In Belgium, contractual mutual funds are considered fiscally transparent. As a result, Belgian (corporate or individual) investors must include in their tax reporting, on an annual basis, the income received by the foreign mutual fund as if they received it directly (and this regardless of a possible distribution of income by the fund to the investors).
Contractual mutual funds distributed to Belgian investors must consequently provide a breakdown of the income received by the fund. This breakdown will differ depending on whether the investor is a natural person or a corporation.
The breakdown provided to private individual investors must include dividends and interest, including interest as stipulated in article 19bis of the Belgian ITC (Belgian tax on savings income).
The breakdown provided to corporate investors must include dividends, interest and capital gains and losses.
This must be provided on a day-to-day basis for the investor to be able to take purchases and sales made throughout the year into account.
The Belgian tax on savings income is applicable in case of sale or redemption of shares of undertakings for collective investment - (UCI)/UC in transferable securities (TS) - or in case of liquidation of a UCI(TS) with more than 10% (for shares of UCI and UCITS acquired since 1 January, 2018) or 25% (for shares of UCITS acquired before that date) of assets invested in debt-related assets. The percentage of the assets of the fund invested in debt-related assets is the so-called Asset Test. This tax only applies to Belgian resident individuals.
The investor is taxed on the income on debt-related assets accumulated during the detention period. This amount is the Belgian Taxable Income per Share (BTIS), which reflects the accumulation of income on debt-related assets. The taxable basis will be equal to the difference between the BTIS on the date of sale or redemption and on the date of acquisition.
However, in the case of contractual mutual funds (considered fiscally transparent in Belgium), providing Belgian private investors with a breakdown of the income received, the debt-related income included in the BTIS will only include income not already detailed in the breakdown provided to private investors. In other words, the BTIS will only include latent debt-related income.
Where no BTIS is calculated for the fund, the taxable basis will equal the capital gain earned by the investor, multiplied by the Asset Test.
If no Asset Test is available, the taxable basis will equal the full capital gain earned by the investor.
As only UCIs with more than 10% (for shares acquired after 1 January, 2018) or 25% (for shares acquired before 1 January, 2018) of their assets invested in debt-related assets are within the scope of the Belgian tax on savings income, it’s crucial for any fund distributed on the Belgian market to be able to provide Belgian investors and distributors with accurate and up-to-date information regarding its Asset Test.
The Asset Test is indeed the only accurate information for determining if a UCI(TS) is within the scope of the Belgian tax on savings income. In addition, the need to calculate the BTIS for a particular fund will depend on its Asset Test.
If no BTIS is calculated for a particular fund, the Asset Test is used to calculate the taxable amount.
The BTIS computes, upon each net asset value (NAV) calculation (so potentially on a daily basis), the share of the NAV consisting of income (unrealised and realised) from debt-related assets.
In case a BTIS is calculated for the fund, the taxable basis of the investor will be equal to the difference between the BTIS on the date of sale or redemption and on the date of acquisition.
Our specialists are highly experienced in delivering the daily breakdown of income received by contractual mutual funds. We can set up an online income calculator with your company branding, where Belgian investors can obtain the information they need to complete their annual tax reporting.
PwC has extensive experience in the calculation of Asset Tests and serves many clients who trust us in this context. Our methodology is proven and documented, and we follow the evolution in tax closely and adapt our methodology reactively as needed.
For the calculation of BTIS, we offer a machine-to-machine solution allowing you to receive, according to the calculation rhythm of the fund’s NAV (daily, weekly, monthly, etc.), the BTIS computation required by Belgian individual investors.