PwC’s Head of Tax and M&A explores how the new 2026 three-tiered framework impacts deal structures, private equity rollovers, valuation baselines, and more.
Until recently, Belgium stood as a notable exception in Europe as one of the few jurisdictions where capital gains on shares realised by private individuals were generally non-taxable, provided they arose within the normal management of the individual’s private estate. That era has officially come to an end…
Effective 1 January 2026, the country’s government introduced a framework for taxing capital gains on financial assets that form part of personal income (not corporate income or non-resident income).
“With ongoing macroeconomic challenges globally, we expected that something would be coming,” admits PwC Head of Tax and M&A, Nancy De Beule. She explains, however, that this adds another layer of complexity to an already complicated M&A environment, as dealmakers must navigate three different capital gains regimes.
The 33 percent anti-abuse penalty
The so-called internal capital gains regime (“Type A”) applies when a private individual sells shares or profit certificates to a company over which they – either alone or together with close family members – exercise direct or indirect control.
Designed to curb tax-driven internal restructurings, these Type A gains are taxed at a flat rate of 33 percent without surcharges. Crucially, this 33 percent rate will in principle not apply to standard private equity roll-overs or management buy-outs. “The circular letter confirms that typical governance provisions in private equity structures, such as veto rights, arrangements regarding the company’s strategic direction, board nomination rights, etc. do not, in themselves, constitute evidence of control,” Nancy shares. Instead, control must be assessed in application of the Belgian Companies Code.
Furthermore, temporary tax deferrals remain available for share-for-share contributions if the historical cost basis is preserved. “The exemption only defers taxation, while the historical acquisition value or 31 December 2025 reference value of the contributed shares is preserved for any later disposal,” Nancy adds.
Partnerships as a pooling tool
This also applies to contributions into civil partnerships, which are often used in private equity structures to pool management investments. “The circular clarifies that there will always be an implicit exchange – and therefore a realisation event – where a new partner is admitted to a civil partnership during its existence,” Nancy elaborates. The underlying assets are subsequently reallocated among the partners, resulting in a partial transfer of financial assets.
However, no realisation event occurs where two individuals jointly hold a shareholding in undivided ownership and contribute those shares to a civil partnership without altering the relative proportion of their rights. Therefore, no implicit exchange of assets occurs.
She suggests sponsors and management teams should carefully assess any admission of new partners or restructuring of partnership interests, as such changes may constitute an implicit exchange of assets, giving rise to capital gains taxation.
“The mere creation or termination of a civil partnership does not in itself trigger capital gains taxation,” Nancy clarifies. “Likewise, the contribution of financial assets to an undivided ownership arrangement should not constitute a taxable event – provided that it does not result in an implicit exchange of one financial asset for another.”
Specific rules governing carried interest remain intact and are not requalified under the new general capital gains tax framework. “Consequently, amounts falling within the scope of the carried interest rules are taxed under that specific regime rather than under the new capital gains tax,” Nancy adds.
The 20 percent ownership threshold
A specific capital gains tax regime is introduced for individuals who own a substantial shareholding (“Type B”), and applies to direct share transfers where the seller holds at least 20 percent of total capital rights at the exact moment of transfer.
Sellers under this regime benefit from a substantial €1 million tax-free exemption, which is a rolling allowance over five consecutive taxable periods. Any gains above this threshold are taxed on a progressive scale ranging from 1.25 percent to 10 percent (or a flat rate of 16.5 percent if the transaction relates to a Belgian entity and the acquiring entity resides outside the European Economic Area).
The circular states that profit certificates, warrants and options do not count, only shares and directly held participations. “The 20 percent threshold should be considered regardless of the class of shares and is to be calculated based on all shares together, irrespective of their voting rights,” Nancy notes.
Because eligibility for the Type B regime hinges strictly on maintaining that 20 percent threshold at time of disposal, pre-deal equity dilution (such as a capital increase prior to an exit) can accidentally push a founder out of Type B and into the “Type C” residual regime.
“As a result, the design and evolution of the shareholding structure in PE structures may have a substantial impact on Belgian private individual shareholders’ net returns upon exit and should be duly considered throughout the holding period,” Nancy emphasises.
The circular states that earn-out payments are taxed only when the contingent amounts become certain and quantifiable. Crucially, if the initial transaction qualified under Type B, deferred earn-out payouts retain that preferential regime regardless of when cash is received. Earn-outs stemming from deals closed prior to 1 January 2026 remain completely exempt, however.
Catch-all regime taxed at 10 percent
Type C serves as the residual regime for all other financial capital gains not covered by Types A or B. This includes shareholdings below 20 percent, listed equities, and other financial assets such as, but not limited to, bonds, fund units, derivatives, crypto-assets and life insurance contracts.
Gains falling under Type C are taxed at a flat 10 percent rate. To protect smaller everyday investors, the regime provides a standard annual tax-free exemption of €10,000 (indexed), alongside an additional €1,000 (also indexed) annual build-up for a maximum of five years. This means a maximum tax-free exemption of €15,000 could be claimed under the Type C regime.
Under Type C, a 10 percent withholding tax (WHT) may be levied by a Belgian intermediary, though taxpayers can opt out and settle the capital gains tax through their annual personal income tax return.
31 December 2025 reference value
To prevent retroactive taxation, all capital gains accrued prior to 31 December 2025 remain completely tax-free. Establishing the highest possible reference value shields historical earnings from future tax exposure.
For unlisted assets, the framework allows taxpayers to select the highest valuation resulting from four valuation methods:
- The value at which a financial asset has been disposed of in 2025 (or subscription price in case of a capital increase), given the transaction occurred between independent parties;
- The value from a valuation formula included in a contract or put option in force on 1 January 2026;
- The equity value of the company increased by four times the EBITDA, as per the last financial statements prior to January 1, 2026; or
- The value as determined by an auditor or an independent chartered accountant (not the statutory or usual practitioners) by 31 December 2027 at the latest.
As a transitionary relief mechanism, the actual (documented) acquisition cost may also be applied for disposals occurring up to 31 December 2030, with the burden of proof lying with the taxpayer.
With regard to the third valuation method, the law refers to a formulaic EBITDA definition used in Belgian tax law, which is based on standalone (unconsolidated) figures and does not allow for (commercial) normalisations.
Nancy advises that analysing whether performing a detailed valuation and – if relevant – performing the work and getting it signed off before 31 December 2027 should be a key priority. “Given the potentially significant tax impact, it is essential that the valuation is robust, well-supported and capable of withstanding scrutiny from a tax perspective,” she says.
Read also: Changing from compliance checker to value creator
Nancy will be sharing more guidance around tax and how it applies to dealmaking during a masterclass on 24 September 2026, taking place during the M&A Strategy Forum 2026.
Join us and Nancy's masterclass at the M&A Strategy Forum!
