Les réductions de capital sont-elles toujours intéressantes fiscalement en Belgique ?

Abstract

Belgium is a small country known for its complexity, and its tax system is no exception. Changes in this area are ongoing and reforms are commonplace. One important reform from a legal point of view was that of the 2019 Belgian Code of Companies and Associations. Major changes have been made, including the abolition of the concept of capital and the minimum capital requirement for SRLs.

Capital reductions, previously very attractive, have been affected by these changes. Previously, it was possible to carry out a capital reduction by deducting it solely from the paid-up capital, with total exemption from corporation tax and withholding tax.

The purpose of such an operation could be to absorb losses carried forward, to repay shareholders or to carry out an accordion effect in order to improve the company's balance sheet structure.

As from 1 January 2018, the proportional allocation of the operation has become compulsory, obliging companies to divide the capital reduction between paid-up capital, taxable reserves and exempt reserves, which may generate, depending on the case, taxation not only for withholding tax but also possibly for corporation tax. This has made the operation more complex.

Despite these changes, capital reductions may still be advantageous, depending on the objectives of the operation or the composition of the company's equity capital. Where withholding tax is payable, there are opportunities to be exempted or to benefit from a reduced rate.

In the case of repayment to shareholders, SRLs and SCs require a double distribution test (liquidity and solvency test). For SAs, only a net assets test is required.

However, despite the potential advantages, capital reduction remains an unusual operation because of its complexity and the changing nature of Belgian taxation. Such a decision must be carefully considered and correctly applied to avoid falling into a situation that could be deemed abusive by the Belgian tax authorities and courts.