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thank you all for your company at today's presentation and uh we appreciate you taking the time out to listen to our words of wisdom and we're certainly going to be passing across a lot of information for you today to ensure that you get maximum bang for your buck on which note before we start a couple of housekeeping points i've just said there's going to be a lot of information so there'll be a lot of slides and a copy of those slides will be available as well and i'm just checking yes we are recording there will be a recording of this presentation and this will be added to our back catalog via our website or you can actually google the fry group on youtube and as i said we might be 120 years old but we are moving into the 21st century so an outline of today's uh presentation so um it's quite straightforward um this is an update on the belgian tax on investment accounts and mark has added version 2.0 because this isn't the first time that this tax has been proposed and so what he will do is just give a background to this as then uh as well bringing us all up to speed where we are in this year they'll then be a little bit uh a short bit on mitigation techniques or not what you can and more importantly what you cannot do and then of course we hope to have plenty of time for questions at the end what i'd like to do is just to point out that there is a q a button so as we go along do ask questions and we'll try and pick up as many as we can at the end for those that we can't then we will reply to you by email obviously if things are very very specific um then we may need to move into further discussions contact details both mark's contact details and the fry group's contact details will be displayed at the end i'm hoping everybody can hear us and do bear with us if we have further tech issues mark will not be joining us with a video stream but um he will be joining us uh um verbally um just lastly you'll have noted that everyone is muted and your cameras are off just so that we can all have a good experience so that's a little bit of the uh intro let me just introduce myself uh my name's edward cutting head up the brussels office of the frey group uh as most of you know we're based in montgomery i've been advising clients in belgium for 25 years i think i almost qualify as being a veteran of the financial planning industry i'm joined in the office with my um colleagues senior advisors katie boak thompson sean o'connor and amanda newell all of them comparative spring chickens compared to me although i have to say katie has been advising clients for in belgium for 23 years so just a little bit behind myself plenty of experience between us and we're supported by a first-class admin team as most people on this presentation of clients i'm not going to go through the who we are and what we do that will come at the end along with our compliance slide so i'm delighted today to be joined by guest speaker mark quaggaber mark will be known to many of you either professionally as the international tax lawyer that he is or is the top selling author of rest in peace which is mark's guide to not only having a tax efficient life which is what we're here to talk about today but also a tax efficient death in a belgian context his book is available on amazon i'm sure that mark will give details at the end of this presentation mark is a member of the brussels bar specializing in international tax and corporate structuring in particular relating to investment funds and real estate tax uh he's very well known on the expat circuit and the frye group has worked with and presented with him i've presented with him for over 20 years or so including uh at the british chamber of commerce and the european commission on a variety of financial planning and tax related subject matter so the one tax issue we're getting a lot of questions about at the moment is the tax on securities accounts and obviously we thought there would be no better person to ask to demystify what is actually going on than mark so mark over to you mark we can't hear you uh you're right i think you should give me a moment can you hear me now there we go yeah perfect sorry excellent thank you thank you for the introduction ed that's quite a lot to live up to but i'll do my best and try and give you a presentation on the new tax zone securities accounts as it said 2.0 it is a new version of an existing tax with some changes and some improvements so as usual let me give you a quote i won't read it for you that's only spoils it i hope you all know terry pratchett uh the author of fantastical books who died a couple of years ago so now that you're wiser let's go back a bit in time and in fact the tax on wealth the tax attack on wealth has been going on for about 10 years now you may remember in 2013 the withholding tax was raised from 15 to 21 and then there was a special increase of 4 for anybody who had dividends and interest over 20 000 it's always less to make the rich pay more that didn't work and it was hard to enforce so basically rather than reducing it the the withholding tax was raised for everybody and in 2017 it was raised to 30 percent if you remember only a couple of years ago the government introduced the speculation tax and that was a tax on shorter capital gains capital gains made within six months that was something that the banks were going to have to follow up on or work out it didn't work and at the end of 2016 it ended in 2017 the stock exchange tax that has been in existence since 2013 was extended to overseas bank accounts basically when you buy and sell shares in belgium the bank or the stock broker will charge a little tax and pay that you don't see it but they they pay it but since 2017 if you work on overseas bank accounts and overseas platforms to buy and sell shares you have an obligation to report the dividends and interest the tax that you have to pay and pay the tax for most people that's something like 40 to 100 euros but it's just a pain and then in 2018 the tax on securities accounts was introduced now what was the just a short recap of what that tax was it was a tax due by anybody who's holding securities accounts worth more than 500 000 or if there are a couple more than 100 1 million if you have securities on the securities accounts over 500 000 or a million the tax was 0.15 on 1 million um but starting from the first euro on a million that gives for instance a tax of 1500 1 500 euros the tax is calculated a lot of that will come back in the the new tax the tax is calculated on the average of the value of your securities account on 31st of december basically every quarter the first quarter being the last quarter of the previous year and then march june and september in the previous securities tax the not all the financial instruments were uh targeted cash was not targeted but also turbo speeders and trackers were not targeted and warrants were but for instance stock options were not if you had a bank account in belgium the bank or the broker would deduct the tax and pay it for you if you have overseas accounts you were obliged to declare that and file this form specifically saying that the average value of my accounts is so much so the tax that i have to pay is so much um that has lasted for two years but of course it was attacked before the constitutional court by the banks and by certain taxpayers and the best way to describe it is a chronicle of a death foretold because the council of state that is advising the government on all new legislation has been um have been advising the government that attacks might be unconstitutional that the people were certain people were discriminated and that the principle of equality that is one of the basic principles in tax matters was infringed the reason were that only certain financial instruments were targeted for instance shares uh escaped and it was possible if you have more than one shareholder to split the account um for instance a bank account held by pans and two parents and two children could be split in four even if the parents were really controlling the account and bring the value per uh account holder or under 500 000 so the constitutional court said well we cancel the tax but and they can do that for budgetary reasons they can limit the effect of the cancellation of the tax uh for burj reason for the future only that means that the tax was still due in 2020 for the year from december 2018 to september 2019 next year you will not have to declare it but for the following year the new attacks will come into place what's a justification given well when the government was formed the idea was that a stronger shoulder had to pay more and that was to get certain parties on board to show that it was not only the workers that paid but also the rich the when it was pointed out that that was discriminatory against the rich the the minister of finance said well i will pay for covet 19. but if the tax has to pay for covert 19 it's a social security contribution and in that case the um [Music] european regulation says that the tax that the social social security contribution can only be due in the country where one is resident that means that the government could not tax french people who have an account in belgium and finally they said well let's just say it's to balance the budget so there is no objective uh reason to try and uh cancel the tax although there are still some discriminations so whose accounts are targeted well if you're a belgian resident if you have a belgian account or an overseas account you'll the tax may be due how that works we'll see in a minute but and under the previous tax legal entities those companies and associations were exempted here they are paying tax both on their belgian and overseas accounts then non-resident individuals are legal entities they're not here so only if they have a belgian account they're will they be liable to the tax and then something that's new is you may have heard of the cayman tax the cayman tax allows the government to look through legal arrangements and legal arrangements are anything from trusts to companies and tax havens to insurance policies with which one holds certain assets under the cayman tax if you're a belgian resident settler you continue to declare the income of the trust or of the entity underneath as if it was still yours and if you have an if you have a trust that has a belgian account it's unlikely or if an overseas account you will have to declare the tax and pay it yourself if under the cayman tax that tax continues also with the heirs of the settler so if you have a belgian resident who sets up a trust and has he dies his children will have to declare the income if they live in belgium the same applies to the tax on securities accounts if they don't live in belgium it is only on the belgian accounts that the tax will be due again that is very unlikely with a trust and accounts in belgium so which securities and brokerage accounts well it's basically all accounts on which securities are held that are worth more than 1 million there's no exclusions like in the past trackers and all the financial instruments are not excluded anymore and even cash held on a brokerage account is liable to the tax and we'll come back on that there is a threat from the brokers that the their treated discrim that they are discriminated against for accounts with several account holders it's not possible to say well there's two accounts holders so the account of two million or one million eight is only worth nine hundred thousand no the tax that is due on the account itself it's like a car tax that is due on a vehicle so a person has an account of one million two hundred thousand pays a tax but the person has two accounts or six hundred thousand does not pay the tax now don't you give instructions now to your stock broker to split your account into that will not work there are anti-abuse rules just a little update the tax was published in the belgian state gazette yesterday so this is all very fresh and i'm not going to say you're the first to hear all about it but as good as so what's a tax again if the account is worth more than 1 million the tax rate is 0.15 and it is due from the first euro it is calculated on the same reference dates 31st of december march june and september when you open an account in say in may the only relevant relevant dates will be june and september if you close it in may the relevant dates will be december and march if you move abroad in may the relevant dates will be the 31st of december the 31st of march and there will be calculated on the averages of those if you move abroad there are possibilities that the tax may not beat you there are countries where uh the double tax treaty extends to wealth tax and since this is wealth tax the it would not be you for instance if you move to uh uh france the the that double tax treaty does not cover the wealth tax your belgian accounts will be liable to the tax if you move to the netherlands the treaty does not govern the the does cover uh wealth tax so that you will not have to pay the tax if there's just a little correction if the average value of your account is 1 million 153 000 the tax will be limited to 10 of every euro over 1 million so that that's something that takes a little calculation how and when do you pay the tax so report it well if you have a belgian bank account it's the belgian bank that will deduct the tax will report the the how much tax is due and will pay the tax they have to do that by 20th of december that is 20 of december after the end of the reference period at the same time they must report to the account holder by the 30th of october to say how much tax what value they have taken into account and how much tax they have deducted so and by informing the accounts holder the account holder knows that he has uh paid attacks and that he doesn't have to declare the tax himself again uh in the past it was important to know if you had one or two accounts because you had to add the accounts now in this case it's only accounts over 1 million to over 1 million that are targeted now if you have your bank a bank account with an overseas bank or broker it is possible that the the bank or the broker will deduct the tax for you but that i've hardly seen in until now even luxembourg banks are simply saying well here is a total here's the average of your figure per um per quarter and your average is so much so the tax will be so much please report it and they leave it up to you to report the tax if the bank or the broker does not pay the tax the accounts holder has the obligation to report and this year or basically from next year you will have to report online and with the same deadline as for the income tax uh income tax return is to be filed normally by the 30th of june for online filing via tax on web the tax will be um uh due uh sorry the the deadline is normally the 15th of july so you have until the 15th of july you do not do it in your income tax return but you will have to log on online and declare it we haven't seen any forms yet we don't know what information will have to be given if you'll have to give the number of the accounts and if you'll have to show how the calculation is done the tax is then paid by the 31st of august of the following year so because the law has been published now we'll have three reference dates 31st of march 30th of june and 13th of september 2021 you will have to file before the 13th of june 2022 a bit later if you file online um and you have to pay by the 31st of august 2022. now i'll quickly go through the penalties i just have them on on the slide because i'm sure nobody of you will have penalties one of the questions that has been asked is what's the account who's the accounts holder because in the past it was either the bear owner or the uzufriti in case that the ownership of the account was split so that can be a problem because some banks are declaring are recording only the bear owner as titular and then other banks are recording both so who is going to have to pay the tax well strictly speaking it's not really built a problem if you have a bank in bel a bank account with a belgian bank because they just deduct the tax and pay it and uh there's nothing for you to d the only thing is that they may have to be reporting who is the account holder but i doubt that that would happen there will be a problem if you're living in belgium and you have overseas bank accounts because then who has to report is it the person who has the um is the bear owner is it the person who's usually free often planning estate planning is done by um giving uh securities accounts to your children and reserving usually free so the parent has used and basically the income from the account but the um the the bear owner is there as well in the past under the previous tax it was so the question has been asked to the finance minister and the finance minister thought that mrs may had a good expression when she said brexit is brexit he said titular has to delay so basically in whose name is the account registered and as you can see there are there can be different issues on that um so you'll have to see for a particular belgian resident with overseas bank accounts will have to see um how the account is held if you have securities accounts with your children and you're registered as an account holder you'll have to report if you have an overseas account with your children and the children are um are recorded as a titular they will be the ones that have to well there will be no tax due joint account holds as i said it does not reduce the tax on the securities accounts um because they're both jointly liable to to pay the tax but it's enough that one pays a tax to report for all to be released just make sure you've got good arrangements that not everybody reports the tax and pays it two or three times and they're all jointly liable to pay penalties and interest the question then is what about my insurance rappers in the beginning the finance minister stated that they were really the same as securities accounts and we thought that they were going to introduce a tax on all insurance rappers in belgium and abroad now the we were anticipating wrongly because not all insurance rappers are targeted they are targeted indirectly there is a financial an exemption for financial institutions like insurance companies who hold securities accounts for their own accounts that means that if you have an ensure if you have a group insurance with an insurance company the company is investing the premiums on the stock market and then bonds and holds those on the securities account now those are not um are not targeted but if they hold securities for funds that are in an insurance wrapper they're holding these accounts on behalf of their clients and on those um accounts the insur the the tax on securities accounts will be due so basically belgian insurance companies pay the tax on the accounts on which they hold the uh assets of insurance wrappers if you have a bronze 23 in belgium the tax the the bank will so the insurance company will pay the tax apparently some insurance companies are thinking of taking it up this time themselves but they will probably be deducting it in the future um but if you do not have if you have an insurance rapper in ireland or the isle of man overseas insurance rappers they these are not targeted because there are you do not have a bank account with the insurance company in ireland or on the isle of man so the tax on securities account is not you you don't even know what the average value is it's not the average value of your ancient portfolio in the wrapper there is no securities account report now there one of the reasons that i say that is that basically the belgian state considers that moving your assets to inform insurance wrapper is uh be a tax abuse and could be liable to the uh tax on securities accounts there is an exception though and that's insurance rapids for phone dda von d are a luxembourg invention where they allow you to have a personal portfolio a just your own investment that is a fund an internal fund for one insurance rapper and that is usually held by one or more individuals so basically in luxembourg you have the possibility and some insurance company allow that in belgium as well to hold a a portfolio with specific stocks and bonds that you give to bank instructions to buy now such funded year is considered to be a legal arrangement as you remember i said that legal arrangements could be trust and companies and tax havens but also insurance policy and that is what is the case here the formed dda is a legal rearrangement and so basically you have a securities account in there and you'll have to declare the value of that average value of the security account and pay the tax on it other insurance wrappers are not liable to the tax as i said there's no specific securities account linked to that and the one of the confirmation that i have on that is that moving it to an overseas insurance rapper is considered to be a tax abuse i'll come back on that well basically now because there's a general anti-abuse rule what is abuse well there is a basic principle that you have the right to take the cheapest tax route but since 2012 the tax authorities can assume that any transaction that reduces tax has been set up only to reduce attacks and in that case it's a tax abuse they can tell you well we think that you have abused the tax regime and therefore will disregard it will tax you anyway the taxpayer can then prove and rebut that presumption uh he can prove that he had all the reasons and then it's up to the tax authorities to prove otherwise this general general anti-abuse rule is retractive until 30th of october because the government put a warning in the monitor belgium of the fourth of november so what are examples of tax abuse stated in parliament and these are rebuttable presumptions so you can prove that you had other reasons and i'll give you some examples of rebutting uh these presumptions for instance splitting your account with the same bank giving your as i said don't give your bank instructions to split your account of two million into three or seven hundred thousand that will not work the bank will regard look through that and charge the tax anyway keep in mind that in belgium it's the the bank that has the first obligation to look and declare what the situation is it is not an store this is not you so you'll have to take it up with the bank uh if you want to rebut the presumption another one is opening new account to spread your securities convert securities into registered securities for instance if you have shares of let's say google and you have the possibility to register convert those in register shares of google directly with the company that would be seen as an abuse you move the securities to an overseas account of a trust in the uk or going to your jersey that would be targeted you move the securities to a fund that has registered shares so that instead of having uh accounts uh assets on a securities account you have registered shares that doesn't work moving the securities account or insurance into an overseas wrapper as i mentioned before moving the securities to a securities account abroad sounds much like what i said before and then transferring or selling and that is a clever one you secure these before the reference date so basically if you have an account worth 202 on the 30th of on march you tell the bank sell for 300 000 and then the picture that will be taken on 31st will show that you only have 900 000 and then you buy back the day after uh for the 300 so that you're back at one million two the bank will not uh accept that sorry that's a slide that went slightly wrong so there are two of these that are not accepted as rebuttable uh presumptions that is splitting if you have after the 30th of october 2020 split accounts with the same bank or converted securities into racial securities accounts you cannot prove that you had other reasons to split the accounts or convert to securities that it's not rebuttable is something that could be attacked before constitutional court it's simply not possible to do that now what are um what is possible well there's nothing that prevents you from selling securities to invest in real property or to invest in art or to invest in gold or to hold cash for instance because you expect a financial crash you can do that there's nothing that the bank can do or if you have an overseas account you do not have to declare the securities as part of securities accounts you can get cell securities or you can give them to your children that again is a valid um a valid alternative you do something with it you sell or you give to your children to make them beneficiaries uh gifting to children with reservation of uzufu is another possibility i don't see what the problem what the tech stories could object to here the only thing you have to be careful about is who is going to be seen as a titular on the account if you're seen as a title of the account then as the account holder then you would have still have to pay the tax that's something that could be difficult with overseas accounts especially in common law countries where they're not that familiar with uh usually and finally selling investments to buy an insurance rapper now that is going to be a difficult one and you would have to prove for what reason you have done this now um i mentioned that do some free advertising here while ed is not talking uh one of the re things that was uh mentioned to the press today is that the um is that the brokers were complaining that if their clients were selling shares they had to keep the cash on the securities account and the cash was liable to the tax whereas if a bank was selling the shares for their clients the the cash was kept on a separate account that was kept separately so in that case the tax is not is not calculated it's calculated separately so there will be litigation before a constitutional court and that will be one of the main issues that will be raised so i think i'll hand over here to um to add or stop sharing ed yeah i've got two there we go just do that hopefully we're questions we're moving on to um brilliant mark um insightful as always and i think a lot to digest particularly because of the novelty of the tax i know there'll be a lot of those ifs and buts and whatevers um just because i've got the microphone we've got a couple of questions that have come in can i just ask one thing um so just confirming at the moment all offshore luxembourg without the fond day but luxembourg ireland and you mentioned isle of man we we don't have that many clients with other isle of man policies most of ours are european but those that are luxembourg and dublin are out of scope correct yes yes okay perfect that's good um just the other thing you talked about transferring assets into a branch 23 now we do quite a lot of estate planning um and i can't remember whether you mentioned it today you certainly mentioned it yesterday when we were going through this there's no estate duty on the first death of a joint life branch 23. um but you can also i mean the advantages of the branch 23 you can nominate beneficiaries you can gift policy segments to children and grandchildren and one or two other things are those legitimate reasons could those be seen as legitimate reasons because we do that already if somebody is saying right i want to go through this process and i'm sorting out my estate planning of moving from a securities account into a branch 23 insurance contract um well one of the problems we have is that in flanders the there's no inheritance tax on the first death but when the uh second the surviving uh uh policyholder takes money out then that can be seen as taking money from the others estate and they may be taxed you on half or uh more or less of the source policy for i think maloney and brussels are moving in that direction they're not there yet but i think we'll have a separate uh webinar on that in the near future um okay i think that would uh could work but you'll have to see um in what circumstance because holding an offer an insurance branch 23 and uh holding a securities account is not that much different except sometimes when you want to do things like ad beneficiaries and and um gifting segments and and assigning policies yeah but okay listen let's not over complicate it in terms of it it might be or it might not be we're back into the realms of you know we need we need to seek advice on a case-by-case basis i'm assuming but but just one thought on that mark and then we'll get to to a couple of external questions um with the um tax authorities if somebody is has a securities account they'll pay a little bit of dividend tax and they'll pay their um tax on buying and selling securities or on the selling of funds if they move into a branch 23 they're going to be paying two percent as a premium tax um in terms of the time it would take to collect the 0.15 on the securities account i mean assuming that there's no growth it would take 13 years let's say that there's some growth so it might take seven or eight years to collect it why would they be against people moving into branch 23 when they could actually collect quite a lot of revenue up front anyway well i think they don't think that far ahead i think this is just a trophy tax that they can say well we have made the rich pay more keep in mind that when you say we'll reinvest for a state plan into bronze 23 it's not that what they're looking at is that the money goes away from the securities accounts so yeah it's part of to it will be part of whole estate planning exercise yeah okay okay listen a couple of external questions hi mark is the tax applicable if someone has different brokerage accounts with different brokers none of which individually total a million euros but if all totaled up do surpass a million euros i think you cover this but could you just clarify that please no indeed that's the beauty of it but if you have four accounts of 500 000 you're worth 2 million under the previous tax you had to pay 0.15 under this tax you don't have to pay 0.15 so keep your securities account split as much as possible especially if you start investing or if you uh start putting your accounts securities accounts together and you can even if if you you get your pension capital of one million uh put it in two or three securities accounts there's nothing against that just repeat that again mark no if you receive your pension capital at age 65 or before um belgium pensions are geared to receive the pension upon retirement you've got one million one million two invested in three securities accounts or foreign okay that's clear that's clear and i think that's answered another question which is what has changed on the rebuttal position of having different securities accounts with for example key trade bolero etc each being below 500 000 so i think that that's answered that question yeah but that that one didn't work you had to declare how many accounts you had and you had to add them up and pay the tax yeah now it works but the other way yeah okay another question here does an exemption apply to foreign capitalization contracts considered branch 26 in belgium um i don't think so i don't think so because they're basically overseas insurance policies they capitalize but there is no securities account linked to that and there's no investment as such so i don't think so okay all right fine i think we've moved through those questions um so i think what i'll do is just um before we close is just um say a very quick word about the fry group it will be quick um most of you all know we were established more than 120 years ago we've been in belgium for over 25 years and since then we've helped thousands of people around the world and across the generations and whilst we've got a truly global um perspective um sorry whilst we have a uk focus with with our eight offices globally we we can offer a truly global perspective and our um service covers three core core areas of of financial planning really which is tax estates and investments our core purpose is to provide financial freedom for our clients we understand this means different things to different people and so we do try and take time to find out what is important for you so that we can uh structure your finances around your goals and of course recognizing that there are many threads to this opera ion but integral to freedom is not only helping clients to grow their assets but increasingly look at ways to protect those assets so just to repeat the slides and adida recording of this session will be available afterwards here are our contact details please note that we are available to be followed on linkedin and if you do that you will receive regular news and updates if you're still with us i'd just like to say thank you very very much for attending um and last but last last but not least mark i'd like to thank you very very much for um giving us news that is really very hot off the press and i'm sure that it will provoke a lot of questions over the next uh week or so as we digest and look at ways that we can assist those that that need helping and then finally uh to a fanfare and a drum roll the compliance slide i must point out please note that everything that was had here was generic please please do double check before taking any action or indeed not taking any action and thank you once again and i wish you all a wonderful weekend uh mark do you have any last comments um we're working on a text with the office to um that will be will make it available fantastic listen ladies and gentlemen thank you very much for your attention uh sunshining here uh i hope you're able to go out and enjoy the sunshine uh and i wish everyone a safe journey through the uh rest of the year stay safe thanks a lot bye