New Exit Tax on Emigrating Companies: is Belgium building an Iron Curtain at its Borders?
The draft Program Law of the Belgium Government which aims to introduce various new tax measures has been submitted to the Belgium Parliament on May 27, 2025. One of the most significant measures is the newly announced “exit tax”. This tax will apply on a deemed liquidation dividend for shareholders of a company which emigrates.
Present situation: Exit Tax at Corporate Level, not at Shareholders Level
In corporate tax, the emigration of a Belgian company abroad is already treated as a liquidation. In such a case, the net asset value of the company, minus the revalued fiscal capital, is considered a distributed dividend. This fiction subjects latent capital gains and exempt reserves of the emigrating company to corporate tax, unless the company moves its seat to another EU member state and retains its assets and exempt reserves in a Belgian establishment.
As a result of various decisions of the Federal Ruling Committee and based on various tax court judgements, shareholders of emigrating companies were until now not taxed on such transfers if legal continuity at the level of the emigrating company was maintained. And this didn't necessarily reduce Belgium’s taxable base, since future dividends and capital gains would still be taxed—unless the shareholder also emigrated, which seems to be the main concern prompting this new exit tax.
New situation under the new Tax Rules
The draft Program Law confirms that the tax fiction of a liquidation at the moment of emigration not only applies to the emigrating company, but now also applies to its shareholders. These shareholders will therefore be deemed to receive a (fictional) liquidation dividend.
Withholding Tax and Reporting Obligations
No withholding tax will apply, as no real income is received. Shareholders must report the deemed dividend in their tax return. Corporate taxpayers will be able to apply the dividend received deduction (“DRD”) on the deemed dividend, allowing a 100% tax deduction of the deemed dividend (non-taxation), and assuming the various conditions for applying the DRD are fulfilled.
For individual shareholders, the new exit tax will cause a deemed dividend which will be subject to a 30% individual tax rate. To enable the exit tax levying, the emigrating company must issue tax forms to shareholders. If it fails to do so, a "secret commission fee" penalty will be applied.
The exit tax applies to all shareholders – individuals, companies, legal entities and non-residents.
Effective Date
The exit tax takes effect on July 1, 2025, for emigrations from that date onward. The draft Program Law still has to be approved by the full Assembly of the Chamber of Representatives. However, given the short time limit for effectively applying the new exit tax (i.e. July 1, 2025), we expect this approval to be voted in very soon.
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