The Belgian government has agreed to introduce a new capital gains tax (CGT) on financial assets held by Belgian residents. The tax will take effect from 1 January 2026 and will apply to a broad range of financial products, including unit-linked life insurance contracts.
Overview of the New Capital Gains Tax
Belgium has long stood out as one of the few countries without a general capital gains tax on financial assets. This will change from 1 January 2026, following the government’s recent agreement on a new CGT regime.
This article outlines the key features of the proposed tax based on early commentary and a preliminary draft law. We also provide initial insights into its impact on unit-linked life insurance contracts.
Scope of the New Tax
At present, we believe the following key points are especially relevant for financial intermediaries advising Belgian clients and working with insurance-based solutions:
- CGT will apply to all financial products, as defined by the law, including listed and unlisted equities, bonds, derivatives, investment funds, ETFs, cryptocurrencies, gold, and insurance-based investment contracts such as Branch 21 and Branch 23.
- The tax will be triggered upon the realisation of gains, typically at the point of sale. A flat rate of 10% will apply, with an annual exemption of €10,000 per investor. Unused exemptions can accumulate by €1,000 per year, up to a maximum of €15,000 over five years.
- CGT will only apply to disposals for valuable consideration. Transfers due to death, gifts, or marital contributions will be exempt.
- Gains realised before 31 December 2025 will not be subject to the new tax.
- Losses can only offset gains within the same tax year. Investors cannot carry losses forward to the next tax year.
- Branch 21 (fixed return) and Branch 23 (unit-linked) insurance policies will fall within the CGT scope, but only on withdrawals or surrenders. The following points are relevant:
- The 2% insurance premium tax at inception will remain. The law may allow this tax to offset CGT, but the mechanism is not yet defined.
- No CGT will apply to beneficiaries receiving policy proceeds due to the death of the life assured or through a gift of policy rights.
- An exit tax will apply if a Belgian resident relocates and realises gains within two years of departure. Non-residents must report such gains, with stricter rules for moves to non-EU countries.
- Existing capital gains taxes will remain in place. This may lead to double taxation in some cases. For example, the 30% Reynders tax on fixed-interest investment funds and the 33% tax on speculative transactions will still apply.
- The new CGT will apply only to individuals. Belgian companies already subject to corporate tax are excluded. However, legal entities not under the corporate regime, such as foundations and non-profits, will be subject to the new tax.
- A reduced, progressive CGT rate will apply to gains on shares in private companies where the investor holds at least a 20% stake.
Implementation Timeline and Practical Considerations
The draft law will soon be submitted to the Council of Ministers. It will then be reviewed by the Conseil d’État/Raad van State (Council of State), which has 30 days to issue its opinion.
Following this review, the draft will be introduced in Parliament. Although minor amendments may occur, approval is expected given the government’s majority.
Parliament is likely to approve the law by October or November 2025, enabling it to take effect from 1 January 2026.
From 2026, Belgian financial institutions will be required to withhold CGT on gains, with an opt-out mechanism available to investors. This change will place a significant administrative burden on banks and insurers, and timely implementation may prove challenging.
For financial assets held abroad, Belgian residents must declare capital gains in their tax returns. They must also request the €10,000 exemption in their tax declaration, even for assets held with Belgian financial institutions.
The new regime is expected to significantly complicate the already complex tax declaration process for Belgian residents from the 2026 tax year onward.
Why this Matters for Your Clients
The new CGT regime may enhance the appeal of unit-linked life insurance contracts for Belgian residents. As CGT applies only on withdrawal or surrender, these contracts offer tax deferral benefits.
They may allow gains to offset losses over time, depending on future clarifications and simplify administration.
Advisers with Belgian-resident clients should review clients’ investment structures now to ensure readiness for the new tax regime.
