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  • Description of this presentation : Company profile of Febelfin Overview of the main characteristics and assets of the Belgian financial sector, more particularly its openness, diversity and international character thanks to the presence of national as well as international players.- Facts and figures as for the Belgian financial market will be commented upon- Several challenges and commitments the sector has to deal with at present (innovative payment solutions ; new financial architecture)
  • Febelfinrepresents 236financialinstitutions of which 105 banksincluding 6 US banks,Febelfin covers 75% of the Belgianfinancial sectorNext to banksFebelfinconsists out of 5 constituent associationsrepresentingalsoasset managers, credit instiutions, stock brokers and leasing companies9 members have a special status : Euroclear, Swift, AtosWorldline, NYSE-Euronext, the Belgian Private Equity & Venture CapitalAssociation (BVA), de Belgische vereniging der factormaatschappijen (APBF/BBF), the CouncilforStrockbrokers’ accreditation, Isabel, LCH Clearnet en NYSE Euronext
  • A sample of the bankswhich are representedbyFebelfin (Atos, Swift,Euroclear, NYSE-Euronext are on the slide as well)

Financialinnovationseminarny2011[1] Financialinnovationseminarny2011[1] Presentation Transcript

  • Thursday, June 23rd, 2011Financial Innovation SWIFTA Belgian approach in the heart of Europe Times Square NY 10036 1
  • “Financial Innovation,A Belgian Approach in the Heart of Europe” Please turn off your cell phones ! Thank you. 2
  • Overview Programme “Financial Innovation,A Belgian Approach in the Heart of Europe” Welcome speech A relevant practical case Steven Vanackere, Belgian Deputy Prime Minister André Claes, Partner at Deloitte and Federal Minister of Foreign Affairs and Institutional Reforms Financial innovation in Europe Eileen Dignen, Managing Director, Banking Accounts Investing in the Belgian Financial Sector and Initiatives, SWIFT Americas Filip Dierckx, Vice-Chairman of the Executive Board BNP Paribas Fortis Bank SA/NV, Vice-Chairman Febelfin US investment in Belgium, The Amcham perspective Unique tax incentives in Belgium Marcel Claes, Chief Executive Officer at Amcham Albert Wolfs, Head of the Fiscal Department for Foreign Investments (Belgian Ministry of Finance) Moderated by Robert Tortoriello, Partner at Cleary, Gottlieb,Steen and Hamilton 3
  • “Investing in the Belgian financial sector”Filip Dierckx, Vice-Chairman of the Executive Board BNP Paribas Fortis Bank SA/NV, Vice-Chairman Febelfin Febelfin June 23, 2011 4
  • Agenda• Belgian Financial Sector• „Financial Innovation‟ Seminar 5
  • • Febelfin represents 236 financial institutions of which 105 banks including 6 US banks• Consists out of 5 constituent associations• Members are Banks, Asset Managers, Financial Niche players, Lease companies andStock Brokers• 9 members with special status 6
  • 7
  • Belgium In the heart of Europe Home to European Institutions and NATO HQ Open and well diversified economy • GDP (PPP): $399 billion (30th worldwide) • GDP - real growth rate: 2.1% (2010) • GDP - per capita: $36,100 (18th worldwide) • Harmonized unemployment rate: 8.4% • Inflation rate (consumer prices): 2.3% (HICP) 8
  • Belgium Export and imports account for more than 70% of GDP • 8th largest exporter of goods worldwide • 13th largest exporter of services in the world 100.0 80.0 60.0 Exports and imports of goods and services 40.0 (% of GDP) 20.0 0.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Exports Euro Area Imports Euro Area Exports Belgium Imports Belgium 9
  • Belgium Highly educated, multilangual and productive workforce • Active population of 4.5 mio out of 10.8 mio total population • Belgian workforce has one of the highest productivity rates in the EU Luxembourg Belgium France Overall productivity(GDP in PPS per person Netherlands employed relative to United Kingdom EU27, EU27=100) EU15 Germany Denmark 0 20 40 60 80 100 120 140 160 180 10
  • The Banking Sector Number of banks established in Belgium (End of December 2010) Open, international and diversified landscape 59 • 80% Foreign Banks of which majority 26 20 branches, 20% Domestic Banks Domestic Banks Branches Subsidiaries Foreign Banks (85) 11
  • The Banking Sector Share of foreign banks in the banking sector’s activities volume Open, international and diversified landscape (share in total bank assets, as a %, 2009) • 80% Foreign Banks of which majority branches, 20% Domestic Banks • Large Market Share of Foreign Banks 12
  • The Banking Sector Open, international and diversified landscape • 80% Foreign Banks of which majority branches, 20% Domestic Banks • Large Market Share of Foreign Banks • Regional Decision Centres 13
  • The Banking Sector Total bank credits as compared to total bank deposits (as a %, 2009) Open, international and diversified landscape • 80% Foreign Banks of which majority branches, 20% Domestic Banks • Large Market Share of Foreign Banks • Regional Decision Centres • High Credit to Deposit ratio 14
  • The Banking Sector European comparison of the sector’s contribution to the economy – Total assets of the whole of credit institutions as compared to the GDP (as a %, 2009) Open, international and diversified landscape • 80% Foreign Banks of which majority branches, 20% Domestic Banks • Large Market Share of Foreign Banks • Regional Decision Centres • High Deposit to Loan ratio • Bank Assets to GDP ratio in line with Eurozone average 15
  •  Financial Crisis of 2008 and 2009 Economic Recession International activities & exposure of Belgian financial sector Financial Market Funding Domestic Funding (Savings) Domestic Lending (mortgages & corporate) 16
  •  World Class Centres of Excellence Euroclear number of transactions after netting • World player for settlement services (in millions, period figures) • Annual transactions worth more than €500 trillion • +2000 financial institutions as client • Active in around 90 countries worldwide 17
  •  World Class Centres of Excellence Average daily traffic Messages (millions) • Worldwide Interbank Telecom services • Serving +9000 banking organizations, securities insitutions and corporate clients • Active in +200 countries 18
  •  Inexpensive and Safe Payment Services • Cost of retail bank amongst lowest in Europe • Belgian payment landscape aligned to Single Euro Payment Area (SEPA) 7 out of 10 Belgians use Internet Banking New Innovative payment applications • Joint venture Banking and Telecom sector in progress • Offering payment solutions for small amounts with near field technology 19
  •  New Belgian financial architecture and EU supervision are being aligned • Based on European model • NBB & Financial Services and Markets Authority 20
  • Thank you for your attention. 21
  • “Unique tax incentives in Belgium”Albert Wolfs, Head of the Fiscal Department for Foreign Investments (Belgian Ministry of Finance) Foreign Investments June 23, 2011 22
  • Federal Public Service FinanceUNIQUE TAX INCENTIVES in BELGIUM 2011 Fiscal Department for Foreign Investments Albert WOLFS 23
  • 24 Effective (Average) Corporate Tax Rate (ECTR) 2009* *(based on asset and source of finance) Especially in Belgium, the ECTR is considerably below statutory tax rates (-9,3%) Sources : Report 2009, made by ZEW (Centre for European Economic Research) for the EU Commission Project : Taxud/2008/CC/099, Mannheim and Oxford, October 2009 24
  • 25 Effective (Average) Corporate Tax Rate (ECTR) 2009* *(based on asset and source of finance) Especially in Belgium, the ECTR is considerably below statutory tax rates (-9,3%) Netherlan Germany Belgium USA Italy ds UK France Japan Sources : Report 2009, made by ZEW (Centre for European Economic Research) for the EU Commission Project : Taxud/2008/CC/099), Mannheim and Oxford, October 2009 25
  • INVEST IN BELGIUM www.invest.belgium.be1. Notional Interest Deduction2. Tax Ruling3. Dividend withholding tax exemption4. Holding regime5. Other tax incentives 26
  • 1. Notional Interest DeductionWhat is it? A notional interest calculated and deducted yearly from the taxable basis used to off-set operational or financial income (thus lowering effective tax rate) 27
  • 1. Notional Interest DeductionWho?Companies subjected to- Corporate tax- Non-residents / Corporate Tax 28
  • 1. Notional Interest DeductionHow does it work ? Annual Tax Deduction = EQUITY X RATE (OLO 10 years) 29
  • 1. Notional Interest DeductionEXAMPLE 1: Assets Liabilities(Return on Equity: 4%) Group Financing Share Capital 10,000 10.000 P&L Account Before N.I.D. After N.I.D Profit before tax 400 400 N.I.D. (3,425%) / - 342,5 Taxable 400 57,5 Corporate Tax (33,99 %) 135,96 19,5 Effective Tax Rate 33,99 % 4,89% 30
  • 1. Notional Interest DeductionEXAMPLE 2: Assets Liabilities Business Assets Share Capital 10,000 10.000 Net Result Effective Tax Rate (Return on Equity) ≤ 3,425 % 0% 4 % (Previous slide) 4,89 % 5% 10,71 % 8% 19,44 % 31
  • 1. Notional Interest Deduction« Qualifying » equity Equity = total equity as defined under Belgian GAAP (includes retained earnings) in the opening balance sheet of the taxable period “adjusted” to avoid double use and abuse. 32
  • 1. Notional Interest DeductionInterest Rate RATE = annual average of the monthly published rates of the long term Belgian Government Bonds (10-year OLO) Fixed yearly for 2011 (Tax Year 2012) :  3,425 % 33
  • 1. Notional Interest DeductionOther particularities Permanent measure + 0,5% for SME’s Carry forward of 7 years No ruling nor agreement is needed Suppression of the 0,5% capital duty as of 1/1/2006 EU compliant 34
  • 1. Notional Interest DeductionOPPORTUNITIES It’s a valuable tool for further development of Coordination Centre activities Opens possibilities for international groups of allocating new activities to a Belgian entity such as intra-group financing, central procurement or factoring THUS: increases attractiveness of Belgium for capital intensive companies, equity funded headquarters and treasury centers. 35
  • 2. Tax Ruling Advanced decisions or ruling is about creating CONFIDENCE to invest in Belgium; The investor describes the facts, allowing the tax administration to determine, in advance, how the tax laws are to be applied on a CASE BY CASE BASIS It ensures a LEGALLY BINDING ACCURATE FORECAST of all the tax implications of your investment project 36
  • 2. Tax RulingUnlimited application field for ruling:  Transfer pricing  Business Restructuring  Deductible expenses  Financing  Branches  Bonded warehouses, etc. 37
  • 3. Dividend withholding tax exemption Parent company (treaty partner of Belgium)• No WHT • 10% shareholding• No LOB • 12 months Belgian Subsidiary 38
  • 4. Holding regime Participation exemption  dividends received : deduction of 95% Deductibility of interest paid to acquire shares No capital duty Exemption of realized capital gains on shares 39
  • 5. Other incentives Tax treaty network (new favorable US-Belgium tax treaty) Expat regime R&D incentives Bonded warehouses and VAT deferal European pension funds Tax shelter for audiovisual sector Etc.,… 40
  • INVEST IN BELGIUM – increase your profits Need to know more ? Federal Public Service Finance Fiscal Department for Foreign Investments Rue de la Loi, 24 (Parliament Corner) 1000 Brussels - BELGIUM Albert WOLFS Email: albert.wolfs@minfin.fed.be Tel.: +32 257 938 67 Fax: +32 257 951 12 41
  • “A relevant practical case” André Claes, Partner at Deloitte Deloitte June 23, 2011 42
  • Tax Opportunities inBelgiumIllustrationJune 23, 2011
  • Introduction• The purpose of this presentation is to illustrate various tax opportunities using a Belgian company.• More in particular, we will illustrate through different practical cases the attractiveness of Belgium as: – a holding company location; – a finance company location; – IP company location; – a principal company location.• Although envisaged separately in this presentation, those ideas could possibly also be combined.44 Copyright © 2011 Deloitte Development LLC. All rights reserved.
  • HoldingCo Case Study – Technology distribution company Project / Need • European holding company project USDividend Sale of shares Company profile • European HQ located in Belgium BelcoOperating Operating & Interest Finance What Belgium offered holding activities income Loan company • Repatriation of dividends from European subsidiaries to the US parent company at Dividend no WHT cost • 1.7% tax rate on dividends received by European European Belco, effective tax rate possibly close to Sub Sub zero • Deductibility of all expenses relating to the holding of the shares, including interest 45 Copyright © 2011 Deloitte Development LLC. All rights reserved.
  • FinCo Case Study – Technology Distribution company Project / Need US Dividend • Funding of European operations through cash pooling Equity Company profile European • Former Belgian Coordination Center Holdco What Belgium offered Finance • Offset of net interest income with notional NID company Cash pool leader interest deduction (NID) allowing the cash pool leader to be taxed only on a spread, if European European any, between interest income and notional Sub Sub interestCash pool member Cash pool member Cash Pool • Repatriation of income to the US parent at no WHT cost46 Copyright © 2011 Deloitte Development LLC. All rights reserved.
  • IPCo Case Study – Highly innovative equipment manufacturer Project / Need US • Sale of self-developed patented technology to third parties Belgian 80% PID exemption Company profile IPCo • R&D developed in Belgium Cost plus License remuneration What Belgium offered Royalties Sale • Apply an 80% deduction on:(un)related Low risk – royalty income licensee manufacturer – deemed royalty income included in the sales Sales price Sale price of products • Repatriate dividends to the US parent at no Clients WHT cost47 Copyright © 2011 Deloitte Development LLC. All rights reserved.
  • Central Entrepreneur Case Study – Specialized software distributor Project/ Need • Central entrepreneur for Europe US Company profile • Creation of a new business unit Central Residual • Belgium ranked within top 3 location by Entrepreneur Profit site selection analysis What Belgium offered Service fee • Excess accounting profit ruling allowing Limited Risk for the exemption of a substantial percentage of the residual profit of the Service business centralized into a central Providers entrepreneur established in Belgium • Repatriate dividends to the US parent at no WHT cost 48 Copyright © 2011 Deloitte Development LLC. All rights reserved.
  • About DeloitteDeloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its networkof member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detaileddescription of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. Please seewww.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.Copyright © 2010 Deloitte Development LLC. All rights reserved.Member of Deloitte Touche Tohmatsu Limited
  • “Financial Innovation in Europe”Eileen Dignen, Managing Director, Banking Accounts and Initiatives, SWIFT Americas Febelfin June 23, 2011 50
  • The Financial Industry,SWIFT and InnovationBelgian Economic Mission in USEileen DignenJune 2011
  • • Launch of Innotribe: Sibos 2009 Hong Kong• Open innovation• Network of innovators from across industries to explore the future of the financial industry and to co-create• Community dialogue:52 www.swiftcommunity.net
  • Key technology trends• Cloud computing• Vertical integration• Open source• Cyber security• Networking 53
  • SWIFT and Innovation Critical Mission Deliverables success factors Facilitation & training Senior management Build the Proof of Concept commitment to support and Enhance E2E development facilitate roll out Skills process Tools KPI / Monitoring Adequate budget Processes Co-investment Metrics Events Clear priorities translated in Value detailed project plans Network Frame of responsibilities changes over time Delivery tracked and impact required to support Involvement measured collaborative innovation and transform SWIFT in Solid programme an agile company, management able to succeed in a t1= now t2 time changing environment. Mandate for continuous Adopt Demo ransfer Adapt T communication on progress 54
  • Thank you
  • “US investment in Belgium, the Amcham perspective”Marcel Claes, Chief Executive Officer at Amcham Amcham June 23, 2011 56
  • The American Chamber of Commerce in BelgiumWhy US Investment in Belgium isimportant and attractive?June 2011
  • IntroductionAmerican Chamber or Commerce in Belgium • Founded in 1948 by IBM, JP Morgan, Kodak, GM • 500+ company members: 1/2 US, 1/3 Belgian • Membership led/funded non-profit organization • Independent, i.e. no US or Belgian government subsidies • Networking and knowledge sharing focused • Issue driven: representing US business interests …the undisputed leader to improve business and investment opportunities for the US-Belgian business community 58
  • Belgium remains important destination forUS Investment • More than 900 different US companies with approx. 1800 affiliates in Belgium, • Many US companies with a large presence, also in financial services: BNY Mellon, Citibank, State Street, MasterCard, NYSE Euronext, JP Morgan, but also SWIFT, Euroclear, etc. • Significant investments by many well known names: Ford, Exxon, P&G, Pfizer, J&J, Baxter, DuPont, Google, • Approximately 400 Headquarters of US companies Belgium is an anchor point in the important Transatlantic relations
  • US Investment in Belgium is important andrecovered from crisis • 75 billion Euros US Direct Investment-stock in Belgium • After fast growth from 2004 to 2007, USDI inflows were lower in 2008 and 2009 • US investment has recovered significantly since 2009, expect to be in record territory in 2010 and positive for 2011 • Direct employment of 130.000 people (2009), • Approx. 300.000 employed including indirect jobs or over 10% of all private sector employment in Belgium
  • US presence is still Manufacturing focused butgrowing services investments • 70.000 US jobs in Belgium in wholly-owned affiliates of manufacturing based companies or over 50% of all US jobs • Very strong US presence in certain sectors, e.g. over 50% of all pharma jobs in Belgium • Manufacturing: over 1/3 of total US investments (in 2009) - down from 52% in 1990, mainly because of rapid increase of financial services/investments Growing services activity offers a lot of growth potential
  • Belgium’s 3 regions have their own strengths • Flanders: has about 60% of the US investments – Heavy concentration of manufacturing companies (automotive, chemical, pharma) – Main logistic access: airport, harbors • Brussels, as Belgian, Flemish and EU Capital and separate region attracts 25% of US investments – Mostly Services and Headquarter operations • Wallonia: about 15 % of US investment – Now starting to play its’ strengths: available, cheap and accessible infrastructure (logistics), available high quality resources – Attracting some good new investments: Google (greenfield datacenter €250 mio), Baxter, J&J, GSK … 62
  • Top 10 reasons to invest in Belgium: • Central location in heart of Europe • Cross and multi-cultural, multilingual • Highly educated, skilled an productive workforce • Capital of Europe, proximity to EU and Nato HQ • Attractive corporate tax regime with NID, very relevant for Financial Institutions and company headquarters • Attractive regime to support Innovation and R&D • Competitive “effective” labor and other business conditions in spite of high nominal charges and rates- many deductions • Top quality of life at reasonable cost • Attractive real estate • Specific cluster benefits in areas such as financial transaction processing: SWIFT, Euroclear, Mastercard, BNY Mellon, etc Belgium is Europe’s “best kept secret” 63
  • Contact Information www.amcham.be Marcel Claes Chief Executive American Chamber of Commerce in Belgium Handelsstraat 41 rue du Commerce 1050 Brussels Tel +32/(0)2/289.10.81 Email: mclaes@amcham.be
  • 65