Article 35 of the Programme Law of 18 July 2025 now requires, for companies applying the DRD (Dividend Received Deduction) on received dividends (and thus also for the capital gains exemption), that the participation must amount to at least 10%, or that it has an acquisition value of at least EUR 2.5 million and, in that case, also has the nature of a financial fixed asset.
This additional condition does not apply to “small companies,” which in practice will rarely have a real impact. Situations where a “small company” is investing or holding more than EUR 2.5 million in a single share as a pure investment, are indeed rather rare…
Despite some remarks on the matter, even in the opinion of the Council of State, I believe there is no doubt that this addition does not conflict with the Parent-Subsidiary Directive, as it adds an exemption condition only to an exemption possibility that is not provided for in the directive.
The conceptual logic behind this addition is clear: to better distinguish between shares held as a portfolio investment — in respect of which dividends received and realised capital gains are fully taxable — and shares that constitute a participation— where dividends received and capital gains realised are fully tax exempt. From a legislative perspective, one might have expected that the “financial fixed asset” condition would simply replace the EUR 2.5 million threshold as the exemption criterion, but that idea was ultimately not retained.
When does a shareholding qualify as a “financial fixed asset”?
To my surprise, several commentators—including inspired practitioners from the Big Four—have proclaimed that the introduction of this requirement creates significant fiscal uncertainty and raises many questions. Yet, this is a concept that has been applied rather consistently on a daily basis for many decades. The fact that the concept is now linked to a tax benefit does not suddenly cause it to have become ambiguous…
One thing is crystal clear: it is NOT sufficient to simply record a shareholding on the assets side of the balance sheet as a “financial fixed asset” to be or become entitled to claim the exemption (assuming the EUR 2.5 million threshold is met). Merely accounting for a shareholding as a “fixed financial assets”, does not cause it to become a “fixed financial asset”. The exemption can only be validly claimed if the shareholding actually has the nature of a financial fixed asset. One could even argue that it need not necessarily be recorded as such… although that might lead somewhat to an uphill battle when arguing the deduction or exemption.
In other words, the tax authorities are only bound if a shareholding is correctly and appropriately recorded as a financial fixed asset.
Tax law does not itself define what a “financial fixed asset” is, which is appropriate: it is indeed an accounting law concept. IFRS 9 and IAS 32 recognize the term “financial assets,” but the concrete definition is found in Belgian regulations: most recently in the Royal Decree of 29 April 2019 implementing the Code of Companies and Associations, and previously in the old Royal Decree of 30 January 2001 concerning company annual accounts. The concept also appears in the Minimum Chart of Accounts and in opinions from the Accounting Standards Commission.
In summary, for any shareholding below the 10% threshold (if the threshold is met, it automatically qualifies as a “participation” and thus a financial fixed asset), it must be demonstrable that there is a durable and specific link with the company whose shares are held. This link must contribute to the business activity of the company holding the shares. It is essential that the shareholding is intended to sustainably support the company’s activity, or that it is held in the context or extension of that activity. Holding shares as a mere “external investment” in a third company does not suffice.
For example, a shareholding will not qualify as a financial fixed asset if acquired to invest accumulated funds within the company, in a way that is unrelated to the company’s own operations. Consider a management company actively serving on various boards of directors that acquires at least EUR 2.5 million in AB InBev shares. It seems to me that converting cash or other investments into a significant equity position merely with the aim of generating returns will likely not result in a shareholding that qualifies as a financial fixed asset for a “normal” active operating company.
Financial fixed asset: concrete examples
In what concrete cases can a shareholding of less than 10% (thus a small stake, often without significant influence) but with an acquisition value of at least EUR 2.5 million qualify as a financial fixed asset?
A typical case might be a manufacturer acquiring a minority stake in a distributor of its products, often as financial support. Or a construction company acquiring shares in a carpenter company with which it frequently collaborates. The concrete examples can vary widely, but in all cases the shareholding is clearly acquired and held at least in the extension of the company’s own activity. The fact that the acquisition is funded with available cash previously recorded as a portfolio investment is then irrelevant.
Another very concrete example involves a management company acquiring and holding shares in one of the companies where it serves as director, via its own director acting as “permanent representative.” In that case, the shareholding clearly seems to have the nature of a financial fixed asset.
In short, a factual assessment is indeed necessary, but in my view does not lead to excessive uncertainty if the above guidelines are reasonably applied. Or put differently: an informed “I know it when I see it,” within a quite familiar framework.
Burden of proof
Finally, who bears the initial burden of proof?
When a shareholding is recorded as a financial fixed asset, the DRD deduction, or the “adjustment of the opening balance of reserves” for triggering the capital gains exemption, will self-evidently be claimed in the corporate tax return. It is then up to the tax authorities to act and, if necessary, put into question (and potentially reject) the deduction or exemption. And since it is in all cases the claimant of an exemption or deduction who, as a rule, is required to substantiate its applicability, the tax authorities may indeed suffice with a request for information asking for the concrete elements that establish the durable and specific link, and thus the nature of a “financial fixed asset.” In this way, the burden of proof quickly shifts to the company itself.