A holding company is a company whose purpose is to acquire, hold in its portfolio and manage financial shares in other companies, and to direct and administer companies through these shares.
It can also carry out any other activities in the areas of trade, industry or real estate, for example.
A holding company also seeks to structure and streamline an organisation and finance a group of companies.
Finally, many holding companies are created with the aim of ensuring stability for shareholders, control and transferability.
The following paragraphs are designed to give you a brief overview of the system.
Our activity is focused both on the keeping of accounts, as well as on tax and financial consultancy and optimisation.
Certification and special supervision
Wealth or property tax
Inbound dividends regime: dividends paid to a Belgian holding company
Deduction at source
In Belgium: none
In Europe: none if the share held by the Belgian holding company is at least 10% and is held for 1 year (EU Directive)
Outside Europe: the large number of international double-taxation agreements signed by Belgium make it possible to limit foreign deductions at source
Belgian taxation of dividends
In principle, the taxable base is limited to 5% of the dividend received, which is equivalent to a maximum tax of 1.77%. This tax will be reduced to zero from 2018.
To benefit from this regime, a number of conditions must be met; the share held in the company must be at least 10% or amount to an investment value of €2,500,000. In addition, the share must be held for 1 year and the dividends must not come from tax havens or companies subject to a considerably more favourable tax regime (a tax rate of < 15%, for example)
Outbound dividends regime: dividends paid by a Belgian holding company: deductions at source
To a company
None, if the parent company is established in Europe (EU Directive) or is established in a country with which Belgium has signed an international double-taxation agreement, provided that the share held by the Belgian parent company is at least 10% and is held for 1 year
To a natural person resident in Belgium
Deduction of withholding tax of 15% or 30%
To a non-resident natural person
Deduction of withholding tax of 15% or 30% but reductions possible under double-taxation agreements (to be examined on a case-by-case basis)
Tax on transfers of interests or shares (capital gains)
By the holding company
None (0%), except
– tax at a rate of 0.412% if the selling company is not an SME. This tax will be scrapped from 2018.
– tax at a rate of 25.75% if the share is sold within a 1-year period
– tax at a rate of 25.75% to 33.99% if the shares are in companies established in tax havens or subject to a considerably more favourable tax regime. These rates will be reduced to 20% and 29% in 2018 and 20% and 25% in 2020.
From 1st January 2018, to benefit from capital-gains tax exemption, the share held in the company must be at least 10% or amount to an investment value of €2,500,000.
SMEs are companies with a legal personality which, as at the date of the balance sheet for the last closed financial year, do not exceed more than one of the 3 following limits:
- balance sheet total: maximum of €4,500,000;
- turnover (before VAT): maximum of €9,000,000;
- annual average number of employed workers: maximum of 50 workers (expressed in full-time equivalents).
Affiliated companies are consolidated for calculating the criteria.
By the holding company’s affiliates
None, except in specific situations
Deduction of interest paid by a Belgian holding company
Unlimited, except under the thin capitalisation rule, which relates to the interest on certain loans. This interest is not deductible if a “debt-to-equity ratio” of 5:1 is exceeded. This means that, when the amount of certain debts is in excess of 5 x the amount of the company’s equity, the interest on the excess amount cannot be deducted from the taxable base.
This rule applies to debts in relation to:
– companies subject to low tax rates or untaxed companies (tax havens or preferential tax regimes);
– companies of the group to which the debtor belongs.
There are exceptions and specific arrangements for a group’s cash pooling companies.
Deduction of losses
Unlimited and without time constraints
Notional interest deduction
See the above heading “Tax advantages – Belgian regime”.
Note that the calculation of the notional interest deduction is not favourable to holding companies because shares held are deducted from the calculation base, which reduces the deduction. Nevertheless, a holding company is often used as a means to optimise the notional interest deduction in other companies, for example in finance companies capitalised by the holding company
Fees and royalties
It is possible to limit the taxable base to 15% of the amount of innovation income, which is equivalent to a maximum tax of 5.10% of the fee.
In some cases, it is possible to benefit from foreign taxes being charged on top of Belgian tax (QFIE mechanism).