2012 Tax & Legal Seminar Taxation of Moveable Income

Transcription

1 2012 Tax & Legal Seminar Taxation of Moveable Income February 28, 2012 Marc De Munter Lawyer - Belgium marc.demunter@dlapiper.com

2 TAXATION OF MOVEABLE INCOME Law containing miscellaneous provisions of 28/12/11 (B.S. 30/12/11 fourth ed.): Change in withholding tax ('WHT') rates for certain dividends and interest Introduction of additional levy on (certain) moveable income of 4% Introduction of notification requirement for withholding tax debtors of moveable income to central contact point Changes in reporting of moveable income in annual income tax declaration for individuals Insert filename here 28 February

3 Change of tax rates - dividends Change in withholding tax rate as from 01/01/12 : 15% for VVPR shares and collective investment companies increase to 21% 10% on share buy-backs increase to 21% rate of 20% on AFV dividends (RD n 15) increased to 21% rate of 25%, 21% or 10% for indemnity for missing coupon (depending on the rate applicable to the underlying coupon) No change in respect of : 25% standard rate 10% for liquidation boni existing exemptions from withholding tax Insert filename here 28 February

4 TAXATION OF MOVEABLE income Change of tax rates - interest Changes in withholding tax rate as from 01/01/12 : 15% standard rate increase to 21% No change in respect of : 25% rate for certain interest (non-ventilated income from collective investment funds; interest re-qualified in dividends) 15% rate for non-exempted portion of interest of regulated savings deposits (for assessment year 2013 : > 1,830 per person/year) 15% rate for 'Leterme' issue of government bonds issued between 24/11 2/12/2011 (according to Minister of Finance: extended to similar government bonds from other (EU Member) States?) existing exemptions from withholding tax Insert filename here 28 February

5 No changes in respect of royalties, etc 15% rate remains unchanged : royalties rentals of moveable goods copyrights non-exempt life annuities miscellaneous income from moveable nature existing exemptions remain unchanged Insert filename here 28 February

6 Additional levy on moveable income What? Additional levy on dividend and interest income for the benefit of the State and assimilated to personal income tax Who? Only Belgian resident individuals earning more than 13,675 of net moveable income per year, i.e. indexed 20,020 for assessment year 2013 per person and per year Basis? Dividends and interest income taxable at 21% exceeding a net annual amount of 13,675 (to index), with the exception of (i) dividends and interest taxable resp. at 10% and 25%, (ii) interest from regulated deposits and (iii) income from Leterme government bonds (both taxable at 15%) Rate? 4% on excess dividends/interest > 13,675 (to index) Timing? Upon collection of 21% withholding tax or via tax assessment Insert filename here 28 February

7 Additional levy on moveable income Distinction between basis for 4% levy and that for threshold Basis for calculating 20,020 threshold : all dividends and interest mentioned in art. 17, 1, 1 & 2 ITC including in priority those dividends/interests that are not subject to the 4% levy (e.g. interest/dividends subject to 25% WHT or non-exempt interest from regulated savings deposits subject to 15 WHT) excluding liquidation boni, taxable at 10% excluding the Leterme government bonds, taxable at 15% not including the exempt income mentioned in art. 21 ITC (e.g. exempt portion of regulated savings deposits, liquidation or redemption boni of collective investment companies, etc.) not including indemnity for missing coupons Basis for 4% levy: only interest/dividends subject to 21% Insert filename here 28 February

8 Additional levy on moveable income Calculated example: Type of income Amount 20,020 basis 4 % levy 21% 7,000 7,000 7,000 25% 3,000 3,000 x Deposit 15% 2,000 2,000 x Exempt deposit interest 1,830 x x 10% 4,000 x x 21% 5,000 5,000 5, % 3,500 3,500 x 15% 1,000 x x Total 27,330 20,500 12,000 (20,020) 4% Insert filename here 28 February

9 Additional levy on moveable income Collection of additional levy: 2 possibilities Either taxpayer elects withholding of additional levy, on top of the 21% normal withholding tax, in which case the debtor of the withholding tax (as defined in art. 261 ITC) withholds 25% in total and is exempt from notifying the relevant income subject to the 4% levy (but not the other income mentioned in art. 17, 1, 1 and 2 ITC) to the central contact point. Or taxpayer elects not to have the additional levy withheld at source, in which case the withholding tax debtor (as defined in art. 261 ITC) needs to notify this income (together with all other dividend and interest income mentioned in art. 17, 1, 1 and 2 ITC) to the central contact point. The levy is collected via the normal income tax assessment, based on taxpayer's tax declaration, completed where necessary with missing info supplied by the central contact point [and with info obtained during the review of the tax return] Insert filename here 28 February

10 Additional levy on moveable income Central contact point: Creation : Law 28/11/12 : to be created within National Bank of Belgium Draft Program Law : autonomous service to be created within the SPF Finance Role : Collecting data from WHT debtors on all dividends/interest mentioned in art. 17, 1, 1 and 2 ITC with identification of the beneficiaries Upon request from the operational tax administration, it sends all information regarding a particular taxpayer in order to ensure the correct application of the 4% levy Insofar the contact point receives for any taxpayer communication of more than the 20,020 threshold (indexed) per year, it transmits automatically this info to the competent operational tax administration Details on communication to/from contact point to be detailed in RD Insert filename here 28 February

11 Additional levy on moveable income Taxpayer's choice (*) withholding of 4% levy WHT debtor retains 21% + 4% from first WHT debtor does not communicate the dividends/interest subject to 4% levy, but all other income of art. 17, 1, 1-2 ITC is communicated Taxpayer can elect also not to declare relevant income (no credit nor any refund of excess) but if still declared, he can claim refund of any excess withholding/levy (in particular 4% on first 20,020) no withholding of 4% levy WHT debtor only retains 21% WHT WHT debtor must communicate all types of dividends/interests of art. 17, 1, 1-2 ITC to central contact point Taxpayers needs to report relevant dividends/interest in tax return 4% levy charged via assessment based on tax return and input from central contact point (automatic or upon request) (*) According to the Minister of Finance, the choice could be made per product Insert filename here 28 February

12 Mandatory declaration of all income Art. 313 ITC redrafted: Belgian resident individuals need to include in their annual tax return: all moveable income mentioned in art. 17, 1 ITC (not limited to dividends and interest!), irrespective of whether WHT was levied all miscellaneous income of movable nature mentioned in art. 90, 6 and 11 ITC One optional exception: interest and dividends subject to 21% WHT which have been the object of the 4% levy deducted at source anonymity (no communication to central contact point nor declaration) BUT: no refund of any excess withholding tax or 4% levy (important for 4% on first 20,020!) Uncertainty on what impact mandatory declaration has : end of liberatory withholding tax or not? Insert filename here 28 February

13 Declaration communal taxes Uncertainty of whether mandatory declaration entails also application of local taxes levied by commune (and, where relevant, agglomeration) One certainty: no local taxes on the 4% levy on the excess above 20,020 only, but quid on the normal withholding tax? Was apparently not intended (dixit Minister of Finance), hence reparation legislation expected to clarify the position Insert filename here 28 February

14 Overview of formalities Overview of different obligations : 20,020 threshold calculation Communication to contact point 4% levy Report in annual tax return Dividends 25% Yes Yes No Yes Dividends 21% Yes Yes (*) Yes Yes (**) Dividends 10% No Yes No Yes Interest 25% Yes Yes No Yes Interest 21% Yes Yes (*) Yes Yes (**) Interest 15% Yes (***) Yes No Yes Royalties 15% No No No Yes Copyrights 15% No No No Yes (*) Except if and to the extent that taxpayer opts for 21% + 4% levy from first Euro (**) Except if taxpayer opts for anonymity and does not declare income subject to 21% + 4% levy (***) Except for Leterme government bonds Insert filename here 28 February

15 TAXATION OF MOVEABLE INCOME Entry into force of new measures All new measures regarding moveable income apply to income attributed or made available for payment on or after 1 January 2012 attribution or making available for payment = criterion for levy of withholding tax / fixing the taxable period, i.e. the date on which the beneficiary can effectively dispose of the income or immediately collect it, irrespective of the date of effective collection, except for non-belgian income for which the date of effective collection counts fiction rule for deposit interest: last day of the period to which they relate period of accrual of income not relevant, as long as collection can take place on or after 1 January 2012 issue if transfer of fixed income securities (bonds) or within X/N system : WHT settlement at old WHT rate, while new increased rate upon maturity date Insert filename here 28 February