Can I benefit from a withholding tax exemption?
There is an exemption from withholding tax on interest for loans to a start-up taking place through an alternative financing platform (credit crowdfunding). On the interest that is received annually from these loans (of at least 4 years), no withholding tax needs to be paid on the first tranche of €9,965 (due to indexation it is €15,320 for assessment year 2019) per year and per taxpayer. Normally, this withholding tax is 30%.
However, the conditions for benefiting from this exemption are very strict:
The exemption is only for beneficiaries who are natural persons (residents or non-residents) and who act outside the practice of their professional activity. Entrepreneurs and managers of a company acting as a private person can also benefit from this exemption from withholding tax on interest.
The loans must be contracted with a small company as defined in Article 15 of the Belgian Companies Code (= small companies are those companies with a legal personality that, on the balance sheet date of the last completed financial year, do not exceed one of the following criteria:
- annual average number of employees: 50;
- annual turnover excluding value-added tax: €9 000 000
- Balance sheet total: €4 500 000).
The borrower must not have been registered for more than 48 months in the Crossroads Bank for Enterprises or in a similar register in another Member State of the European Economic Area.
The funds raised must be used to develop new economic projects. Refinancing loans are not taken into account.
The loans must have a minimum term of four years.
The loans must be contracted based on an annually payable interest rate.
The loan must be issued by a Belgian crowdfunding platform licensed as an alternative financing platform by the Financial Services and Markets Authority or must be issued by a regulated Belgian company or a crowdfunding platform governed by the law of another Member State of the European Economic Area that, by virtue of its status, is entitled to engage in such activity.