Pro memoria:
The cayman tax was introduced by the program law of August 10, 2015, and immediately retroactively corrected by the law of December 26, 2015. Subsequently, the December 25, 2017, program law introduced a whole series of adjustments to this system, which we have dubbed "cayman tax 2.0”. By introducing a transparency tax in the personal and legal entities income taxation, the income received through "legal constructions" is attributed for tax purposes to the "founders" as if they had directly obtained that income themselves. The second form of taxation under the cayman tax lies in the taxation of distributions to a beneficiary, whereby the distribution is taxed as a dividend, unless it can be shown that the distribution is composed of either a) income that has already been taxed or b) capital that has been contributed, and this within the restrictive application of the so-called "anteriority rule". Notwithstanding these principles appear to be quite simple, the concrete application of the current legislation has become a very complex matter.
The most relevant changes are listed below and provided with some brief comments where necessary. We also attempt to take a look at some of the remarks made by the Council of State as well as some additional refinements made to the earlier version of the explanatory statement. In this regard, it is important to note that the Council of State itself says that it was not given the time to subject each of the provisions of the preliminary draft to an in-depth examination, and that the remarks formulated are only the result of an initial examination, without any guarantee that all the fundamental problems have been detected and adequately analyzed. The comments must be read with that explicit reservation.
Furthermore, the Council of State literally says: "It should therefore not be automatically inferred from the observation that if nothing is said about a provision of this section that nothing can be said about it and, if something is said about it, that nothing móre could be said about it. It will be up to the Constitutional Court, where appropriate, to rule on the unconstitutionality alleged (own translation)." This may safely be read as a warning shot to the government warning of annulment appeal(s) to the Constitutional Court.
The summary of it all is that the government is making cayman tax more than ever an autonomous tax system that is difficult to fit into the rest of the Belgian income tax code. Indeed, the logic is completely lost. This makes the practical interpretation of these rules extremely difficult and perhaps in several cases highly uncertain and impossible to apply. This is particularly the case for the so-called "intermediate structures" and the abolition of the exemption "exemption vaut impôt". This appears particularly clear from the notion in the explanatory statement which reads literally:
"Furthermore, the cayman tax may sometimes be more advantageous than the alternative taxation in which it does not apply. Although the cayman tax was just introduced to avoid tax avoidance, more and more taxpayers request to deliberately fall under the cayman tax in order to find themselves in an advantageous tax situation. This was not the intention of the legislator at the time (own translation)."
Actually, the government is saying here that it did not realize very well what the consequences of the Cayman tax would be – anno 2015 - and that it is not willing to accept the logic of the system they invented. Sothis is not really consistent.
CHAIN CONSTRUCTIONS BECOME INTERMEDIATE STRUCTURES
Briefly, to date, a "chain construction" is understood to be a set of legal constructions formed by a parent entity and all its subsidiaries. Crucially, each of the entities is to qualify as a legal construct in itself. To the extent that one entity in the chain does not qualify as a legal construction, qualification as a "chain construction" is not possible for all the underlying entities. Under the currently applicable regulation, chain constructions are thus subject to the cayman tax in cases where legal constructions are identified in a top-to-bottom approach. Thus, the application of the cayman tax is logically stopped in the case where the chain is broken by an entity that does not qualify as a legal construct in itself. The government sees this - quite unjustifiably - as a form of evasion, where, to the contrary, it is sheer logic.
The 'solution' currently proposed by the draft bill consists in the extension of the scope of the definition of 'founder' and the elimination of the term 'chain construction' which is replaced by the use of the term 'intermediate construction'. Whereas the currently applicable legal provision of Article 2, § 1, 14°, fourth indent of the BITC (Belgian Income Tax Code) limits the scope of application to holders 'of the legal rights of the shares', this draft bill proposes to extend the scope of application to those who 'directly or indirectly hold the legal or economic rights of the shares through a chain of intermediate constructions'. This would significantly expand the scope of application. In addition, the use of the term intermediate construction also makes it possible to target chains of legal constructions where not all entities of that chain are, in themselves, legal constructions.
Notwithstanding the theoretical possibility of introducing such measures, the practical feasibility of doing so is unrealistic. As is also already evident from discussions regarding the UBO register, obtaining sufficient information by an individual about a great-granddaughter entity through to the great-grandmother entity, regarding how this entity is controlled, in order to then make the tax analysis from a Belgian point of view, is not self-evident, read often "impossible". As a result, the cayman tax will simply become unenforceable in many cases.
The draft bill (ironically) emphasizes that - despite the aforementioned extension of the scope - the system still has limits. Among other things, it stipulates that the transparent tax only applies to legal constructions and cannot be applied to 'normally taxed' intermediate constructions. This is of course rather obvious, but still makes the whole system horribly complex, especially when distributions are made between the mother and granddaughter constructions.
Furthermore, the government says in the explanatory statement:
"Following the advice of the Council of State, it is clarified that this new procedure does not increase the risk of double taxation, even when a non-legal construction is being interposed. Indeed, the exemption of this movable income can always be claimed under article 21, 12°, BITC, the scope of which is broadened in this draft (own translation)."
This is obviously not correct. First, the system becomes totally illogical. Furthermore, the scope of article 21, first paragraph, 12° ITC is already severely limited by the abolition of the exemption "exemption vaut impôt" (see below).
It is also emphasized that - despite the broad scope of application of intermediate constructions - this should not mean that the investment institutions or listed companies referred to in Article 2, § 1, 13°/1, first paragraph of the BITC could also be considered intermediate constructions (apart from so-called ‘dedicated funds’). For example, the amended explanatory statement now specifies:
"As a result of the opinion of the Council of State, it was re-examined whether the distinction between structures that are sham and those inspired by legitimate wealth planning purposes is sufficiently clear and straightforward. As a result of this examination, it is opted to now exclude private alternative investment vehicles from the application of the cayman tax as well, with the exception of cases where the ‘dedicated funds’ shareholding is established."
Of course, we are interested to read that the government wishes to distinguish between "structures that are sham" and "structures inspired by legitimate wealth planning purposes." After all, the former are fraudulent, and thus fall outside the scope of the cayman tax anyway. So it remains to be seen what exactly is meant by "structures inspired by legitimate wealth planning purposes" ? Are they also outside the scope of cayman tax? Surely not, it seems to us.
Finally, Article 5/1 BITC is supplemented by some new rules aimed at mitigating the transparent tax “pro rata” in the event that the legal construct is not held 100% through an intermediate construct. A "pro rata taxation" will apply to the extent that the founder indirectly holds, through this intermediate construct or the chain of intermediate constructs, the legal or economic rights of the shares of the legal construct (which is then a subsidiary). Again, this is sheer logic.
REALIZED CAPITAL GAINS ON SHARES
In order to avoid "advantageous" cayman tax situations, the condition of application of article 21, first paragraph 12°, BITC is made more stringent, by henceforth not allowing the exemption upon distribution of income, which has been subjected to their Belgian tax regime, in the event that the income is/was exempted in accordance with this Belgian regime, sufficiently called "exemption vaut impôt". This would have the effect that, for example, a realized capital gain on shares in an entity subject to cayman tax, would still constitute a taxable dividend upon distribution. Completely illogical, of course. At present such a distribution is - rightly - not a dividend and therefore tax-free. Whether such unequal treatment is compatible with the principle of equality, as well as with the right to free movement of capital and freedom of establishment, is highly questionable.
Following the advice of the Council of State, it is clarified that this amendment should not affect the application of the treaties. To illustrate this, the explanatory statement mentions the example of the French SCI realizing capital gains on real estate that are subsequently exempted by treaty.
"If this income is subsequently distributed as a dividend to a resident then the draft has the effect that Article 21, [paragraph 1], 12°, BITC cannot be invoked to exempt this dividend. This of course does not prevent any other provisions in the BITC or the double tax treaty from being invoked that may mitigate the taxation of the dividend."
However, they forget to mention that on the basis of the existing EEA Royal Decree, which is now being integrated into the text of the law, this situation is not subject to the cayman tax at all (already in effect since January 1, 2018) precisely because the real estate capital gains in question are exempted by treaty (see Article 1, second paragraph in conjunction with Article 1, third paragraph EEA Royal Decree). This has apparently been overlooked, except that the same effect is to our opinion achieved via the new article 21, first paragraph, 12° BITC. Or how one seems to get lost in self-created complexity. However, it should be noted that the EEA Royal Decree was apparently not adopted in its entirety, since the current provision on the "treaty exemption" of art. 1, second paragraph EEA Royal Decree is missing.
THE INTERACTION OF THE TRANSPARENCY SCHEME WITH DISTRIBUTIONS IN THE SAME CALENDAR YEAR
According to the draft, there is currently discussion about the interaction of the transparency regime as provided for in article 5/1, §1, tenth tier of the BITC, namely which moment prevails: the moment of allocation to the legal entity resulting in transparent taxation, or the moment of effective distribution by the legal entity (in the same calendar year). The choice between the two moments is important from a tax point of view, in the way that, depending on which moment is chosen, certain income received by the legal entity is not taxed, while if the distribution were to be effective, it would be taxable as a dividend. Article 5/1, § 1 BITC is amended under the new draft law to clarify that the income obtained through the legal arrangement is always to be taxed transparently, even if it is redistributed in the same calendar year. This also corresponds to the existing ruling practice on this point.
This is the rather technical discussion of art. 5/1, §1, tenth paragraph BITC that was already discussed in the year 2017 and is now resurfacing. Indeed, the current Article 5/1, §1, tenth tier BITC reads, "This paragraph does not apply to income paid or granted by the legal construction." The statement accompanying the draft Program Law of December 25, 2017, shows that a legal arrangement is transparent on the part of the founder in terms of income received, but not transparent in terms of income distributed. More so, the explanatory statement literally states that the purpose of Article 5/1, §1, tenth tier BITC is to avoid that Article 5/1, §1 BITC would be invoked to prevent a qualification of income distributed in the same year by the legal arrangement as a dividend. However, with this particular provision, the system lost its character of perfect tax transparency, and the system would end up (by converting the nature of the income into a dividend) in a form of imperfect tax transparency. With the introduction of this new clarification, this situation is thus mitigated and the system - on this point - retains its perfect transparency, without conversion of the nature of income. Note that, with the adaptation of art. 21, first paragraph, 12° BITC and the abolition of the exemption "exemption vaut impôt" rule, this is again completely overturned.
DEDICATED FUND SHAREHOLDING
The draft bill proposes to combat the "circumvention" of the dedicated fund shareholding application. Indeed, in practice, according to the Court of Audit, it happens that frontmen are sought to fill the position of unrelated person/shareholder - giving them a minimum participation - in order to shield the fund from the application of the cayman tax. Therefore, a minimum shareholding by unrelated persons who together hold 50% will lead to a qualification as dedicated fund sub-fund. With this new provision, a sub-fund will also fall under the cayman tax if, for example, 51% of the shares are held by one family, even if 49% of the shares are held by unrelated "third" parties. Under the present rules, this is not the case. This rule is supplemented in certain situations by a reversal of the burden of proof. Indeed, a legal presumption is established in case the asset manager of the relevant sub-fund receives specific instructions from the persons holding the rights to buy or sell certain financial instruments, or in case there is simply no independent asset manager. Thus, cayman tax would also become applicable in all these cases, which may lead to a far more broad of the field of application.
Furthermore, the provisions indeed envisaged that both public, institutional and privately issued CIUs are only subject to the application of the cayman tax if they are a dedicated fund sub-fund. Strictly speaking, this also applies (contrary to the current rules) to funds outside the EEA. The only inconvenience is that the concept of CIU refers to typical European law concepts, in particular, among others, "the alternative collective investment undertaking under Belgian law or under foreign law whose manager, in accordance with the law of April 19, 2014 on alternative collective investment undertakings and their managers, meets the conditions of Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers, in accordance with the domestic law of a Member State of the European Union or in accordance with the domestic law of a third country." "In real life," it may not always be obvious to prove that CIUs based outside the EEA meet the conditions of Directive 2011/61/UE. We dare to hope that the FPS Finance will show some flexibility in its application here, so that CIUs in third countries will not be treated more disadvantageously than CIUs established in the EEA.
SYMBIOSIS OF CAYMAN TAX AND ARTICLE 19BIS BITC
The Council of State inquired with the government's authorized representative about the possibility whereby income may be subject to both article 19bis BITC and the cayman tax, as, for example, in the case of interest income from a dedicated fund. The representative replied that in practice it is established that dedicated funds are used to hold share portfolios rather than bonds, and that such a concurrence seems rather unlikely in practice. In itself, this is not an obvious preposition, especially since it is in principle sufficient to invest more than 10% in debt securities to fall within the scope of article 19bis BITC.
Furthermore, the government's authorized representative stated (free translation): "in the theoretical case that there would nevertheless be concurrence, both article 19bis BITC and article 18 BITC have the effect that 30 pct. WHT must be withheld from this movable income, except, of course, if the income was already previously taxed via the cayman tax and can therefore be exempted via article 21, first paragraph, 12°, BITC. The only problem that follows from such concurrence is thus a theoretical classification problem. It then concerns income that can be classified as both dividends (article 18 BITC) and interest (article 19bis BITC). Practically, this does not pose a problem because the WHT rate (or income tax rate) is the same for both. In case the application of article 18 BITC and article 19bis BITC results in a different amount of movable income, the higher of the two amounts should be taken. However, an argument based on the idea that this would require you to subject the same income to WHT twice does not hold. It is not because a benefit is classified as a movable income in two different ways that it would be subject to double taxation."
We do not fully agree. If the interest income of a dedicated fund compartment was initially taxed at 30% via the cayman tax, double taxation may occur if, in a later year, the investor transfers his shares in the UCI for valuable consideration to a third party. In that case, the application of article 19bis BITC to the transfer for valuable consideration cannot be prevented by article 21, first paragraph, 12° BITC, which can only be used to exempt taxable distributions. We therefore agree with the statement by the Council of State that the authors of the preliminary draft should provide for a legal regulation that clearly - and conclusively - addresses this concurrence.
FICTITIOUS INCOME DUE TO STATUTORY SEAT RELOCATION OR TRANSFER OF ASSETS
Article 5/1, § 2 BITC is amended in the draft bill to clarify the tax consequences of a transfer to Belgium. The proposed idea is to discourage the transfer of capital held in a legal entity to another legal entity and to encourage a transfer of such capital to Belgium. In order to correctly classify the income that then becomes taxable as a result of the transfer of the seat of a legal entity or the transfer of capital from one legal entity to another legal entity, this part of article 5/1 §2 BITC is transferred to a new article 18, first paragraph, 3°/1 BITC, which classifies this income as a (fictional) dividend. The precise impact of this new provision remains however unclear. The question that arises here, of course, is whether within the EEA there may be a tax difference between a transfer to Belgium and a transfer to another EEA country. We do not think there is.
EXIT TAXATION
An "exit tax" is provided for in article 18 paragraph 1, 3°/1 BITC in cases where the founder transfers his tax residence abroad. To mitigate the application of this (cf. Article 5 ATAD Directive), a staggered payment is provided for in Article 413/1 BITC 92. However, this change is more far-reaching that at first sight appears.
First of all, it is unclear how this will fit into the whole of the BITC, which is nowhere mentioned in the bill. Furthermore, this is not at all good for the position of Belgium within global world trade, or for the international business community present in Belgium. This is especially a problem for that part of the world based on Anglo-Saxon legal culture, e.g. Americans and English who generally use "trusts" as a "normal" planning tool for their wealth and inheritance. Within their legal culture this is very common. Upon decease within their family, heirs living in Belgium may suddenly find themselves "trapped" within a potential latent exit tax, which is then due when they return to their home country. They will - rightly - perceive this as a major problem that is suddenly created here, making our country a "territory to be avoided." For a small country like Belgium with a thriving international trade and numerous expats present here, this is disastrous. Furthermore, the scope of this exit tax is then not limited to the "Belgian period", making latent capital gains accumulated outside Belgium taxable as well.
We hope parliament will realize this in time and provide for a different approach by means of an amendment. It may be possible to find a way around this within the idea of "structures inspired by legitimate wealth planning goals" as suggested in several sections in the Explanatory Statement.
THE "1" IN "3" RULE
In order to anticipate so-called "manipulations", whereby one waits until the taxable period in which the legal construct loses its qualification as a legal construct before making a distribution, the bill proposes that the special rules for distributions by legal constructions (i.e. the rules of art. 18, first paragraph, 3° in conjunction with art. 21, first paragraph, 12° in conjunction with art. 21, second paragraph BITC) should also be provided for the cases in which distributions are made by entities that have been qualified as a legal arrangement in at least one of the 3 previous taxable periods. So, this is actually a specific anti-abuse measure that targets a situation where the cayman tax would normally simply not apply. It remains to be seen how this complex rule will work out in practice.
SUBSTANCE EXEMPTION
Furthermore, it is proposed to tighten and rewrite the substance exemption. The founder can still provide evidence that the legal arrangement has sufficient substance and thus carries out a substantial 'economic activity' supported by personnel, equipment, assets and buildings. In order to avoid too broad and "too European" (sic) an interpretation of the concept of "economic activity," the new draft bill specifies its meaning. Specifically, the exercise of an economic activity is to be understood as the offering of goods or services on a given market. As a result, activities relating to the management of private or family assets cannot constitute an economic activity for the purposes of this provision.
Subsequently, the economic activity must also be substantial, meaning that the economic activity must not be a peripheral item within the overall activities of the legal arrangement, but must be a core activity. Finally, the concept also presupposes that the economic activity is supported by a set of personnel, equipment, assets, and buildings. However, it is not enough to meet this criterion by creating a minimum of substance by renting an office space and compensating a part-time paid employee. The set of personnel, equipment, assets, and buildings must be credible when measured against the turnover and economic activity that is supposed to be carried out.
According to the draft bill, it is not intended that this rewritten substance exclusion can be easily invoked by any legal construct that is not a letterbox company for the purpose of shielding it from the cayman tax. It remains necessary to examine whether all the conditions are met.
To inspire the aforementioned clarification, a similar clause provided for in the articles in the ATAD Directive related to the introduction of a CFC measure was considered. Reference is also made to the jurisprudence of the Court of Justice where the Cadbury Schweppes case is regularly cited in doctrine, from which the initial substance exclusion originated but which, according to the new draft bill, has evolved since then. Indeed, according to the new draft bill, the clause included in the ATAD Directive goes beyond the concept of "wholly artificial constructions", which strictly speaking limits the application of CFC measures to so-called letterbox companies.
EXTENSION OF DECLARATION REQUIREMENTS AND MANDATORY ATTACHMENT TO THE DECLARATION
According to the draft bill, the declaration of legal constructs should also be compulsorily and supplemented by a specific annex to the declaration, to facilitate administrative follow-up and make it easier to monitor the budgetary proceeds of the cayman tax. The draft law stipulates that all data which at present is to be reported must be included in the annex to the declaration, and that this annex must also mention the income obtained by each legal construction separately, as well as the dividends referred to in article 18, first paragraph, 3° and 3°/1 BITC, including those exempted in application of article 21, first paragraph, 12° BITC.
THE DUTCH FOUNDATION (‘STICHTING-ADMINISTRATIEKANTOOR’)
In order to deal with the lack of clarity that has arisen in the matter of certification via the Dutch foundation (STAK), a technique used by many Belgian families in the context of corporate governance, a paragraph has been inserted into the Explanatory Statement to avoid the problem of undesired application of the cayman tax, as threatened by the planned measures (free translation):
"In the context of the intended better delineation between structures that are feigned and those inspired by legitimate wealth planning purposes, it is clarified that in the case of certification of shares, share units or other underlying assets, consideration must be given to the application of Article 13 of the Law of July 15, 1998 on the certification of securities issued by commercial companies. The latter provides for a tax transparency to be taken into account when applying the general look-through mechanism also provided for in the cayman tax. The aforementioned law provides that, in the case of certificates, these are treated the same as the underlying securities to which they relate. In fiscalibus, this means that certificates are not considered as separate "securities" and therefore there are no realized capital gains or losses upon certification or annulment of these certificates. In application of Article 13 of the aforementioned Law of July 15, 1998, the holder of the certificates, and not the issuer of these certificates, is considered the direct beneficiary of the dividends arising from these securities."
With this paragraph in the Explanatory Statement, the pre-eminent source for interpreting the application of the law, the supremacy of the Certification Act has been confirmed, which means that the problems that have arisen concerning capital gains taxation are in principle resolved. The ruling commission may still be able to provide a more definitive answer in a specific case.
Then there remains the problem of the STAK-BM which, strictly speaking, cannot be caught under Article 13 of the Certification Act. However, in light of the non-subjection to the cayman tax of the Dutch "stichting administratiekantoor” - by means of Article 13 of the Certification Act - as well as in light of the complete fiscal transparency of the Belgian civil-law partnership whereby the income is directly allocated to the partners, it can, in our opinion, be concluded that it cannot be the intention to subject the certified partnership, whereby the shares of a Belgian civil-law partnership are certified through a Dutch “stichting administratiekantoor”, to the cayman tax. In such a case, there is an immediate allocation of income to the partners, so there is no ‘waivering’ capital, nor is there a difference in tax treatment of income and capital gains before or after certification. Like the ordinary civil partnership, which is a normal wealth planning instrument that can be used by taxpayers to shape the economic landscape, so is the certified partnership. There should therefore be no discrimination between the situation where the units are either a) not certified, or b) certified through a Belgian “stichting administratiekantoor”, or c) certified through a Dutch “stichting administratiekantoor”. Fiscally, there is no difference. This principle of fiscal neutrality has already been confirmed in several previous decisions, both prior to the introduction of the cayman tax (PD 500.127 dd. 24.11.2005; PD 500.124 dd.23 .06.2005; PD 600.439 dd. 19.12.2006; PD 800.096 dd. 03.03.2009) and after the introduction of the cayman tax (PD 2015.538 dd.22.12.2015; PD 2016.613 dd. 18.10.2016). Thus, there is no reason to further apply the cayman tax rules in such case, as the ordinary perfectly fiscal transparency is already applied. Let us therefore assume that the legal uncertainty that has arisen will be remedied by parliament in this case as well.
THE DIFFERENCE WITH TAX TRANSPARENCY BASED ON OTHER PROVISIONS
The opinion of the Council of State raised the question of whether a justifiable difference in treatment arises between entities whose tax transparency follows from the cayman tax and entities that are transparent pursuant to the application of other provisions. This opinion then specifically referred to the tax transparency of a civil partnership where the exemption does carry over to the distribution to the partner. The explanatory statement now includes a number of paragraphs intended to reassure the civil-law partnership. In itself this is strange since the civil-law partnership is not subject to the cayman tax at all. On the other hand, these additions do shed some light on the underlying motives of the proposed legislative changes.
Thus, the explanatory statement states (free translation):
"In response, it can be said that the difference created is most certainly justifiable. In this context, it should be recalled that the primary objective of the cayman tax is not to subject as many entities as possible to the cayman tax system, but rather to have a deterrent effect whereby taxpayers are discouraged from using such structures in order to engage in tax avoidance. On the contrary, the system aims to put them on the path to take the non-cayman tax routes."
"The legal constructs, which are subject to the cayman tax, have in common that, on the one hand, they are not subject to income tax in the home state and, on the other hand, they have little or no substance, which means that they have little to do with normal economic life. By contrast, the civil partnership (renamed when the Companies Code was introduced) is a normal instrument that can be used by taxpayers to shape the economic landscape."
"A second essential point of difference is that legal constructs, including those without legal personality, have the effect of creating waivering assets, of which without the application of the Cayman tax, the income in many cases escapes taxation and hence cannot simply be allocated to an individual. Such an issue is totally absent with the partnership, since in this case the income is automatically allocated to the controlling partners."
"Just as, in the context of the principle of equality, the difference in tax treatment between unincorporated and incorporated companies results in impermissible discrimination, the difference in tax treatment between an unincorporated legal construct and a partnership also does not result in impermissible discrimination. Indeed, the differences between the two cases are too essential to be comparable."
Now this is all very interesting, but it totally ignores the fact that the cayman tax cannot apply to a civil-law partnership since this is not a foreign but a Belgian entity. Furthermore, it seems that the explanatory statement considers foreign structures suspicious and Belgian structures 'normal'. That may be true (in certain cases), but that still does not justify why there would be a difference in valuation in terms of benefit in case of prior tax transparent treatment. So when the explanatory statement then concludes that it is a legitimate objective to avoid making the application of the cayman tax more advantageous than its non-application, and that the draft therefore aims precisely to avoid the creation of new avoidance mechanisms, and that this legitimate objective justifies the choice made in the draft, we still have our doubts. It remains to be seen what the Constitutional Court would say about this, if any.
QUALIFICATION AS A FOUNDER ON THE BASIS OF A UBO REGISTER
Article 2 §1, 14° BITC is supplemented by an additional presumption of "founder", subject to proof to the contrary and taking into account all relevant facts and circumstances. The presumption applies to any natural person, designated in the Belgian or any comparable foreign UBO register, as a beneficial owner of a company, fiduciary, trust, foundation, non-profit association, or an arrangement similar to a fiduciary or trust, which is also a legal construct. Thus, this is a rebuttable presumption, merely additional to the five other legal definitions of founder.
ENTRY INTO FORCE
This adjusted cayman tax 2.1 would according to article 43 of the draft take effect for distributions as of Jan. 1, 2024, on the one hand, and on the other hand, for income obtained through legal constructions as of Jan. 1, 2024. Nothing is said about any grandfathering for accumulated reserves in legal structures accumulated in the period 2015/2023. So apparently the intention is to start taxing distribution of "old tax-exempt capital gains" as a dividend at 30% from January 1, 2024. Or how underhandedly a capital gains tax of 30% will then be introduced anyway... As for the appendix to the tax return, that already takes effect from tax year 2024.
Under the banner of "cayman tax 2.1", the cayman tax is being substantially amended. Certain of the proposed measures raise serious questions regarding equal treatment and proportionality of the measure. The silent introduction of a 30% capital gains tax in violation of previous commitments also raises eyebrows.
We are following these developments closely for you and will keep you informed as soon as there are any news/clarifications in this. To be continued.
