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Exemption from withholding tax on dividends from shares of up to EUR 192

Published on:

13/05/2019

In recent years, investors have had to swallow a few bitter pills in terms of taxes. The stock market tax on share transactions rose to 0.35%. The withholding tax jumped to 30% for dividends, whereas it was only 15% to 25% a few years ago.

However, there is also some good news: you will receive partial compensation of up to EUR 192 for this from 2019 onwards. It is important to know that in order to receive this partial compensation, you need to take action yourself when filling out your personal income tax return.

Only for private individuals

For dividends that you, as a private individual, received in 2018 from shares, you may declare up to EUR 640 in personal income tax with regard to dividends tax in the reporting year 2019 regarding the income year 2018. This results in a maximum tax benefit of EUR 192 (30% of EUR 640).

Please note that dividends received for minor children are not eligible for this exemption separately. They could be combined with those of the parents. If you are one of the holders of a joint account, each holder will have to recover the charged withholding tax for his or her part of the account.

Dividends from shares

The tax advantage applies to dividends from shares of both Belgian and foreign companies. For dividends from foreign companies, the foreign withholding tax is obviously not eligible, but the part of the Belgian withholding tax is indeed.

The deduction does not apply to dividends from funds (collective investment undertakings, mutual funds) or trackers (ETFs, ETPs and so on).

A tax advantage of up to 30%

This tax benefit is up to 30% of EUR 640 in dividends for the reporting year 2019, income year 2018. Two types of withholding tax apply to dividends from shares at Keytrade Bank:


  • 30% on dividends from listed companies
  • 15% on dividends from regulated real estate companies (RRECs) of which at least 60% of the portfolio consists of health care real estate. In practice, there are only two such companies: Aedifica (AED) and Care Property Invest (CPINV), both of which are listed on Euronext Brussels.

Declaration

The withholding tax exemption must be applied for each individual person. That is why it is best to bear in mind two codes: code 1437 and code 2437 (for a joint declaration). That is where you fill in the withholding tax amount (up to EUR 192) and not the amount of dividends received.

No separate certificate

To find out how much withholding tax has been deducted from your dividends, go to the “History” section of your Keytrade Bank securities account.

There you will find a statement for each dividend received in PDF format. This explicitly states how much Belgian withholding tax was charged.

No direct burden of proof

No supporting documents need to be added to your tax return. At the moment, it is not even clear which documents the tax administration requires as proof of your entitlement to this tax benefit. In the event that your tax return is inspected, you can use your statements.

 


An example of an individual declaration

  • >In 2018, an investor received a EUR 1,000 gross dividend (EUR 500 from Aedifica and EUR 500 from Solvay).
  • > Aedifica: in the case of a EUR 500 gross dividend, a withholding tax of EUR 75 was deducted (15% withholding tax since Aedifica is a health care RREC). That gave the investor EUR 425 in terms of net dividend.
  • > Solvay: in the case of a EUR 500 gross dividend, a withholding tax of EUR 150 was deducted (30% withholding tax). That gave the investor EUR 350 in terms of net dividend.
  • > The gross dividend of EUR 1,000 is exempt for up to EUR 640.

-> How can the investor include that in the declaration?

Scenario 1:

Solvay's gross dividend of EUR 500 and the associated withholding tax of EUR 150 already add EUR 500 to the basket of up to EUR 640.
This leaves an additional EUR 140 of gross dividend for Aedifica. A 15% withholding tax or EUR 21 was deducted from that.
Specifically, the investor enters EUR 171 for code 1437 (EUR 150 + EUR 21) to recover EUR 171 of the EUR 225 withholding tax.

Scenario 2:

The investor could also choose to add the EUR 500 in gross dividend from Aedifica to the EUR 640 basket. That offers a benefit of EUR 75 (15% of EUR 500), which can then be supplemented with EUR 140 in Solvay dividend. That represents EUR 42.
This investor enters EUR 117 (EUR 75 + EUR 42) for code 1437.

These two scenarios show that it is better to use dividends with a higher withholding tax to achieve a maximum tax benefit.

 


An example of a joint declaration

The investor may have a joint security account with his or her partner for which they have received a EUR 800 dividend from Bekaert. The investor may also have an individual securities account for which he or she received a EUR 300 dividend from Cofinimmo.


-> How can the investor and his or her partner include that in the declaration?


The partner's share is EUR 400, so he or she enters EUR 120 for code 2437. The investor himself or herself has received a gross dividend of EUR 400 from Bekaert and a gross dividend of EUR 300 from Cofinimmo. The investor can only file EUR 640 of the EUR 700. Because these two dividends are subject to a 30% withholding tax, the investor enters EUR 192 (30% of EUR 640) for code 1437.

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