Corona tax shelter
In the past the legislator already undertook several attempts to seduce the Belgian saver in order to invest in shares. The two most recent initiatives are 'tax shelters'. One for starting companies, the other for grow companies. With Corona III a third one is added.
Private individuals investing in shares of starters or grow companies can obtain a tax reduction for the investment they make.
The modalities and conditions for the 2 existing tax shelters are not identical. E.g. The tax reduction for grow companies is 25%. For starters, it amounts 30% and can under certain conditions increase up to 45%.
Corona tax shelter
The new tax shelter is based on the same principle: give incentives to private individuals to invest new capital in companies by granting them a tax reduction on the invested amount.
Conditions regarding the contribution
The investor has to make a contribution in cash. A quasi-contribution or a contribution in kind are excluded. With this contribution, new shares which are issued between 12 March 2020 and 31 December 2020 are underwritten. The contribution should actually be paid before the end of the year.
Conditions regarding the company
The company issuing new shares, should in principle have suffered a turnover loss of at least 30% in comparison with the same period in 2019 between 14 March 2020 and 30 April 2020. Also starters qualify: in this case the actual turnover is compared with the projection in the financial plan.
Only 'small' companies qualify. Additionally, a number of companies are excluded, irrespective whether they are small or big. It concerns investment, finance or cash companies, real estate companies, management companies and listed companies. Also companies in financial difficulties are excluded.
The contribution should strengthen the financial situation of the company. Therefore, the receiving company cannot distribute dividends, perform capital reduction or repurchase own shares or grant loans.
The company cannot hold a participation in a company in a tax haven or make payments to such companies (except for real and genuine transactions).
Maximum in the hands of the company
The maximum amount that the company can receive under this regime is 250.000€. The corona tax shelter can be combined with the other tax shelters.
The investor has a right to a tax reduction of 20%. The contribution cannot exceed 100.000€. Additionally, the participation of the investor cannot exceed 30%. There is no tax reduction to the extent that the participation following the contribution exceeds this threshold.
Note, and this is an important difference with other tax shelters, that directors are NOT excluded from this tax reduction.
The investor must hold on to his investment for 60 months. In case the shares are transferred earlier, the tax reduction is reclaimed for every full month that is still to run. A liquidation is also considered as a transfer. But a liquidation after bankruptcy is no transfer. In case of bankruptcy the investor does not lose his tax reduction. And also in case of decease of the shareholders, the heirs are not bound by the detention obligation.
Crowdfunding or investment through an investment company is not possible. The investor should 'know' the company. But by the tax reduction the investor realizes a certain return. You do not have much time to decide: the contribution should be made before the end of the year.