On 20 October 2026, the Federal Public Service Finance published circular letter 2026/C/94 on the application of the withholding tax on capital gains realised on financial assets. The circular letter has a broad scope, but Title III contains a separate section on the withholding tax owed by legal entities subject to the legal entities tax (“LET”). This marks the first time administrative guidance has specifically addressed the position of non-profit organisations and foundations.
Eubelius summarises the key points below.
Background: capital gains tax under the LET
The Act of 6 April 2026 introducing a capital gains tax on financial assets (Belgian State Gazette 21 April 2026) applies to capital gains realised on or after 1 January 2026. Pursuant to the new article 222/1 of the Income Tax Code 1992 (ITC 92), the tax also applies to legal entities that do not operate a business or engage in profit-making activities (art. 220, 3° ITC 92), such as most non-profit organisations and foundations, as well as to associations that have opted for the LET (art. 220, 4° ITC 92). Government entities and legal entities under public law specifically excluded from corporate income tax (art. 220, 1° and 2° ITC 92) are exempt. Institutions recognised as eligible to receive tax-deductible donations (art. 145/33, § 1 ITC 92) are also exempt.
What does the circular letter clarify?
- The legal entity itself is liable. The circular letter confirms that the legal entity is the sole party liable for the withholding tax on the capital gains it realises (art. 262 ITC 92). Unlike in the case of individuals, the bank does not withhold tax. The opt-out that is available to individuals is not available to legal entities.
- Only “ordinary” capital gains. Withholding tax applies only to capital gains referred to in article 90, paragraph 1, 9°, c) ITC 92. So-called “internal” capital gains and capital gains on a substantial shareholding are not subject to withholding tax.
- Base exemption and capital losses already applicable under the withholding tax. For legal entities, the calculation basis is determined in accordance with articles 102 and 102/1 ITC 92 and subject to the exemptions set out in article 96/2, paragraph 1, 1° to 4°, 6° and 7° ITC 92. This also includes the annual base exemption. Furthermore, due to the explicit reference to article 102 ITC 92, which also governs capital losses, the legal entity may deduct capital losses realised within the same taxable period when calculating the withholding tax. This is a significant difference from the withholding performed by banks for individuals, where the base exemption, a higher acquisition value, and capital losses are not taken into account.
- One return per year. Capital gains are deemed to have been allocated on the last day of the taxable period in which they were realised (art. 267, paragraph 6 ITC 92). Therefore, one withholding tax return per year, using the updated Form 273, is sufficient. The applicable withholding tax rate is 10%.
Uncertainty regarding additional flexibility
The circular letter does not contain any specific relaxation of the filing and payment deadline for legal entities. The extended deadline until 30 November 2026 only applies to income allocated between 1 June and 31 August 2026, and is not aligned with the annual allocation on 31 December. Although the Minister of Finance indicated during the parliamentary debate that he would consult with the sector regarding a possible extension, for the time being, the general 15-day deadline must be observed. The filing and payment of withholding tax on capital gains for 2026 must therefore be completed by 15 January 2027 at the latest. It is also unclear whether a separate circular letter regarding capital gains tax under the LET will follow.
Conclusion: prepare in good time!
The circular letter primarily confirms what was already known. Nonetheless, it is important to request the necessary information from your financial institutions in good time, to document the acquisition values and the values as of the reference date of 31 December 2025, and to calculate the withholding tax due, so that the return is filed and the payment is completed by 15 January 2027. In addition, do not forget that the capital gains must also be included in your annual LET return.
The Eubelius team is closely monitoring developments regarding the new capital gains tax and would be happy to assist your non-profit organisation or foundation with its implementation.
Authors:
- Korneel Decroix, Partner at Eubelius
- Kelly Moens, Counsel at Eubelius
