belgium , prime location for pan-european pension funds · belgium, prime location for pan-european...
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Belgium,
Prime Location
for Pan-European
Pension Funds
Invest in Belgium, increase your profits
www.business.belgium.be
Table of Contents
Foreword
1. Introduction
2. Legal framework: Structure and organization of the OFP2.1 Separate legal entity2.2 Autonomous legal framework2.3 Simple and flexible structure2.4 Comply with host country social and labor legislation2.5 Creation of the OFP and authorization to act as a pension fund2.6 Conclusion
3. Financial framework3.1 Conditions of operation3.2 Qualitative rules as opposed to quantitative rules3.3 Technical provisions3.4 Coverage of the technical provisions3.5 Investments3.6 Financing plan3.7 Statement of investment policy principles - SIP3.8 Balance sheet of the OFP: assets and liabilities3.9 Dynamics of the financing framework3.10 Asset management and custody3.11 Information to the pension plan participants and beneficiaries3.12 Supervision3.13 Conclusion
4. Tax regime4.1 Corporate income tax – “zero taxation on profit”4.2 International taxation: benefiting from double taxation treaties4.3 VAT4.4 Other indirect taxes4.5 Conclusion
5. Some data
Contacts
2
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The ageing of the population will boost the development of
funded pension schemes, complementary to the statutory state
pension.
This theme will enlarge the pension fund market on an
unprecedented scale. In the coming decades they will change
from net asset accumulators to institutions paying out more
than they are receiving.
The recent turbulence on the global financial markets
demonstrated the importance of pan-European pension funds.
Pension promises have a more and more profound impact on
corporate balance sheets of multinationals. The sharp decline
in the financial markets and falling interest rates has led to unexpected pension deficits and a growing
concern as to how to mitigate the volatility of coverage ratios.
Pension funds get management attention with a strong demand for centralized risk management
and control of pension assets and liabilities. Pooling enables businesses to bundle assets and liabilities
from various jurisdictions under a single licensed Pension Fund.
In line with the Single Market, recent European directives now allow cross-border pension funds to be
set up within the European Union. Today, Belgium is the only European country offering multinationals
a complete and comprehensive dedicated framework for establishing both pan-European and
international pension funds.
Belgium has already facilitated the establishment of the pan-European pension funds. Pooling is
in practice not a big bang but a step-by-step approach leading to a fully operational pan-European
pension fund.
This brochure sets out the benefits of this very effective and advantageous legal, fiscal and prudential
framework. It also points out the broad range of modern treaties for the avoidance of double taxation
which our country has concluded, thereby offering substantial savings with regard to the portfolio of
each fund.
Our situation in the heart of Europe further strengthens our position on the pension fund market.
The European headquarters of many multinationals are already located in our country. It is therefore
to be expected that they should also set up their pan-European or international pension funds here.
Belgium is positioning itself as a prime centre of shared services for international businesses and
the Belgian government is committed to facilitate an attractive and sustainable framework for long
term investors, such as pension funds.
I trust that this brochure will be a useful document for the decision-makers in the pension and
business community.
Yves Leterme
Prime Minister
3
1. Introduction Belgium recently implemented the EU Directive 2003/411 (the so-called IORP Directive) by adopting a new and transparent flexible legal framework, which promotes Belgium as as “the prime location” for in-ternational and pan-European pension funds. The Act of 27 October 20062 on the supervision of IORPs (Institutions for Occupational Retirement Pro-vision) defines the legal structure, the organization and the functioning of pension funds. Moreover, the prudential legal framework applies the “prudent person”– principle and grants optimiza-tion opportunities to the pension fund, its sponsoring undertakings and the pension plan participants. The Act offers a flexibility which allows the pension fund to best respond to the specific needs and wishes of the multinational or group of companies. A pension fund located in Belgium may have cross-border activities and operate several pension plans applicable to employees working in different countries (host countries). The pension fund will, however, solely be subject to the Belgian legal and regulatory prudential framework. If the employees affiliated to the pension fund are working in countries belonging to the European Economic Area (EEA), the relevant legal provisions3 of their country’s social and labour laws must be respected. The Belgian pruden-tial framework offers, on the one hand a guarantee of solid management securing the interests and pen-sion rights of the plan participants and, on the other hand, provides a high degree of flexibility in the level of funding by sponsoring undertakings. The justifica-tion “on a case by case” basis relates to the “specific” characteristics of the pension plans and their partici-pants.
Furthermore, new tax provisions were adopted on 27 December 20064 to create a new favourable tax regime in line with the EET-principle5. Thanks to these provisions, a well-designed pension fund loca-ted in Belgium can benefit from a “zero” corporate income tax. 2. Legal framework : Structure and organization of the OFP
2.1. Separate legal entityA pension fund established in Belgium takes6 the le-gal form of an OFP :- Organization for Financing Pensions - Organisme voor de Financiering van Pensioenen- Organisme de Financement de Pensions.Autonomy. The OFP is a separate legal entity solely liable for its funds and obligations and distinct from the sponsoring undertakings7.It is specifically designed to allow for a flexible gover-nance structure and organization.
2.2. Autonomous legal frameworkUnique. Since the OFP is a new legal entity, it is not subject to laws applicable to other legal entities.The Act of 27 October 2006 is transparent and go-verns the OFP’s structure and organization but also its activities and its functioning.The Act is available in English, French, Dutch and German on the website of the Belgian competent Su-pervision Authorities, the CBFA (www.cbfa.be). The Act is implemented by Royal Decrees, which are also available on the CBFA-website. Furthermore, the CBFA issues circulars and memoranda8 commenting on the practical implications of the legislation.
2.3. Simple and flexible structureGovernance. In accordance with the OECD Guideli-nes for pension fund governance9, the governance structure of the OFP ensures an appropriate division of operational responsibilities as well as oversight and supervision responsibilities.
1 Directive 2003/41/EC of the European Parliament and of the Council on
the activities and supervision of Institutions for Occupational Retirement Pro-
vision (IORPs) of 3 June 2003.
2 Most provisions entered into force on 1 January 2007.
3 Mandatory legal provisions of the host countries (‘host country’ is the
country whose social and labour legislation applies to the relationship
between the sponsoring undertaking and the plan participants), within the
limits of EU/international law.
4 Act of 27 December 2006 relating to diverse provisions.
5 EET : “exempt-exempt-taxation” : (E) : tax exemption for the contributions
paid into a pension fund for the accrual of pension benefits (tax relief for the
contributions paid by the sponsoring undertakings and by the pension plan
participants) ; (E) : tax exemption of income generated by the contributions,
gains realized by the pension fund, capital gains during the accrual period
prior to the payment of the benefit ; (T) : taxation of the pension benefits upon
payment of the benefits.
6 The Act of 27 October 2006 provides for a transitional period of 5 years
(until 1 January 2012) to the benefit of already existing pension funds which,
pursuant to the previously applicable legislation, took the legal form of a non-
profit association (vzw-asbl) or mutual fund (ovv-aam).
7 Hence, safeguarding the accrued pension benefits and entitlements of the
pension plan participants against bankruptcy of their employer, the sponso-
ring undertaking.
8 Also available on the CBFA’s website, www.cbfa.be.
9 OECD guidelines for pension fund governance, adopted by the OECD
Council on 28 April 2005.
Pensions.indd 6-7
1. Introduction
Belgium implemented the EU Directive 2003/411 (the so-called IORP Directive) by adopting a new and transparent flexible legal framework, which promotes Belgium as “the prime location” for international and pan-European pension funds.
The Act of 27 October 20062 on the supervision of IORPs (Institutions for Occupational Retirement Pro- vision) defines the legal structure, the organization and the functioning of pension funds.
Moreover, the prudential legal framework applies the “prudent person”– principle and grants optimization opportunities to the pension fund, its sponsoring undertakings and the pension plan participants. The Act offers a flexibility which allows the pension fund to best respond to the specific needs and wishes of the multinational or group of companies.
A pension fund located in Belgium may have cross-border activities and operate several pension plans applicable to employees working in different countries (host countries). The pension fund will, however, solely be subject to the Belgian legal and regulatory prudential framework. If the employees affiliated to the pension fund are working in countries belonging to the European Economic Area (EEA), the relevant legal provisions3 of their country’s social and labor laws must be respected. The Belgian prudential framework offers, on the one hand a guarantee of solid management, securing the interests and pension rights of the plan participants and, on the other hand, provides a high degree of flexibility in the level of funding by sponsoring undertakings. The justification “on a case by case” basis relates to the “specific” characteristics of the pension plans and their participants.
Furthermore, new tax provisions were adopted on 27 December 20064 to create a new favorable tax regime in line with the EET-principle5. Thanks to these provisions, a well-designed pension fund located in Belgium can benefit from a “zero” corporate income tax.
2. Legal framework - Structure and organization of the OFP
2.1. Separate legal entityA pension fund established in Belgium takes the legal form of an OFP:- Organization for Financing Pensions- Organisme voor de Financiering van Pensioenen- Organisme de Financement de Pensions. Autonomy. The OFP is a separate legal entity solely liable for its funds and obligations and distinct from the sponsoring undertakings6.It is specifically designed to allow for a flexible governance structure and organization.
2.2. Autonomous legal frameworkUnique. Since the OFP is a new legal entity, it is not subject to laws applicable to other legal entities.The Act of 27 October 2006 is transparent and governs the OFP’s structure and organization but also its activities and its functioning.The Act is available in English, French, Dutch and German on the website of the Belgian competent Supervision Authorities, the FSMA (www.fsma.be). The Act is implemented by Royal Decrees, which are also available on the FSMA-website. Furthermore, the FSMA issues circulars and memoranda7 commenting on the practical implications of the legislation.
2.3. Simple and flexible structureGovernance. In accordance with the OECD Guidelines for pension fund governance8, the governance structure of the OFP ensures an appropriate division of operational responsibilities as well as oversight and supervision responsibilities.
1 Directive 2003/41/EC of the European Parliament and of the Council on
the activities and supervision of Institutions for Occupational Retirement
Provision (IORPs) of 3 June 2007.
2 Most provisions entered into force on 1 January
3 Mandatory legal provisions of the host countries (‘host country’ is the
country whose social and labor legislation applies to the relationship
between the sponsoring undertaking and the plan participants), within the
limits of EU/international law.
4 Act of 27 December 2006 relating to diverse provisions.
5 EET: “exempt-exempt-taxation”: (E): tax exemption for the contributions
paid into a pension fund for the accrual of pension benefits (tax relief for the
contributions paid by the sponsoring undertakings and by the pension plan
participants); (E): tax exemption of income generated by the contributions,
gains realized by the pension fund, capital gains during the accrual period
prior to the payment of the benefit; (T): taxation of the pension benefits
upon payment of the benefits.
6 Hence, safeguarding the accrued pension benefits and entitlements of
the pension plan participants against bankruptcy of their employer, the
sponsoring undertaking.
7 Also available on the FSMA’s website, www.fsma.be.
8 OECD guidelines for pension fund governance, adopted by the OECD
Council on 28 April 2005.
4
Consequently, the OFP must consist of at least 2 bo-dies :- a general assembly The sponsoring undertakings whose pension plans are operated by the OFP are members of the gene-ral assembly10. The general assembly has the overall supervision and oversight responsibility and may be granted broad powers (to be defined in the bylaws11).- a board of directors The OFP must have at least one operational body : the board of directors. The latter defines the general policy of the OFP and is responsible for the operatio-nal activities of the OFP.Contractual Freedom. The new legal framework is based on the principles of flexibility and contractual freedom : the parties setting up the OFP can structure it according to their own needs and wishes provided the basic double structure is complied with.
2.4. Comply with host country social and labour legislationRespect of local social regulation. One or more so-called social committees may be set up to allow the OFP to meet the requirements of the host country’s social and labour legislations applicable to the pen-sion plans which it operates.Employee involvement. Social committees will pro-ve useful to involve different groups of pension plan
participants and beneficiaries in the management of their pension plans by the OFP. The creation, composition, powers and functio-ning of the social committee(s) can be decided upon by the parties involved. No legal requirements other than the establishment of a written document are imposed by Belgian law.
2.5. Creation of the OFP and authorization to act as a pension fundAdopt bylaws. The OFP can simply be created by adopting bylaws. One ordinary member-sponsoring undertaking suffices to that end. The bylaws do not need to be drafted by a notary nor do they require court approval. The bylaws will be published in the Belgian State Gazette.Apply for authorisation. Prior to commencing its pension fund activities, the OFP must apply for the IORP-authorization from the Belgian (home country) competent authority, the CBFA. The request file to be submitted to that end can be downloaded from the CBFA’s website.Amongst the most important documents to be remit-ted to the CBFA are : - the bylaws- the financing plan- the statement of investment policy principles (SIP), - a description of the pension plans which the OFP intends to administer
10 Voting rights can be determined in the bylaws.
11 Bylaws or certificate of incorporation (“statuten” – “statuts”).
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Consequently, the OFP must consist of 2 (at least) or more bodies:- A general assemblyThe sponsoring undertakings whose pension plans are operated by the OFP are members of the general assembly9. The general assembly has the overall supervision and oversight responsibility and may be granted broad powers (to be defined in the bylaws10).- A board of directorsThe OFP must have at least one operational body: the board of directors. The latter defines the general policy of the OFP and is responsible for the operational activities of the OFP.- Other operational bodies (under the control of the board of directors)Contractual Freedom. The new legal framework is based on the principles of flexibility and contractual freedom: the parties setting up the OFP can structure it according to their own needs and wishes provided the basic double structure is complied with.
2.4. Comply with host country social and labor legislationRespect of local social regulation. The parties involved in the pension plan can set up one or more committees to enable the OFP to meet the requirements of the host country’s social and labor
legislations applicable to the pension plans which it operates.
The creation, composition, powers and functioning of these committee(s) can be decided upon by the parties involved. No legal requirements other than the establishment of a written document are imposed by Belgian law.
2.5. Creation of the OFP and authorization to act as a pension fund
Adopt bylaws. The OFP can simply be created by adopting bylaws. One ordinary member-sponsoring undertaking suffices to that end. The bylaws do not need to be drafted by a notary nor do they require court approval. The bylaws will be published in the Belgian State Gazette.Apply for authorization. Prior to commencing its pension fund activities, the OFP must apply for IORP-authorization from the Belgian (home country) competent authority, the FSMA. The request file to be submitted to that end can be downloaded from the FSMA’s website.Amongst the most important documents to be remitted to the FSMA are:- The bylaws- The financing plan- The statement of investment policy principles (SIP),- A description of the pension plans which the OFP
intends to administer9 Voting rights can be determined in the bylaws.
10 Bylaws or certificate of incorporation (“statuten” – “statuts”).
5
- the management agreement12
- information regarding the sponsoring undertakings and the members of the operational bodies. The CBFA decides upon the application within 3 months following remittance of the complete file.If the OFP envisages engaging in cross-border acti-vities within the EEA, the notification procedure13 fo-reseen by the IORP Directive must be complied with. This notification can be introduced simultaneously with the authorization request.
2.6. ConclusionThe legal framework sets forth simple principles for the organization and the governance structure of the OFP and allows parties to adapt the organization and functioning to their specific situation.
3. Prudential framework
3.1. Conditions of operationWhen authorized by the CBFA14 the OFP may start operating pension plans providing for retirement benefits15.No Belgian activity is required. The Belgian law does not require that one or more sponsoring un-dertakings be located in Belgium, nor that at least one pension plan which the OFP operates applies to
workers in Belgium. Hence, a multinational group without a company basis in Belgium may decide to set up its pan-European or international pension fund in Belgium. Adequate liabilities covered by appropriate assets. In respect of the pension plans which it is operating, the OFP must establish an adequate amount of liabi-lities (i.e. technical provisions) corresponding to the financial obligations which result from the pension plans. These technical provisions must be covered by appropriate assets (cf. infra 3.3).Global management/netting. Different pension plans may be managed globally16. However, the OFP is free to decide differently and organize a ring-fencing on a voluntary basis between different pension plans. Solidarity. The OFP can also determine itself the degree of solidarity it wishes to apply amongst its sponsoring undertakings. These rules need to be laid down in the so-called management agreement. This agreement is concluded between the OFP and the sponsoring undertakings and defines the rules of the OFP’s functioning. The management agreement may allow compensation (“netting”) to be organized without prejudice to the relevant applicable social and labour legislations and provided the minimum vested rights of the plan participants and beneficiaries are safeguarded.
3.2. Qualitative rules as opposed to quantitative rulesThe prudential framework of the new Belgian legisla-tion describes the rules which the OFP must respect in relation to the technical provisions, the investments and the management. The law sets qualitative rather than quantitative rules, both for the determination of the technical provisions and for the investments.
3.3. Technical provisionsCross-border activities if “fully” funded. In the event of cross-border activities, the IORP Directive requires that the technical provisions are fully funded at all times in respect of the total range of pension plans operated by the pension fund.Prudent but dynamic “fully” funding requirement. The Belgian legislator has not adopted a quantitative approach in this respect but requires a prudent calcu-lation method, based on economical and actuarial as-
16 The Act only imposes as exceptions to this rule : the separate mana-
gement of pension plans applicable to salaried workers and of pension
plans applicable to self-employed workers and the separate manage-
ment of pension plans which are subject to recovery measures decided
upon by the CBFA.
12 If any. The management agreement is concluded between the OFP
and its members sponsoring undertakings, determining its terms and
conditions of operation and the rules of its functioning. If these rules are
defined in the bylaws, the law does not impose the conclusion of a mana-
gement agreement.13 Notify the intention to accept sponsorship from a
sponsoring undertaking established in another EEA-member state (host
country). The notification must be addressed to the home country’s com-
petent authorities (i.e. for Belgium : CBFA). The OFP may also engage in
cross-border activities outside the EEA. A simplified notification proce-
dure applies to that end.
14 In the event of cross-border activities, the OFP can start its activities
after completing the cross-border activities notification procedure (i.e.
within 2 months for cross-border activities within the EEA following the
principal 3 months CBFA-review and authorization period).
15 For non-Belgian pension plans (i.e. pension plans not applicable to
salaried and self-employed workers in Belgium), the Belgian legislation
does not impose any restrictions or conditions for the content of the pen-
sion plans. Indeed, if the pension plan can be considered in the host EEA-
member state as a pension plan within the meaning of the IORP Directive
(for non EEA-member states : the same definition of retirement benefits
as the one used in the Directive), the OFP is authorized to operate it. For
pension plans applicable to salaried workers and self-employed persons
working in Belgium, a different definition of “retirement benefits” is retai-
ned to better correspond to the Belgian situation.
Pensions.indd 8-9
- The management agreement11
- Information regarding the sponsoring undertakings and the members of the operational bodies.
The FSMA decides upon the application within 3 months following remittance of the complete file.If the OFP envisages engaging in cross-border activities within the EEA, the notification procedure12 foreseen by the IORP Directive must be complied with. This notification can be introduced simultaneously with the authorization request.
2.6. ConclusionThe legal framework sets forth simple principles for the organization and the governance structure of the OFP and allows parties to adapt the organization and functioning to their specific situation.
3. Financial framework
3.1 Conditions of operationWhen authorized by the FSMA13 the OFP may start operating pension plans providing for retirement benefits14.No Belgian activity is required. The Belgian law does not require that one or more sponsoring undertakings be located in Belgium, nor that at least one pension plan which the OFP operates applies to
workers in Belgium. Hence, a multinational group without a company basis in Belgium may decide to set up its pan-European or international pension fund in Belgium.Adequate liabilities covered by appropriate assets. In respect of the pension plans which it is operating, the OFP must establish an adequate amount of liabilities (i.e. technical provisions) corresponding to the financial obligations which result from the pension plans. These technical provisions must be covered by appropriate assets (cf. infra 3.3).Global management/netting. Different pension plans may be managed globally15. However, the OFP is free to decide differently and organize a ring-fencing on a voluntary basis between different pension plans. Solidarity. The OFP can also determine itself the degree of solidarity it wishes to apply amongst its sponsoring undertakings. These rules need to be laid down in the so-called management agreement. This agreement is concluded between the OFP and the sponsoring undertakings and defines the rules of the OFP’s functioning. The management agreement may allow compensation (“netting”) to be organized without prejudice to the relevant applicable social and labor legislations and provided the minimum vested rights of the plan participants and beneficiaries are safeguarded.
3.2 Qualitative rules as opposed to quantitative rulesThe legal framework of the Belgian legislation describes the rules which the OFP must respect in relation to the technical provisions, the investments and the management. The law sets qualitative rather than quantitative rules, both for the determination of the technical provisions and for the investments.
3.3 Technical provisionsCross-border activities if “fully” funded. In the event of cross-border activities, the IORP Directive requires that the technical provisions are fully funded at all times in respect of the total range of pension plans operated by the pension fund.Prudent but dynamic “fully” funding requirement. The Belgian legislator has not adopted a quantitative approach in this respect but requires a prudent calculation method, based on economical and
11 If any. The management agreement is concluded between the OFP
and its members sponsoring undertakings, determining its terms and
conditions of operation and the rules of its functioning. If these rules
are defined in the bylaws, the law does not impose the conclusion of a
management agreement.
12 Notify the intention to accept sponsorship from a sponsoring undertaking
established in another EEA-member state (host country). The notification
must be addressed to the home country’s competent authorities (i.e. for
Belgium: FSMA). The OFP may also engage in cross-border activities
outside the EEA. A simplified notification procedure applies to that end.
13 In the event of cross-border activities, the OFP can start its activities
after completing the cross-border activities notification procedure (i.e.
within 2 months for cross-border activities within the EEA following the
principal 3 months FSMA-review and authorization period).
14 For non-Belgian pension plans (i.e. pension plans not applicable to
salaried and self-employed workers in Belgium), the Belgian legislation
does not impose any restrictions or conditions for the content of the
pension plans. Indeed, if the pension plan can be considered in the host
EEA-member state as a pension plan within the meaning of the IORP
Directive (for non EEA-member states : the same definition of retirement
benefits as the one used in the Directive), the OFP is authorized to operate
it. For pension plans applicable to salaried workers and self-employed
persons working in Belgium, a different definition of “retirement benefits”
is retained to better correspond to the Belgian situation.
15 The Act only imposes as exceptions to this rule: the separate
management of pension plans applicable to salaried workers and of
pension plans applicable to self-employed workers and the separate
management of pension plans which are subject to recovery measures
decided upon by the FSMA.
6
sumptions which the OFP needs to be able to justify.Coherent. The OFP must establish, as technical provi-sions, an amount sufficient to guarantee the pension benefits already in payment and the accrued pen-sion benefits in accordance with a prudent valuation method. The calculation basis of the technical provi-sions must form part of the financing plan which the OFP and the sponsoring undertakings agree upon.DC. For defined contribution pension plans, the pro-visions to accrue are equal to the sum of the vested pension rights as defined by the plan rules and by the host countries’ social and labour legislation, if any.DB. In respect of pension plans providing for defined benefits, for a guaranteed return or for biometrical risks17, the calculation method of the technical pro-visions may take into account prudent interest rates which may e.g. consider expected investment returns.Flexible. The OFP may define its own rules and cal-culation method provided they may be justified by the specifics of the OFP and the pension plans ad-ministered. The OFP thus disposes of a high degree of flexibility, subject only to a reasonable justification basis.Minimum = vested pension rights. The technical pro-visions may not, however, be lower than the so-cal-led minimum vested pension rights18 defined by the plan rules and, if applicable, the host country’s social and labour legislation. Provided this minimum is res-pected, the law allows a long-term view in respect of the calculation method to be applied.
3.4. Coverage of the technical provisionsPrudent Investments. The technical provisions must be covered by assets invested according to the “pru-dent person” principle.The only quantitative restriction which applies and which is imposed by the IORP Directive relates to in-vestments in the sponsoring undertakings (limited to 5 % of the portfolio as a whole) or in the group (limi-ted to 10 % of the portfolio as a whole) of sponsoring undertakings.
3.5. InvestmentsPrudent and Consistent. Assets are to be invested prudently, in line with the investment policy as defi-ned in the statement of investment policy principles
(SIP) and in accordance with the assumptions used in the financing plan.Derivates may be used provided they contribute to reducing the investment risks or facilitate efficient portfolio management. The key message is again : if you can justify a different use of derivatives as reaso-nable and prudent, considering all elements, it will in principle be allowed.
3.6. Financing planThe OFP must establish a financing plan in agree-ment with all sponsoring undertakings which commit themselves to execute it and to pay the contributions pursuant thereto.The financing plan determines the calculation method of the contributions to be paid per pension plan to ensure appropriate funding of the pension liabilities and of the solvency margin, as well as to cover all costs and expenses. It must be submitted to the CBFA.OFPs which themselves (as opposed to the sponsoring undertakings) undertake to guarantee the pension obligation as well as OFPs which cover biometrical risks must establish a solvency margin (defined by Royal Decree).
3.7. Statement of investment policy principles - SIPThe OFP must establish a written statement of in-vestment policy principles – SIP - describing the investment risk measurement methods, the risk management processes and the strategic asset al-location, considering the nature and the duration of the pension liabilities. The OFP must review this sta-tement at least every 3 years.
17 Risks linked to death, disability and longevity
18 The minimum vested pension rights of the pension plan participants
as determined by the applicable host country social and labour legisla-
tion, if any. For pension plans applicable to salaried workers in Belgium,
these are determined on the basis of a maximum 6 % discount rate and
mortality tables MR/FR.
26/02/07 12:14:58
actuarial assumptions which the OFP needs to be able to justify. Coherent. The OFP must establish, as technical provisions, an amount sufficient to guarantee the pension benefits already in payment and the accrued pension benefits in accordance with a prudent valuation method. The calculation basis of the technical provisions must form part of the financing plan which the OFP and the sponsoring undertakings agree upon. DC. For defined contribution pension plans, the pro- visions to accrue are equal to the sum of the vested pension rights as defined by the plan rules and by the host countries’ social and labor legislation, if any.DB. In respect of pension plans providing for defined benefits, for a guaranteed return or for biometrical risks16, the calculation method of the technical provisions may take into account prudent interest rates which may e.g. consider expected investment returns.Flexible. The OFP may define its own rules and calculation method provided they may be justified by the specifics of the OFP and the pension plans ad- ministered. The OFP thus disposes of a high degree of flexibility, subject only to a reasonable justification basis.Minimum = vested pension rights. The technical provisions may not, however, be lower than the so-called minimum vested pension rights defined by the plan rules and, if applicable, the host country’s social and labor legislation. Provided this minimum is respected, the law allows a long-term view in respect of the calculation method to be applied.
3.4 Coverage of the technical provisionsPrudent Investments. The technical provisions must be covered by assets invested according to the “prudent person” principle.The only quantitative restriction which applies and which is imposed by the IORP Directive relates to investments in the sponsoring undertakings (limited to 5 % of the portfolio as a whole) or in the group (limited to 10 % of the portfolio as a whole) of sponsoring undertakings.
3.5 InvestmentsPrudent and Consistent. Assets are to be invested prudently, in line with the investment policy as defined in the statement of investment policy principles (SIP) and in accordance with the assumptions used in the financing plan and a continuity test that proves the solvability of the IORP in the long run.
Derivates may be used provided they contribute to reducing the investment risks or facilitate efficient portfolio management. The key message is again: if you can justify a different use of derivatives as reasonable and prudent, considering all elements, it will in principle be allowed.
3.6 Financing planThe OFP must establish a financing plan in agreement with all sponsoring undertakings which commit themselves to execute it and to pay the contributions pursuant thereto.The financing plan determines the calculation method of the contributions to be paid per pension plan to ensure appropriate funding of the pension liabilities and of the solvency margin, as well as to cover all costs and expenses. It must be submitted to the FSMA.OFPs which themselves (as opposed to the sponsoring undertakings) undertake to guarantee the pension obligation as well as OFPs which cover biometrical risks must establish a solvency margin (defined by Royal Decree).
3.7 Statement of investment policy principles – SIP.The OFP must establish a written statement of in- vestment policy principles – SIP – describing the investment risk measurement methods, the risk management processes and the strategic asset al- location, considering the nature and the duration of the pension liabilities. The OFP must review this statement at least every 3 years.
16 Risks linked to death, disability and longevity
7
3.8. Balance sheet of the OFP : assets and liabilitiesSummarized under the form of a balance sheet, these main principles apply in relation to the assets and their investments as well as to the liabilities.
3.9. Dynamics of the prudential financing frameworkThe main goal of the Belgian prudential framework is the creation of a prudent and coherent management model in which the investments are in harmony with the characteristics of the pension plans and the plan participants and in which the investments match the underlying technical provisions. This model grants autonomy in the management policies, which are to be prudent and solid. Moreover, this framework al-lows for significant flexibility in the level of funding insofar as the technical provisions are fully covered.
Explanatory comments on Scheme 1 :• The characteristics of the pension plans and their participants highly influence the funding and the in-vestments and determine the technical provisions.
The pension plans and their participants are a given and are the key drivers for the investments, the deter-mination of the technical provisions and the funding.
Investments(Asset Mix)
FundingTechnical provision
+“Solvency margin”
Key is : prudence and coherence
Pension Plan&
participants
Balance sheet of the OFP : assets and liabilities
Assets General rules
• In line with the prudent person principle
• Valued at market value
• Ensure the security, the quality, the liquidity and the profitability
• Only quantitative restriction: max 5 % in sponsoring under-
taking (max 10 % for a group)
Investments for the coverage of the technical provisions :
• Invested in the best interest of the plan participants and plan
beneficiaries
• In line with the nature and the duration of the expected future
retirement benefits
• Invested mainly on regulated markets
• Investments in derivative instruments if compliant with
prudential objective or if justified otherwise
• Properly diversified
Other investments• Flexibility (except 5 % in sponsoring undertaking, 10% in group)
• Alternative for the coverage of the so-called “solvency margin”:
guaranteed claim on the employer
Liabilities Technical provisions17 :
• Amount has to be sufficient to guarantee the pensions already
in payment and the accrued pension rights
• In line with a prudent actuarial valuation
• No quantitative rules but prudent choice of the economical and
actuarial assumptions i.e. :
• Discount rate has to be chosen taking into account :
a)The return of the investments covering the technical
provisions and the future investment returns and/or
b)The market yields of the bonds of a Member State or other
high-quality bonds ;
• Biometric tables (life expectancy/mortality, disability)
adjusted to the plan participants and beneficiaries
• The method and the assumptions remain in principle
unchanged from one financial year to another
• The chosen method and the assumptions have to safeguard
the sustainability of the commitments
• May not be lower than the minimum vested rights defined by
social and labor law
“Solvency margin” (if needed - see 3.6) :
• for the coverage of the death and disability benefits (biometrical risks)
• based on quantitative rules (may be reduced by using
(re)insurance of the risk coverage)
Balance
3.8 Balance sheet of the OFP: assets and liabilities Summarized under the form of a balance sheet, these main principles apply in relation to the assets and their investments as well as to the liabilities.
3.9 Dynamics of the financing frameworkThe main goal of the Belgian prudential framework is the creation of a prudent and coherent management model in which the investments are in harmony with the characteristics of the pension plans and the plan participants and in which the investments match the underlying technical provisions. This model grants autonomy in the management policies, which are to be prudent and solid. Moreover, this framework allows for significant flexibility in the level of funding insofar as the technical provisions are fully covered.
Explanatory comments on Scheme 1:• The characteristics of the pension plans and their participants highly influence the funding and the investments and determine the technical provisions.
The pension plans and their participants are a given and are the key drivers for the investments, the determination of the technical provisions and the funding.
Scheme 1. Prudent management model
8
The choice of the demographic assumptions (e.g. life expectancy/mortality, retirement age…) must be in line with the characteristics of the pension plans and their participants.• The pension plans and their participants influence the investments.• To simplify, it is advisable to invest in a conservative way if the average remaining duration of the pension “liabilities” is short and vice versa.The use of ALM (Asset Liability Management) tech-niques allows aligning the investment strategy with the characteristics of the pension plan and the popu-lation (i.e. “duration”).• The investments influence the technical provisions.The discount rate for the calculation of the technical provisions can be determined taking into account the return of the underlying investments.
This return may be set e.g. by reference to the fol-lowing simplified approach :- the returns which were achieved in the past- the expected long-term consensus return (see exam-ple in Scheme 2) ; this model must be adjusted to the asset mix and the relevant financial markets.A more sophisticated approach consists in defining the return on the basis of the expected return pattern ge-nerated by an ALM study (see example in Scheme 3).
• Global impact on the funding.The Belgian legislation offers a high degree of flexi-bility in setting the target funding level, provided the technical provisions are covered. The OFP may consi-der creating a cushion for e.g. absorbing short-term return volatility.• A pension fund with an average remaining duration of 15 years may consider that a decrease / increase of 1 % in the expected return and thus in the discount rate results respectively in roughly 15 % higher/lower provisions.
3.10 Asset management and custodyThe OFP may freely appoint investment managers for the management of its portfolio.The OFP may also appoint a custodian established and authorized in any EEA member state.As regards the underlying assets covering the tech-nical provisions, the Belgian legislation requires, as a rule, that they be deposited within the EEA. If not, a certificate of an authorized institution must be provi-ded to justify non-EEA-deposits.
3.11 Information to the pension plan participants and beneficiariesThe Belgian legislation fully complies with the infor-mation obligations of the IORP Directive. It thus aims at creating more transparency.
Example of above-mentioned consensus model :
Asset mix : 0 % equities and 100 % bonds • expected LT return = 4.5%
Asset mix : 25 % equities and 75 % bonds • expected LT return = 25% x 7.0 % + 75% x 4.5 % = 5.125%
Asset mix : 75 % equities and 25 % bonds • expected LT return = 75% x 7.0 % + 25% x 4.5 % = 6.375%
The model to be used can be freely determined by the OFP in agreement with the sponsoring undertakings, provided it meets the prudent person criterion.
LT consensus expected return on equities(e.g. 4.5 % + 2.5 % = 7 %)
LT consensus expected return on fixed income investment(e.g. 2.0 % + 2.5 % = 4.5 %)
LT consensus inflation(e.g. 2.0 %)
LT consensus equity risk premium (e.g. 2.5 %)
LT consensus real growth (e.g. 2.5 %)
LT consensus expected return on equities(e.g. 4.5 % + 2.5 % = 7 %)
LT consensus expected return on fixed income investment(e.g. 2.0 % + 2.5 % = 4.5 %)
LT consensus inflation(e.g. 2.0 %)
Scheme 2. Example expected long-term consensus return
Scheme 3. Example of expected long-term return on the basis of
ALM techniques20
2
4
6
8
10
12
R E
T U
R N
%
0 % equities100 % bonds
25 % equities75 % bonds
75 % equities25 % bonds
5-25 % 25-50 % 50-75 % 75-95 %
Probability intervals
Average expected return over 10 years
19 For defined contribution pension plans, the provisions to accrue equal
to the sum of the social vested reserves.
20 This scheme is only illustrative and results from underlying economi-
cal and financial assumptions.
26/02/07 12:15:39
The choice of the demographic assumptions (e.g. life expectancy/mortality, retirement age…) must be in line with the characteristics of the pension plans and their participants.• The pension plans and their participants influence the investments.• To simplify, it is advisable to invest in a conservative way if the average remaining duration of the pension “liabilities” is short and vice versa. The use of ALM (Asset Liability Management) techniques allows aligning the investment strategy with the characteristics of the pension plan and the population (i.e. “duration”).• The investments influence the technical provisions.The discount rate for the calculation of the technical provisions can be determined taking into account the return of the underlying investments.
This return may be set e.g. by reference to the following simplified approach:- The returns which were achieved in the past- The expected long-term consensus return (see example in Scheme 2); this model must be adjusted to the asset mix and the relevant financial markets.A more sophisticated approach consists of defining the return on the basis of the expected return pattern generated by an ALM study (see example in Scheme 3).
• Global impact on the funding.The Belgian legislation offers a high degree of flexibility in setting the target funding level, provided the technical provisions are covered. The OFP may consider creating a cushion for e.g. absorbing short-term return volatility.• A pension fund with an average remaining duration of 15 years may consider that a decrease / increase of 1 % in the expected return and thus in the discount rate results respectively in roughly 15 % higher/lower provisions.
3.10 Asset management and custody The OFP may freely appoint investment managers for the management of its portfolio.The OFP may also appoint a custodian established and authorized in any EEA member state.As regards the underlying assets covering the technical provisions, the Belgian legislation requires, as a rule, that they be deposited within the EEA. If not, a certificate of an authorized institution must be provided to justify non-EEA-deposits.
18
17 For defined contribution pension plans, the provisions to accrue equal to
the sum of the social vested reserves.
18 This scheme is only illustrative and results from underlying economical
and financial assumptions
9
The pension plan participants receive annually a benefit statement describing the situation of the OFP and detailing the current level of financing of their accrued individual pension entitlements.The SIP will also be made available to all plan partici-pants and beneficiaries or their representatives upon their request.Other information can be requested, aiming at provi-ding the pension plan participants (and beneficiaries) with accurate information regarding their benefits.
3.12 SupervisionThe CBFA oversees and supervises the OFP.Within the CBFA, the specific division “Supervision of supplementary pensions” is in charge of overseeing the OFPs. This division consists of a high expertise le-vel team of multilingual actuarial, legal, financial and economic experts. The division is easily accessible and applies an open discussion philosophy.
3.13 ConclusionThe Belgian prudential framework sets qualitative ru-les and grants flexibility in the investment strategy, the determination of the technical provisions (by e.g. ta-king into account the expected investment return), the funding and the involvement of the sponsoring under-takings as well as plan participants and beneficiaries, by using, for example, social committees.The qualitative rules for the determination of the tech-nical provisions do not impose stringent demands on the sponsoring undertakings in respect of their fun-ding and the level of assets to accrue within the OFP, whereas the governance structure and compliance with the prudent person rule guarantee a solid mana-gement securing the interests and pension rights of the plan participants.
4. Tax regime4.1 Corporate income tax – “zero-taxation on benefits”OFPs are subject to Belgian corporate income tax. This does not, however, imply that an OFP will be taxed as an ordinary corporation. To the contrary, an OFP is taxed according to the special income tax re-gime applicable to open-ended investments funds of the UCITS-type21.This special tax regime implies that the taxable basis22 of the OFP only encompasses the following items :
• Abnormal or benevolent benefits receivedThe wording “abnormal or benevolent” refers to the Belgian legal terminology indicating income which
is derived from not at arm’s length transactions and which is to be considered as taxable income.
By only engaging in at arm’s length transactions, the OFP can avoid the addition
of this type of income.
• Non-deductible costs other than reduction in value and capital loss on sharesUnder Belgian tax law, certain costs made by the le-gal entity are not fully tax deductible or are not tax deductible, even if it concerns professional expenses. Examples of such non deductible costs are : non-de-ductible taxes, fines, non-deductible car expenses, restaurant and representation costs, certain social benefits granted to employees…
The OFP should in principle be in a position to avoid these costs.
• Secret commissions paidThis part of the taxable basis is formed by payments for which the tax reporting formalities have not been complied with. In other words : payments have been made but beneficiaries have not been identified to the tax authorities. Since this non-reporting prevents the tax authorities from taxing the beneficiary, the grantor is sanctioned and taxed.
This tax can easily be avoided by complying with the tax legislation on reporting of salaries,
fees and commissions.
Investments : “zero”- taxation. The OFP is not liable to capital gains tax. Likewise, (Belgian and foreign) di-vidend income and interest income will not be taxed in the hands of the OFP.If Belgian withholding tax on income has been applied upon payment of income to the OFP, this tax will be credited against the corporation tax which may be due (cf. supra). In those cases, only the tax remainder which has not been set off will be reimbursed. This results in a favourable tax treatment where “gross in-come” mostly becomes “net income”.The new income tax regime of the OFP will certainly lead to a higher flexibility and more choices in respect of investment decisions. Whereas in the past, Belgian pension funds often turned to UCITS-investments to increase the return of the investments and to avoid
21 E.g. BEVEK / SICAV commonly used in Belgium.
22 The applicable corporate tax rate is 33.99 % (i.e. 33 % increased with
3 % crisis surcharge), except for the secret commissions paid which are
subject to a tax rate of 309 %. The latter tax is deductible, whereas the
ordinary corporate tax of 33.99 % is not.
Pensions.indd 12-13
3.11 Information to the pension plan participants and beneficiaries The Belgian legislation fully complies with the information obligations of the IORP Directive. It thus aims at creating more transparency.The pension plan participants receive annually a benefit statement describing the situation of the OFP and detailing the current level of financing of their accrued individual pension entitlements.The SIP will also be made available to all plan participants and beneficiaries or their representatives upon their request. Other information can be requested, aiming at providing the pension plan participants (and beneficiaries) with accurate information regarding their benefits.
3.12 SupervisionThe FSMA oversees and supervises the OFP.Within the FSMA, the specific division “Supervision of supplementary pensions” is in charge of overseeing the OFPs. This division consists of a high expertise level team of multilingual actuarial, legal, financial and economic experts. The division is easily accessible and applies an open discussion philosophy.
3.13 ConclusionThe Belgian prudential framework sets qualitative rules and grants flexibility in the investment strategy, the determination of the technical provisions (by e.g. taking into account the expected investment return), the funding and the involvement of the sponsoring undertakings as well as plan participants and beneficiaries, by using, for example, committees.The qualitative rules for the determination of the technical provisions do not impose prescriptive demands on the sponsoring undertakings in respect of their funding and the level of assets to accrue within the OFP, whereas the governance structure and compliance with the prudent person rule guarantees a solid management securing the interests and pension rights of the plan participants.
4. Tax regime
4.1 Corporate income tax – “zero-taxation on profit”OFPs are subject to Belgian corporate income tax. This does not, however, imply that an OFP will be taxed as an ordinary corporation. On the contrary, an OFP is taxed according to the special income tax regime applicable to open-ended investments funds of the UCITS-type19.
This special tax regime implies that the taxable basis20 of the OFP only encompasses the following items:
• Abnormal or benevolent advantages receivedThe wording “abnormal advantages” refers to the Belgian legal terminology indicating income which is derived from not at arm’s length transactions.
But duly respecting the generally applicable fiscal at arm’s length principle, the OFP can avoid
becoming taxable on such income.
• Non-deductible expensesUnder Belgian tax law, certain expenses made by the legal entity are not fully tax deductible whether or not it concerns professional expenses. Examples of such non-deductible expenses are: non-deductible taxes, fines, non-deductible car expenses, restaurant and representation costs, certain social benefits granted to employees…
Generally, an OFP does not have non-deductible expenses
• Secret commissions paidThis part of the taxable basis is formed by payments for which the proper tax reporting formalities have not been complied with. In other words: payments have been made but beneficiaries have not been identified to the tax authorities. Since this non-reporting prevents the tax authorities from taxing the beneficiary, the grantor is sanctioned and taxed.
By complying with the ordinary reporting obligations for salaries, fees and commissions, an OFP can avoid becoming taxable on secret
commissions.
Investments: “zero”- taxation.The OFP is not liable to capital gains tax. Likewise, (Belgian and foreign) dividend income and interest income is not taxed in the hands of the OFP.If Belgian withholding tax on income has been applied upon payment of income to the OFP, this tax is credited against the corporation tax which may be due (cf. supra) and any excess credit is reimbursable. This results in a favorable tax treatment where “gross income” mostly becomes “net income”.The new income tax regime of the OFP provides a higher flexibility and more choices in respect of
19 E.g. BEVEK / SICAV commonly used in Belgium.
20 The applicable corporate tax rate is 33.99 % (i.e. 33 % increased with 3 %
crisis surcharge), except for the secret commissions paid which are subject
to a tax rate of 309 %.
10
taxes, this will no longer be necessary since the OFP itself benefits from the same favourable tax regime.
4.2. International taxation : benefiting from double taxation treatiesVery extensive double taxation treaty network. Since it is subject to corporate income tax, an OFP will, in general, be able to claim the benefits of the double taxation treaties concluded by Belgium. Belgium has one of the most extensive double taxation treaty networks. This will result in a higher “net” dividend income of the Belgian OFP versus most other coun-tries.This implies that, if the source state provides for the application of a domestic tax at source, an OFP will in principle be able to claim treaty exemption or re-duction of foreign withholding tax on dividends and interest, provided the treaty conditions are met.Belgium recently renewed its double taxation treaty with the USA23. The Belgian OFP is explicitely men-tioned in the treaty so that no local withholding tax will be due on dividends of US resident companies if received by a Belgian OFP. However, this benefit is subject to treaty conditions which imply “limitation of benefits”.
4.3. VATExempt. The VAT exemption applicable to the mana-gement by UCITS has been extended to the manage-ment by OFPs.Based on case law of the European Court of Justice, the exempted “management” activities24 should en-compass :• the “financial management” of an OFP : services consisting of the management of the financial and other assets of the OFP25, as well as• the “administrative management” : services of ad-ministrative management for the operation of the OFP, to the extent that they are specific to and essen-tial for the OFPs, e.g. : establishment of the annual
report, information to plan participants, reporting to the competent authorities, etc. If fees for VAT-exempted services are charged by a Belgian service provider, the exemption applies ordinarily.If the service provider is located outside Belgium, the preliminary question as to the localization of their ser-vices for VAT-purposes needs to be looked into. If fees for VAT-exempted services, as defined, are charged to the OFP by a service provider established in the EU but outside Belgium, no VAT should, as a general rule, be due in the EU-member state where the ser-vice provider is established, nor would VAT be due in Belgium26.
4.4. Other indirect taxesThe OFP itself is not subject to the UCITS-taxes. This means that the OFP’s direct investments are tax-exempt27, whereas the OFP may indirectly encounter these taxes when it opts for participation in certain investment funds subject to the tax.No subscription tax or stamp duty taxes are due on a Belgian OFP.
4.5. ConclusionThe OFP enjoys a favourable tax regime, both for di-rect and indirect taxes. Provided the OFP avoids to be taxed on non-deduc-tible costs, and to the extent foreign investments are well-chosen or well-structured, the OFP can aim at an overall “zero-taxation”.
Thus, Belgium can boast of particularly advantageous characteristics quite unparalleled
in other EEA-countries.
24 Treaty of 27 November 2006 – still to be ratified.
24 For the definition of “management activities” falling within the scope
of the VAT-exemption, guidance can be found in case law, including case
law of the European Court of Justice (ECJ), as well as in comments dea-
ling with the management of UCITS (although the latter cannot be trans-
posed as such since the mission and activities of both entities, OFPs and
UCITS, differ). The notion “management” of the OFP is specific to VAT,
which is an autonomous concept of EU-law. Consequently, definitions set
forth for financial law purposes may not necessarily be decisive.
25 Asset management does not include actual financial depositary activities
on the securities by the OFP.
26 Since the nature of the services rendered needs to be examined on a
case-by-case basis, and since national legislations must also be consi-
dered in light of EU law to determine the localization of the service, each
contract and fee for services will require a separate analysis.
27 As regards Belgium, the yearly 0.08 % or 0.01 % UCITS tax
26/02/07 12:15:40
investment decisions. Whereas in the past, Belgian pension funds often turned to UCITS-investments to increase the return of the investments and to avoid taxes, this is no longer necessary since the OFP itself benefits from the same favorable tax regime.
4.2 International taxation: benefiting from double taxation treatiesSince it is subject to corporate income tax, an OFP is, in general, able to claim the benefits of the double taxation treaties concluded by Belgium. Belgium has one of the most extensive double taxation treaty networks. This will result in a higher “net” dividend income of the Belgian OFP in comparison to most other countries.This implies that, if the source state provides for the application of a domestic tax at source, an OFP will in principle be able to claim treaty exemption or reduction of foreign withholding tax on dividends and interest, provided the treaty conditions are met. Belgium renewed its double taxation treaty with the USA in 200621. The Belgian OFP is explicitly mentioned as eligible for treaty benefits (subject to meeting the treaty conditions on ‘limitations of benefits’) resulting in zero US withholding tax on dividends from US equity.
4.3 VATExempt. The VAT exemption applicable to the management of UCITS has been extended to the management of OFPs.Based on case law of the European Court of Justice, the exempted “management” activities22 should encompass:• The “financial management” of an OFP: services consisting of the management of the financial and other assets of the OFP23, as well as• The “administrative management”: services of administrative management for the operation of the OFP, to the extent that they are specific to and essential for the OFPs, e.g.: establishment of the annual report, information to plan participants, reporting to the competent authorities, etc. If fees for VAT- exempted services are charged by a Belgian service provider, the exemption applies ordinarily.If the service provider is located outside Belgium, the preliminary question as to the localization of their services for VAT-purposes needs to be looked into. If fees for VAT-exempted services, as defined, are charged to the OFP by a service provider established in the EU but outside Belgium, no VAT should, as a general rule, be due in the EU-member state where the service provider is established, nor would VAT be due in Belgium24.
4.4 Other indirect taxesThe OFP itself is not subject to the UCITS-taxes. This means that the OFP’s direct investments are tax- exempt25, whereas the OFP may indirectly encounter these taxes when it opts for participation in certain investment funds which are subject to the tax.No subscription tax or stamp duty taxes are due on aBelgian OFP.
4.5. ConclusionThe OFP enjoys a favorable tax regime, both for direct and indirect taxes.Provided the OFP avoids being taxed on non-deductiblecosts, and to the extent foreign investments are well-chosen or well-structured, the OFP can aim at an overall “zero-taxation”.
Thus, Belgium can boast of particularly advantageous terms which are quite unparalleled in
other EEA-countries.
5. Some data
On April 1st, 2011 there were six IORP from 3 countries of the European Economic Area active in Belgium. On the same date 9 OPFs located in Belgium have activities in 7 countries within the European Union. The complete list of the different Pan European Pension Funds located in Belgium can be consulted on the website of the FSMA (www.fsma.be).
21 Treaty of 27 November 2006
22 For the definition of “management activities” falling within the scope of
the VAT-exemption, guidance can be found in an extensive administrative
Circular (N° AOIF 22/2008 – ET 113.316) of June 17, 2008
23 Asset management does not include actual financial depositary
activities on the securities by the OFP.
24 Since the nature of the services rendered needs to be examined
on a case-by-case basis, and since national legislations must also be
considered in light of EU law to determine the localization of the service,
each contract and fee for services will require a separate analysis.
25 As regards Belgium, the yearly 0.01 % UCITS tax (for shareclasses
intended for professional investors).
11
Belgium,
Prime Location
for Pan-European
Pension Funds
Contacts
For more information
on other incentives
and reasons to invest
in Belgium, please visit
Pensions.indd 2-3
Federal Public Service Finance
Fiscal Department for Foreign Investments
Parliament Corner
Rue de la loi – Wetstraat 24
B-1000 Brussels, Belgium
T : +32 257 938 66
F : +32 257 951 12
www.minfin.fgov.be/cellalien
Financial Services and Markets Authority
Rue du Congrès - Congresstraat 12-14
B-1000 Brussels, Belgium
T : +32 2 220 52 11
F : +32 2 220 52 75
www.fsma.be
Belgian Association of Pension Institutions
Boulevard A. Reyerslaan 80
B-1030 Brussels, Belgium
T : +32 2 706 85 45
F : +32 2 706 85 44
www.pensionfunds.be
www.business.belgium.be
Responsible Editor: Françoise Audag- Dechamps, Federal Public Service Chancery of the Prime Minister
Rue de la Loi/ Wetstraat 16 1000 Brussels D/2011/9737/1
www.business.belgium.be