Transfers of the accounts are not taxable when they occur within the same legal entity. If transfers are made from one Belgian entity to another legal entity or physical person (e.g. a shareholder or a group company), the transfers may be subject to withholding tax in Belgium (e.g. on dividend or interest or royalty payments).
Financial Aspects
1. Are transfers of the accounts taxable?
2. Are the benefits made through an event taxable in Belgium and in what context?
The benefits made through an event are taxable in Belgium to the extent that a permanent establishment is deemed to exist in Belgium.
A permanent establishment will in any case be deemed to exist where the organiser of an event is structured by ways of a Belgian legal entity.
In case a Belgian legal entity that is subject to corporate income tax is organising an event in Belgium, the profits generated through the event will be taxable in Belgium and in principle be subject to tax at the statutory corporate income tax rate of 25%.
In case a Belgian non-profit organisation that is subject to legal entity tax in Belgium is organising an event in Belgium, any profits generated through the event should not be taxable under the legal entity tax, unless the legal entity receives income from real estate (e.g. rental income) or movable income, such as interest or dividend income, on which 30% withholding tax is due.
In general, Belgian entities in the event sector (e.g. organisers of music festivals, catering companies, stage builders, etc.) are subject to corporate income tax rather than legal entity tax, even if they operate under the legal form of a non-profit-organisation (vzw/asbl).
Furthermore, when a foreign entity or physical person organises an event in Belgium, a taxable permanent establishment may exist in Belgium under certain circumstances. This will depend amongst others on the type of activities carried out in Belgium, the duration, and the double tax treaty concluded between the resident country and Belgium. To the extent a taxable permanent establishment exists in Belgium, the net profits generated through the permanent establishment will be taxable at the statutory corporate income tax rate of 25%. A tax credit will, in principle, be granted in the resident state.
3. Should a tax expert be hired in Belgium or abroad?
When organising a paying or sponsored event in Belgium, it is recommended to seek advice from a Belgian tax expert. If the event does not generate revenue, it is usually not necessary.
4. Where and how should the financial statement/tax declaration and the closing of the accounts of an event be made and what are the different cases?
In case a Belgian legal entity is used, the financial statements should be filed according to Belgian legislation, based on amongst others the size of the entity and the closing of the financial year.
A corporate income tax return or legal entities tax return will be due, in principle, within 6 months after closing of the financial year. The exact dates are communicated each year by the Belgian tax authorities.
5. How can the account balance (i.e. the profits) be recovered?
In case a company is used, profits can be recovered through dividend distributions towards the shareholder.
In case a non-profit-organisation or a company with social purpose is organising an event, the profits realised should not be recovered, but should be used to realise the social purpose of the entity and to organise future events in the framework of the social purpose.
6. How and where should the transfer be reported?
In case of a Belgian company, the transfer of funds (dividend distribution) should be decided by the board of directors of the company, considering the regulations of Belgian company law. The transfer should be reported in the annual accounts.
In certain cases, withholding tax forms and exemption forms need to be filed.
Dividend distributions should be reported in the corporate income tax return.