Tax system

This section provides a survey of the tax system applicable to income such as income attributed by GBL. We have made efforts to ensure that the information provided is as complete as possible, but we cannot cover the entire subject of taxation and all the specific details involved. We therefore recommend you to consult a specialist for further details.

Tax system applicable to dividends subject to
withholding tax
personal income tax 
corporation tax 
tax on legal entities
non-resident tax 
   
Tax system applicable to bond interests subject to
withholding tax
personal income tax
corporation tax
tax on legal entities
non-resident tax 
   

Tax system applicable to dividends subject to withholding tax   ()

The dividends distributed by a Belgian company are in principle liable to a withholding tax deducted at source.

The rate of this tax is set at 25% (ordinary shares).

However, this is reduced to 15% 

• when the dividend is related to shares issued as from 1 January 1994 by means of a public issue; and 
•  provided that the company distributing this dividend does not irrevocably waive the benefit of this reduced withholding tax of 15 %; if this benefit has been waived, then the withholding tax amounts to 25 %.
  

GBL has decided that its shares issued since 1 January 1994 shall benefit from the 15% withholding tax (VVPR shares - Verminderde Voorheffing Précompte Réduit).

In May 1996, in accordance with the legislation in force, GBL undertook the 'stripping' process to ensure optimal liquidity for all its shares while at the same time offering shareholders the benefit of the reduced withholding tax.

In practical terms, shareholders wishing to benefit from the reduced withholding tax of 15% must hold two coupons and present them together

• the coupon attached to the share (ordinary or VVPR);
• the VVPR strip

If these two coupons are not available, withholding tax will be deducted from the dividend distributed at the normal rate of 25%

Tax system applicable to dividends subject to personal income tax   ()

For the inhabitants of the Kingdom of Belgium, this withholding tax of 25% or 15% in principle constitutes a full discharge of personal income tax.

In the context of pension saving schemes, the dividends attributed to undertakings or collective investment approved for the management of joint savings accounts or to holders of individual savings accounts as regards the assets in these accounts, are not considered as taxable income. Such income is therefore exempted from withholding tax.

Tax system applicable to dividends subject to corporation tax   ()

The withholding tax of 25% or 15 % is also deducted.

The dividends collected by these taxpayers are deductible from their taxable profit for up to 95 % of their net amount plus the withholding tax levied, to the extent that this is of benefit to them, provided that

1° on the date of allotment or payment, the beneficiary company owns in the capital of the distributing company a share of at least 10% or whose value totals at least EUR 2,500,000 ;

2° the earnings concern shares taking the form of long-term investments and which are or have been owned in full for an uninterrupted period of at least one year.

The advance levy is usually set against the company tax payable.

However, the levying of the withholding tax is entirely waived if the resident company receiving the dividend has retained a minimum participation of 10% in the share capital of the debtor company for an uninterrupted period of at least one year.

Tax system applicable to dividends subject to the tax on legal entities   ()

For taxpayers subject to the tax on legal entities, the withholding tax is due at the rate of 25% or 15% and constitutes the definitive tax.

The dividends paid to the state and to the subordinate authorities are exempted from withholding tax.

Tax system applicable to dividends subject to non-resident tax   ()

For persons who are not resident in the Kingdom of Belgium (individuals and legal entities), subject to non-resident tax, the withholding tax is also due at the rate of 25% or 15%, subject to exemptions or reductions provided for by international agreements aimed at preventing double taxation agreed by the Kingdom of Belgium.

However, the levying of withholding tax is waived entirely when the beneficiary is: 

• a non-resident saver who is not involved in a profit-oriented business or transactions and who is exempt from all tax on income in the country in which he is resident;
• an approved Belgian investment trust whose share subscription is limited to these same non-residents and whose shares are registered;
• a parent company from another Member State of the European Union, provided that it has retained a minimum holding of 10% in the share capital of the subsidiary company for an uninterrupted period of at least one year.

BERICHT AAN DE AANDEELHOUDERS, NIET-INWONERS,NOTICE TO NON-RESIDENT SHAREHOLDERS INTERESTED IN
BENEFITING FROM DOUBLE TAXATION CONVENTIONS

Preliminary observations:

GBL has been informed of the difficulties non-resident shareholders encounter when they attempt to benefit from the rights to which they are entitled under double taxation conventions (DTC). Accordingly, a summary of the rules applicable in this area follows.
GBL would like to point out that it abides strictly by all legal obligations in this respect and enjoys no special rules or exceptional measures of any kind whatsoever.

1. When GBL pays a dividend, it must deduct a withholding tax (WT). Under Belgian law, the rate of WT amounts to:

• 25% for an "ordinary" coupon;
• 15% for the same coupon accompanied by a "VVPR STRIP".

2. When a non-resident shareholder receives the GBL dividend, the double taxation conventions signed by Belgium with the state of residence of the said shareholder establishes – in most cases – that the rate of WT is reduced to 15%, 10% or even 5%.

To benefit from this reduction, the shareholder must submit a "Form 276 DIV" duly authorised by the competent tax authorities of his or her Member State of residence.

3. The tax authorities have put two procedures in place for this purpose.

3.1. Procedure for "automatic reduction at the source" (with the involvement of GBL)

On the dividend payment date, the WT under Belgian law is "automatically reduced at the source" to the rate established by the DTC.

This procedure is carried out under the responsibility of GBL and obliges the Group to be in possession of "Form 276 DIV" no later than the 10th day following the dividend payment date.

Beyond this deadline, the procedure is time-barred; the non-resident shareholder may nevertheless still make use of the procedure for "reimbursement of over-payment".

3.2. Procedure for "reimbursement of over-payment" (without the involvement of GBL)

On the dividend payment date, the non-resident shareholder pays the WT at the rate applied under Belgian law, namely 25% or 15%.

He then implements the "reimbursement of over-payment" procedure by transmitting "Form 276 DIV" to the Belgian Central Taxation Office, Brussels-Foreign Division ("BCT Bruxelles Étranger" - Current address: Bureau Central de Taxation, Bruxelles Etranger (North Galaxy B7), Boulevard Albert II, 33 boîte 32, 1030 Bruxelles). As a general rule, this form must be transmitted within three years from 1 January of the year of payment of the dividend.

In this case, GBL does not intervene and is not involved in the procedure in any way. The procedure exclusively involves the non-resident shareholder and the Belgian tax administration.

Tax system applicable to bond interests subject to withholding tax   ()

Income from bonds is subject to a withholding tax of 15% under current fiscal legislation.

Tax system applicable to bond interests subject to personal income tax   ()

For the inhabitants of the Kingdom of Belgium, this withholding tax constitutes in principle full discharge of personal income tax.

In the context of pension saving schemes, the interest attributed to undertakings for collective investment approved for the management of joint savings accounts or to holders of individual savings accounts as regards the assets in these accounts is not considered as taxable income. Such income is therefore exempted from withholding tax.

Tax system applicable to bond interests subject to corporation tax   ()

A withholding tax of 15% is also levied, subject to exemptions granted in favour of financial institutions and similar enterprises and provided that these fulfill certain conditions. Among these conditions, the bonds must be registered by name with GBL throughout the entire period to which the interest relates.

In principle, 

• the interest collected, plus the withholding tax if appropriate, is subject to corporation tax;
• the withholding tax levied is assignable.

Tax system applicable to bond interests subject to tax on legal entities   ()

For the taxpayers subject to tax on legal entities, the withholding tax is due at the 15% rate currently in force and constitutes the definitive tax thereon. The interest paid to semi-state social security bodies or similar bodies is also exempt from withholding tax provided that they fulfill certain conditions. One of these conditions is that throughout the entire period to which the interest relates, the bonds must be the subject: 

• either of a nominative registration with GBL;
• or, if they are the bearer, of an open deposit in Belgium with a financial body regulated by the Banking and Finance Commission.

Tax system applicable to bond interests subject to non-resident tax   ()

For persons who are not resident in the Kingdom of Belgium (individuals and legal entities), subject to non-resident tax, the withholding tax is also due at the current rate of 15%, subject to exemptions or reductions provided for by international agreements aimed at preventing double taxation concluded by the Kingdom of Belgium.

However, the levy of withholding tax is waived entirely when the beneficiary is a non-resident provided certain conditions are fulfilled, in particular the fact that the bonds are subject to a nominative registration with GBL throughout the period to which the interest relates.