therefore within the financial instruments referred to in Article 92, §1, a) BITC92. The transfer for consideration of interests in a simple partnership consequently falls within the scope of the capital gains tax, even where the simple partnership itself does not hold any financial assets.

However, the circular links several reassuring confirmations to this finding. Entering into or terminating a simple partnership agreement does not in itself trigger capital gains tax: this requires a realisation. The contribution of financial assets only gives rise to a realisation if it entails an implicit exchange: the contribution of identical assets by two partners does not fundamentally alter their respective assets and is not taxable, since no realisation results from the contribution, whereas the contribution of different assets entails an implicit exchange and a partial transfer.

Similarly, the contribution of a portfolio held in co-ownership, followed by its withdrawal in the same proportions, constitutes a realisation neither upon contribution nor upon withdrawal; the VVPRbis regime is not affected, since the requirement of uninterrupted ownership under Article 269, §2, 6° BITC92 remains satisfied. Finally, the contribution of shares or interests benefits from the exemption under Article 96/2, first paragraph, 4° BITC92, which is not limited to contributions to a company with legal personality.

One point of attention nevertheless remains, which the circular itself highlights: tax transparency allocates the capital gain to the partners pro rata to their interests, based on the historical acquisition values, regardless of the identity of the contributor. The partners are invited to take this latent tax exposure into account in their mutual arrangements, in particular by assigning different weightings to the interests in the simple partnership agreement.

4. Valuation of unlisted securities: the group's statutory auditor is permitted

By way of derogation from the flat-rate valuation based on equity increased by four times EBITDA, the value as at 31 December 2025 may be determined by a statutory auditor who is not the company's auditor, or by a certified accountant, provided that they do not act as the company's usual professional adviser. The valuation must be carried out no later than 31 December 2027. The example provided in the circular accepts that this value may be used even where it is higher than the values obtained using the three methods provided for by law.

The confirmation expected by the profession is explicit: where the company uses accounting firm X, the statutory audit firm belonging to the same group X may prepare the valuation report without issue, provided that the statutory audit firm is established as a separate legal entity and, of course, is not the company's usual professional adviser. Belonging to the same network therefore does not prevent the required independence for this engagement.

The formula based on equity and EBITDA is also available for shareholdings in unlisted foreign companies, where appropriate on the basis of foreign accounting standards.

5. The tax authorities will not challenge the valuation, except in exceptional cases

Where the shareholders of the same unlisted company each submit a different valuation report because they have separately engaged another certified accountant and/or statutory auditor, the valuations may differ. The circular states that, in such a situation, the tax authorities will not choose between the different valuation reports.

It goes further: the tax authorities will only challenge a valuation in very exceptional cases, for example where it is based on false or inaccurate documents. Where, on the other hand, the valuation is based on methods considered standard within the sector, it cannot in principle be challenged. The legal certainty associated with a valuation report prepared before 31 December 2027 is therefore high.

The same flexibility applies to other categories of assets: for crypto-assets, a screenshot of the trading app may suffice, and there is no requirement to calculate an average based on all exchanges on which the crypto-asset concerned is traded; for foreign currency portfolios, the taxpayer may use the closing rate determined by their own financial institution.

6. Private equity and management buy-outs escape the exceptional regime

There was a genuine concern that takeover transactions involving a reinvestment clause would fall under the internal capital gains regime, taxed at 33% without exemption. The circular rejects this interpretation: where the selling shareholder is required under the takeover agreement to invest capital in the acquisition holding company themselves, the so-called "skin in the game" clause, the exceptional regime does not in principle apply, since the shareholder then exercises control jointly with a third party, namely the private equity fund. Article 90, first paragraph, 9°, a) BITC92 only covers control exercised "alone" or "together with close family members".

The circular also specifies that the usual provisions in agreements between a private equity fund and a selling shareholder, such as veto rights over certain decisions, arrangements concerning the direction of policy, strategy, budgets, acquisitions or growth, and binding nomination rights for the governing body, do not in themselves constitute evidence of control within the meaning of Article 1:14 BCCA. The selling shareholder cannot therefore be regarded as a party exercising control solely on that basis.

As regards a management buy-out, where management acquires the majority of the shares in the acquisition vehicle and the selling shareholder retains or acquires only a minority interest, the arrangements made in the takeover agreement will in principle not be decisive: the control condition must always be assessed on the basis of Article 1:14 BCCA.

7. Anti-abuse provisions: a defined scope, a severe sanction

Article 344, §1 BITC92 remains applicable. The circular has the merit of identifying the arrangements targeted, which conversely helps define what is not targeted a priori:

• the gratuitous transfer of financial assets to a non-resident who disposes of them, realises the capital gain and subsequently transfers the proceeds of the sale back to the original Belgian resident free of charge;
• splitting a sale into a transfer of bare ownership followed by a transfer of the usufruct to the same acquirer, with the sole purpose of avoiding tax on the full capital gain;
• the transfer by parents to their children's holding company, followed by the transfer to the children of the balance of the current account, or the direct transfer of shares to the children followed by the donation or transfer of the sale price received;
• the sale of shares to a controlled holding company of one's own, whereby the sale price is recorded as a debt on the current account and subsequently repaid using funds derived from dividends distributed by the transferred company to the holding company; the circular refers to the judgment of the Antwerp Court of Appeal of 7 October 2023;
• the emergence, at any time after the sale, of joint control that is not justified by any motive other than a tax motive, allowing the transaction to be reassessed and reclassified as an internal capital gain;
• the transfer to a legal entity established in the EEA, immediately followed by a resale outside the EEA, which may be regarded as a sham transaction and taxed at 16.5% on the total capital gain.

The consequence deserves particular attention, as it shifts the focus from the rate to the classification. The reference date applies in principle to internal capital gains, meaning that the historical capital gain remains exempt. However, where the transaction is reclassified as a dividend distribution, the entire sale price may be targeted, including the portion of the capital gain accrued before 1 January 2026.

8. Other useful confirmations

• Banking investment products: the realisation occurs on the transaction date, not the settlement date.
• Earn-out arrangements: the balance of the price is only taxed when it becomes certain and fixed, at the same rates and with the same exemptions as the first tranche. Transactions concluded before 1 January 2026 with a certain and fixed earn-out are not taxable, even if the earn-out is actually paid after 1 January 2026.
• The FIFO method applies separately at the level of each securities account.
• Switching between investment funds within branch 23 insurance policies or changes within a branch 44 insurance policy do not constitute a distribution: no capital gain is realised at that time.
• Transfers of crypto-assets between different crypto-asset portfolios belonging to the same taxpayer do not constitute realisations.
• For an asset acquired before 2026, the capital loss is measured from the reference date: an economically profitable transaction may generate an offsettable tax loss.
• Within type B, the capital loss may be offset in the most advantageous manner, including against a capital gain taxed at 16.5%.
• The exit tax of the holder of a substantial shareholding is calculated at the most favourable rate, namely the scale from 1.25% to 10%, with the exemption of one million euros; a subsequent transfer outside the EEA no longer has any impact.
• Transfers within twenty-four months of departure that would have been exempt in Belgium do not terminate the deferral of payment of the exit tax; the same applies to pledges without transfer of ownership.
• Upon returning to Belgium within twenty-four months, the initial acquisition value is retained, where applicable increased by the taxable base of the foreign tax of the same nature.
• A non-emancipated minor is a taxpayer in respect of their own capital gains and benefits from their own exemptions.
• Outstanding balance insurance and funeral insurance fall outside the scope, even in the event of early surrender.

9. What is still expected

The circular is an initial commentary, and the regime is not yet complete.

• Two announced circulars. One devoted to withholding tax on investment income, in particular the arrangements for the opt-in and opt-out regimes, the collection mechanism affecting the largest number of taxpayers; the other devoted to legal entities tax, which concerns non-profit associations and private foundations.
• Two Royal Decrees. The first will adjust the base amount of EUR 480 for the additional exempt tranche upwards or downwards, so that the indexed amount for assessment year 2028 effectively amounts to EUR 1,000; the final indexation coefficient can only be determined at the end of December 2026. The second will determine the essential elements and deadlines for the annual certificate to be submitted in the event of deferred payment of the exit tax.
• A form. The form that intermediaries involved in type A and type B transactions will have to use to comply with the reporting obligation under Article 326bis BITC92.

Two deadlines should, however, already be entered in the calendar for the files concerned: 31 December 2027, the deadline for having the valuation of an unlisted asset as at 31 December 2025 prepared, and 31 December 2030, the end date of the derogating regime allowing the actual acquisition value to be used, as well as the corrections applicable to insurance contracts concluded before 2026.

Finally, it should be kept in mind that this commentary relates solely to personal income tax: the treatment under legal entities tax and the mechanism for withholding tax on investment income still need to be commented on, and the positions adopted remain administrative positions, without legislative force and subject to change. We are monitoring these developments.