Belgium’s government has approved a draft law to introduce capital gains tax, from 1st January 2026.
Draft legislation will mean a 10% tax on gains from financial assets, realised by individuals.
And also an exit tax, with the potential to claw-back tax on any gains that happen two years after leaving the country.
However, investors will benefit from an annual €10,000 allowance. €1,000 of which can be carried forwards, if not used, to a maximum allowance of €15,000 after 5 years.
Does capital gains tax mean it’s time to rethink Branch 23 investments?
Branch 23 investment products, are insurance based investments.
Until the forthcoming change in the rules, they have allowed investors to shield dividends and income from taxes, and could be surrendered with no final tax.
However Branch 23 investments come at an increased cost, compared to a low-cost offshore investment account.
Generally both the ongoing costs are higher, but also investors in Branch 23 products are required to pay the 2% insurance premium tax.
With 10% CGT now applying to Branch 23 too, they’re starting to look unfavourable.
How does Branch 23 compare to an investment account?
There’s two key things to consider, cost and taxes.
Whilst investment accounts suffer ongoing taxes on dividends and interest, they aren’t subject to the insurance premium tax.
Both structures are treated the same way for capital gains tax.
But the cost of Branch 23 contracts, can make them less efficient.
We’ve compared both over a 10 year horizon below.
For higher fee arrangements, and smaller investment amounts Branch 23 becomes even less favourable.
What actions should investors take in 2025, before the rules change?
The draft legislation only applies to gains realised on or after 1st January 2026. So investors have the opportunity to act this year.
If you have a large portfolio, that you’re thinking of making changes too soon, it could be beneficial to implement any changes this year.
With Branch 23 investments becoming less popular, a lot of people may consider switching to a normal investment account (which are generally lower cost).
But surrendering a large Branch 23 investment, after the rules change, could easily lead to a tax charge.
As an example, if you have a €500,000 portfolio, and you’re thinking of switching products. It would only need to rise by 2% at the start of 2026, to put you above the CGT allowance.
But making that change today could be done tax free.
Looking for help to tax-efficiently structure your investments?
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