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Belgium's Di Rupo Confirms Withholding Tax Rate Changes

by Ulrika Lomas, Tax-News.com, Brussels

14 November 2013


In a parliamentary response, Belgian Prime Minister Elio Di Rupo confirmed the decision by both Government and parliament to reduce the rate of withholding tax levied on small- and medium-sized enterprise (SME) dividends from 25 percent to 15 percent, to encourage entrepreneurs to strengthen the capital of their companies.

Defending the decision, Di Rupo stressed that the measure, applicable to all new capital issued by SMEs from July 1, 2013, is an important provision aimed at significantly benefiting SMEs in Belgium.

Furthermore, Di Rupo explained that at the same time the Government and parliament united on plans to increase from 10 percent to 25 percent from October 1, 2014, the rate of tax imposed on liquidation proceeds, namely the amount of capital reimbursed to shareholders above paid-in capital upon liquidation. The initiative is intended to align the tax rate applied to liquidation proceeds with that levied on most other types of investment income.

The measure was deemed necessary to ensure that shareholders in receipt of liquidation proceeds contribute in the same way as other investors in Belgium, Prime Minister Di Rupo made clear. Moreover, the initiative brings the tax rates applied in Belgium nearer to those levied on capital income in most other European countries, Di Rupo added.

Concluding, Di Rupo noted that a transitional regulation is in place until October 1, 2014. Consequently, the 10 percent rate of tax will continue to apply until then for existing reserves, under the conditions provided for by law. This decision takes into account the concerns expressed by businesses in Belgium, as well as the concerns of individuals who invest in those businesses.

TAGS: individuals | tax | investment | business | Belgium | law | entrepreneurs | tax rates | withholding tax | tax breaks | dividends | regulation | individual income tax | Europe

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