The SICAR: An Attractive Luxembourg Investment Vehicle For Belgian Investors

The Belgian Ruling Commission took recently position on the application of the Belgian participation exemption regime to income from a Luxembourg SICAR. The Ruling Commission considered that the SICAR qualifies as Investment Company under Belgian law and that dividends and capital gains from the SICAR could be exempt in Belgium.

Background

Several Belgian investors (resident companies and individuals) intended to establish a Luxembourg SICAR. Based on the Belgian participation exemption regime, in case of an investment in a so-called "investment company", the Belgian exemption only applies if at least 90% of the profits are distributed and if these profits are taxed in the source state at a rate of at least 15%.

Position of the Belgian Ruling Commission

The Ruling Commission analysed these conditions based on the SICAR regime and came to the conclusion that:

the SICAR qualifies as an "investment company" in the case at hand; dividends received by Belgian resident Companies from the Luxembourg SICAR can be exempt in Belgium; capital gains realized by Belgian resident Companies on a share buy-back from the Luxembourg SICAR can also be exempt in Belgium; dividends received by Belgian resident individuals from the investment in the Luxembourg SICAR qualify for the application of the reduced withholding tax (roerende voorheffing) of 15% (standard rate is 25%) and the anti-abuse provisions do not apply. Implications

Even though each specific investment made by Belgian residents in a Luxembourg SICAR will require a...