What added value and other taxes should you consider when selling your business in Belgium?

Introduction

The information in this article is based on the announcement of new legislation in Belgium in 2025. For specific tax advice, it's best to consult a professional tax advisor.

On the future realised capital gains of financial assets, accumulated from the moment the levy is introduced, a tax of 10 percent will have to be paid. Historical capital gains are therefore exempt.

There will be a deductibility of capital losses within the year, without transferability.

For entrepreneurs with a significant interest of at least 20 percent in a company, the profit on the sale of shares up to 1 million euros will be exempt. A capital gain between 1 million and 2.5 million euros will be taxed at 1.25 percent, between 2.5 and 5 million euros, the rate is 2.5 percent, between 5 and 10 million you pay 5 percent, and for any capital gain above 10 million, there is a tax of 10 percent.

NEW Tax on future capital gains of financial assets

10% tax on realised capital gains from the moment the levy is introduced. Historical capital gains are exempt.

Profit on the sale of shares for entrepreneurs with at least a 20% significant interest in the company:

• Up to 1 million euros: exempt from tax.
• Between 1 million and 2.5 million euros: 1.25% tax.
• Between 2.5 million and 5 million euros: 2.5% tax.
• Between 5 million and 10 million euros: 5% tax.
• Above 10 million euros: 10% tax.

EXISTING Tax rate on the sale of a business fund by the company

Corporate tax on the realised capital gain (20-25%).

EXISTING Tax rate upon distribution after the sale of a business

30% tax rate on distribution of proceeds as a dividend or upon liquidation of the company, unless using a liquidation reserve (0% upon liquidation).

Sole Proprietorships - existing arrangements remain in place

Termination capital gains are calculated as the difference between the sale price and the book value of assets upon sale of a sole proprietorship (or upon contribution to a company).

• Realised capital gain on assets (Equipment, inventories, materials): 16.5% tax on realised capital gain.
• Goodwill: tax based on the "4x4 rule" (if paid goodwill is lower than the sum of profits over the past 4 financial years: 33% tax on capital gain, above that progressive rate (up to 50%).

Exceptions for realised termination capital gains at a fiscally favourable moment.

For sales after 60 years, death, or forced cessation, a reduced rate of 10% applies for termination capital gains.

Capital gain on real estate upon sale of a commercial property

The capital gain is taxed as business income. Upon sale after termination, the tax can be reduced if the property has been given a private destination (disaffectation).

Continuation system upon transfer to a family member or heir in the direct line

Exemption from termination capital gains, ongoing depreciations, and investment deductions remain in existence. The sole proprietorship retains its VAT number after transfer.

VAT/registration tax upon transfer

No VAT or registration tax is due on the transfer of shares or business if the business fund does not contain immovable property (*).

(*) There is a small registration fee due if the business transfer contract is registered at the Registration Domains office. Addresses of these offices can be found via this link (usually together with the VAT office of the jurisdiction).

Existing basic principles

When you want to sell your business, it's important to distinguish between a sole proprietorship and a company. If it's a company, a distinction is made between share sale or business fund transfer.

The tax treatment differs significantly between these structures.

1. Transfer of a sole proprietorship - termination capital gains - continuation system

If you carry out your business activities as a natural person (sole proprietorship), the rules of the personal income tax apply.

Here are some key points to note:

Termination capital gains or continuation system

When selling a sole proprietorship, for tax reasons, the sale price is divided into different components:

1. Equipment (Material Fixed Asset): For example, machinery, furniture, etc.
2. Goodwill (Intangible Fixed Asset): The value of your customer base and reputation. (the intangible value of your business)
3. Inventories.

Termination capital gains:

When you sell your sole proprietorship, you owe personal income tax on the so-called “termination capital gains.” These are the gains realised upon the transfer of your business. The tax is not calculated on the total sale price but only on the capital gain (the difference between the sale price and the book value).

Example:
If you sell the equipment of your business for €200,000 and it is recorded in the books for €120,000, you pay tax on the capital gain of €80,000.

Goodwill, which usually has no book value, is taxed on the entire sale price.

Inventories are usually transferred at book value, so there is often no capital gain tax owed.

Tax Rates:

Equipment: 16.5% personal income tax on the realised capital gain.
Goodwill: The “4x4 rule” applies here, where the capital gain is compared to the sum of net profits of the four previous years. Up to this amount, you pay 33% tax, above which the progressive rate applies (up to 50%).

Exceptions:

Upon termination from the age of 60, upon death, or in case of forced cessation, there is a reduced rate of 10% termination capital gains. For intangible fixed assets that do not meet the 4x4 rule, the progressive rates remain applicable.

Note: Termination capital gains only apply upon full cessation of self-employed activities. If you retain your VAT number for occasional activities after the sale, the full sale price is taxed at the progressive rate in personal income tax.

Termination capital gain on real estate

If an entrepreneur sells their commercial property at a profit, that profit is essentially taxable as business income, as this property was used for business activity. Since this sale occurs due to the termination of their sole proprietorship, it concerns a so-called termination capital gain.

How is that gain calculated?

In short, by calculating the difference between the sale price and the book value (purchase price - depreciations and value reductions).

Example. If a sole proprietorship bought a property for €500,000, on which €300,000 has already been depreciated, the book value is €200,000, then upon selling that property for €400,000, an amount of €200,000 (i.e., €400,000 - €200,000) is taxed at 16.5% (or at 10% if > 60 years, death, or forced cessation).

How to avoid this?

Based on the so-called disaffectation! The capital gain is not taxed when the property received a clear private destination for a certain period after the cessation of the business. This is referred to as so-called disaffectation.

When is there "disaffection"?

This is always a matter of facts. The seller must be able to prove that the property was no longer used for business purposes at the time of sale. If the property was used for private residence for a long period after the cessation, it is considered disaffection. This can also be achieved by renting the property as a residence for a period of 3 to 5 years before selling it (a rule of thumb from practice, not a legal regulation).

Continuation System

If the sole proprietorship is continued by the previously working spouse, legally cohabiting partner, or widow(er), or an heir in the direct line, the so-called continuation system applies. This results in an exemption from termination capital gains. Current depreciations, investment deductions, etc., continue as they existed. The sole proprietorship retains its VAT number.

Transfer of a business to a liable VAT payer is exempt from VAT.

If the business includes real estate, the applicable registration duty rates depend on the Region where the real estate is located:

• Flanders: Standard rate: 12% on the sale price.
• Wallonia: Standard rate: 12.5% on the sale price.
• Brussels-Capital Region: Standard rate: 12.5% on the sale price.

2. Business transfer - company: Shares or business fund?

If you operate your business via a company, there are two possibilities:

Transfer of shares (Share deal)

In the past, the transaction was generally tax-free in Belgium when selling shares, as long as it concerned a “normal management of private wealth.” This means the sale must not be speculative. Speculative capital gains are taxed at 33% personal income tax. Factors indicating speculation include frequent buying and selling of shares or exposure to high risks.

In case of selling a significant interest (more than 25% of shares) to a foreign company outside the European Economic Area (EEA), the capital gain might be taxable. This can be avoided by setting up a Belgian holding company (by the buyer).

No VAT or registration tax is due on the transfer of shares.

Transfer of the business fund (Asset deal)

When selling the business fund (all assets needed to run the business), the selling company pays corporate tax (20-25%) on the realised capital gain.

Transfer of a business to a liable VAT payer is exempt from VAT.

After selling its business, the company remains as an "empty shell" with the proceeds from the business sale as assets.

When distributing the proceeds from the business sale in the form of dividend distribution or upon liquidation of the company, a 30% tax rate applies, unless using a liquidation reserve (0% upon liquidation).

3. Specific rules for holdings or patrimonial companies

When the shares of the operating company are held by a holding or patrimonial company, specific conditions apply for the exemption from corporate tax on capital gains:

• Participation requirement: Minimum 10% participation or a purchase value of at least €2.5 million. The government agreement states that the participation requirement is tightened to 10% or 4 million EUR between large companies. This tightening does not apply to SMEs.
• Permanence requirement: The shares must have been in full ownership for at least one year consecutively.
• Taxation requirement: The shares must not pertain to a company in a tax haven. The involved company must be subject to a tax rate comparable to that in Belgium.

If the company does not meet these conditions, corporate tax is payable on the capital gain.