The Belgian government has significantly broadened the scope of the Belgian stock exchange tax. Consequently, as of 1 January 2017 transactions carried out by intermediaries established abroad (e.g. foreign banks) are also subject to the Belgian stock exchange tax provided that the order is given directly or indirectly to a foreign intermediary by (i) a natural person having its habitual residence in Belgium or (ii) a legal entity from its registered office or permanent establishment in Belgium.
Following the law, the tax is payable at the latest on the last working day of the second month following the month in which the transaction occurred or was executed. For transactions in January 2017 the tax would therefore in principle be due by 28 February 2017 (general rule) or by 31 March 2017 (if the tax return is submitted by the Belgian resident). However, in a press release of 27 February 2017 the Minister of Finance announced that an extension is granted (for all foreign transactions) till 30 June 2017.
Last week, also the Royal Decree was published installing the practical formalities for a foreign intermediary to assign a fiscal representative to fulfill the compliance formalities related to the payment and reporting of the Belgian stock exchange tax (see below).
For transactions carried out abroad the Code of Miscellaneous Fees and Taxes (the law) provides that the ordering party is liable for the reporting and payment obligation unless and until he can evidence that the tax has already been paid by the foreign intermediary or its Belgian fiscal representative.
The law provides that foreign intermediaries can appoint a (jointly and severally liable) fiscal representative in Belgium. This representative, an independent company or a company that is related to the foreign financial intermediary, is then responsible for the payment of the tax and the filing of a tax return and an informative statement (“borderel”). This allows the foreign intermediary to take over the reporting and paying responsibility of their Belgian clients (for commercial reasons).
The Royal Decree containing the conditions and modalities to assign such fiscal representative has recently been published (Royal Decree of 16.02.2017 – Belgian Official Gazette dd. 22.02.2017).
In summary, the Royal Decree determines the following:
- Established in Belgium
- Has the power to conclude contracts; and
- Is sufficiently solvent. In this respect, documentation needs to be provided, showing that the fiscal representative is sufficiently solvent to fulfill its obligations for a whole year.
As the law raises several practical questions - e.g. how the concept of indirect order should be interpreted, whether also discretionary management is targeted, etc. - the tax authorities are working on a FAQ which we expect will soon be published.