ANT & Stratego Finance

 

Examples of existing corporate structures served by ANT:

• SPV management for securitization transactions;
• Share trusts for securitization transactions;
• SPV management for corporate bond issue;
• Employee benefit schemes;
• Security Trust and escrow arrangement;
• Commercial real estate vehicles;
• Holding, finance, leasing and licensing structures
• Stichting Administratiekantoor (Voting trust)

Main features and incentives 

1. General principles :

• The corporate income tax in Belgium is applied on worldwide income. Belgian resident companies as well as Belgian branches of foreign companies are therefore taxed on their foreign source income to the extent that is linked to their activity.
• Tax rate is 33,99 %.
• Possibility of ruling for some peculiar cases – as costs centres (cost + system).
• Depreciation of assets is spread over the estimated economic lifetime and is only allowed on the acquisition costs.

2. Participation regime : 

2.1. Intercorporate dividends : 

Participation exemption applies both to Belgian resident and non-resident companies with respect to dividends attributable to Belgian permanent establishment. 
Under the exemption 95% of the dividends are deducted from the profits.  If the Belgian company is in a loss position, the qualifying dividend cannot be deducted. 

The participation exemption applies only if 

• a minimum participation of 5% or 1,25 MIO euros is held,
• dividends are coming from companies subjected to Belgian corporate tax or from non-resident companies subject to a similar foreign corporate tax.

2.2. Withholding taxes : 

Resident companies must withhold a 25,75% tax on the dividends distributed to resident and non-resident shareholders. Most tax treaties reduce this withholding tax either to 15% or to 5% in the case of a subsidiary-parent relationship (at least 25% shareholding). 

Belgium has signed more than 90 double treaties avoiding the maximum 25,75% withholding tax. 

Moreover, the Royal decree of 14 October 1991 deals with the withholding tax applicable to dividend distributions to parent companies established in an EU Member State (incl. Belgian resident companies). Under certain conditions withholding tax is fully exempted, namely a 15% minimum participation. 
In order to obtain the exemption, a foreign parent company should deliver a statement to the Belgian subsidiary in which the parent declares that all these conditions are met. 


2.3. Capital gains and losses : 

Under the participation exemption, capital gains realised by a Belgian resident company on shares in a Belgian or foreign company are fully exempt from corporate income tax, provided that the dividends on the shares qualify for the participation exemption. For purposes of the participation exemption for capital gains the minimum participation test is not required. 
Unrealised capital gains on shares that are recognised in the financial statements (which recognition is not mandatory) are taxable. But a roll-over relief is granted if, and as long as, the gain is booked in a separate reserve account on the balance sheet and is not used for distribution or allocation of any kind. 

As a counterpart to the new exemption of realised capital gains, capital losses on shares, both realised and unrealised, are no longer tax deductible. However, the loss incurred in connection with the liquidation of a subsidiary company remains deductible up to the amount of the paid-up share capital. 


3. New incentives measures : 

3.1. Tax incentives for R&D : deduction for patent income up to 80%

• Scope of application : 
  The new tax deduction is applicable to Belgian companies and Belgian permanent establishments of non-resident companies. Only patents and additional protective certificates qualify for the regime. Other intellectual property rights, such as trademarks, copyright, and know how, are not eligible.
• An eligible patent must be : 
  - originally developed by a Belgian company (or permanent establishment) in R&D centres located in Belgium or abroad; 
  - acquired or licensed by a Belgian company (or permanent establishment) from related or unrelated parties, provided that it is then further developed in R&D centres in Belgium or abroad (but irrespective of whether or not such further development leads to additional patents).
• Basis for the tax deduction : 
  For self-developed or acquired patents that are (sub) licensed by the Belgian company or branch, the deduction will be equal to 80 % of the arm’s length patent income received. The deduction will apply to various types of income e.g. fixed or turnover-based royalties, upfront fees or milestones. If the income consists of a (partial) contribution to the R&D expenses, these amounts will not qualify for the exemption.
• Conclusion : 
  The new patent deduction is a further step along the road to increasing Belgium’s attractiveness for foreign investors. The new incentive also supports the government focus on stimulating innovation in the R&D area. 
  
  The measure can be an impetus for companies : 
  - to have their existing R&D centres in Belgium performing R&D activities for their own account and to take ownership of the intangibles;
  - to revisit their R&D structures to take full advantage of the incentive, with minimal disruption to operations; 
  - to combine R&D (principal) activities with other functions in order to benefit from the patent deduction by reducing the combined taxable basis.

3.2. Notional interests

The law of 22 June 2005 introducing a risk capital deduction (the "notional interest deduction") was published in the Belgian Official Gazette on 30 June 2005 and entered into force as from assessment year 2007 (accounting year starting 01.01.2006). 

All companies subject to resident or non-resident corporate tax (save exceptions) can deduct an amount based on their "adjusted" equity capital. 
The calculation starts with the company's equity capital at the end of the previous taxable period, which would then be reduced by : 

• the net fiscal value on own shares, of shares and participations that are part of the financial fixed assets and of shares of investment companies of which the dividends qualify for the dividends received deduction;
• the net worth of foreign permanent establishments and foreign real estate;
• the net book value of tangible fixed assets or parts thereof to the extent that the related costs unreasonably exceed business needs;
• the book value of assets that are held as an investment and that do not generate taxable periodic income;
• the book value of real estate or of other immovable rights of which directors, their spouse or their children have the use;
• tax-free revaluation gains (including revaluation gains incorporated in capital) and capital investment subsidies.

The applicable rate is the average annual rate of the 10-year OLO which is recalculated each year and the deduction is transferable. 

Simulations have shown that the notional interest deduction may offer a considerable tax benefit, especially for companies with good solvency ratios.

History of Stratego Finance
Stratego Finance was set up in 1992 by Colette Plasman to offer financial management services both to SMEs and Belgian subsidiaries of multinationals. ANT Trust & Corporate Services was established in 1896 by investors and financial institutions seeking to entrust the administration and management of securities and companies to an independent and reliable party.

International & Independent
ANT Trust & Corporate Services has developed into an independent international company whose core activities comprise head office domiciliation, management and the implementation of financial and administrative services. Drawing on a strong national and international network of financial, tax and legal advisers, ANT has grown into one of the larger players in the market.