Belgium,Prime Locationfor Pan-EuropeanPension Fundswww.business.belgium.beInvest in Belgium, increase your profits
Table of Contents    Foreword    1.     Introduction    2.     Legal framework: Structure and organization of the OFP    2...
The ageing of the population will boost the development of                                       funded pension schemes, c...
1. Introduction    1. Introduction                                                                         Furthermore, ne...
Consequently, the OFP must consist of at(at least) or                                          2 least 2 bo-              ...
12    - The management agreement 11    - the management agreement                                                       wo...
actuarial assumptions which the be able to justifybesumptions which the OFP needs to OFP needs to .                       ...
Balance sheet of the OFP : assets and liabilities    Assets                                                               ...
Average expected return over 10 yearsThe choice of the demographic assumptions (e.g. lifeThe choice of the demographic ass...
3.11 pension plan participants receive annually a     The Information to the pension plan                          is deri...
taxes, this will no longer be necessary since the OFP investment decisions. Whereas in the past, Belgian                  ...
ContactsFederal Public Service Finance                                                                     For more inform...
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Brochure Kanselarij

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Brochure Kanselarij

  1. 1. Belgium,Prime Locationfor Pan-EuropeanPension Fundswww.business.belgium.beInvest in Belgium, increase your profits
  2. 2. Table of Contents Foreword 1. Introduction 2. Legal framework: Structure and organization of the OFP 2.1 Separate legal entity 2.2 Autonomous legal framework 2.3 Simple and flexible structure 2.4 Comply with host country social and labor legislation 2.5 Creation of the OFP and authorization to act as a pension fund 2.6 Conclusion 3. Financial framework 3.1 Conditions of operation 3.2 Qualitative rules as opposed to quantitative rules 3.3 Technical provisions 3.4 Coverage of the technical provisions 3.5 Investments 3.6 Financing plan 3.7 Statement of investment policy principles - SIP 3.8 Balance sheet of the OFP: assets and liabilities 3.9 Dynamics of the financing framework 3.10 Asset management and custody 3.11 Information to the pension plan participants and beneficiaries 3.12 Supervision 3.13 Conclusion 4. Tax regime 4.1 Corporate income tax – “zero taxation on profit” 4.2 International taxation: benefiting from double taxation treaties 4.3 VAT 4.4 Other indirect taxes 4.5 Conclusion 5. Some data Contacts2
  3. 3. 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 declinein the financial markets and falling interest rates has led to unexpected pension deficits and a growingconcern as to how to mitigate the volatility of coverage ratios. Pension funds get management attention with a strong demand for centralized risk managementand control of pension assets and liabilities. Pooling enables businesses to bundle assets and liabilitiesfrom various jurisdictions under a single licensed Pension Fund. In line with the Single Market, recent European directives now allow cross-border pension funds to beset up within the European Union. Today, Belgium is the only European country offering multinationalsa complete and comprehensive dedicated framework for establishing both pan-European andinternational pension funds. Belgium has already facilitated the establishment of the pan-European pension funds. Pooling isin practice not a big bang but a step-by-step approach leading to a fully operational pan-Europeanpension fund. This brochure sets out the benefits of this very effective and advantageous legal, fiscal and prudentialframework. It also points out the broad range of modern treaties for the avoidance of double taxationwhich our country has concluded, thereby offering substantial savings with regard to the portfolio ofeach 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 thereforeto 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 andthe Belgian government is committed to facilitate an attractive and sustainable framework for longterm investors, such as pension funds. I trust that this brochure will be a useful document for the decision-makers in the pension andbusiness community. Yves Leterme Prime Minister 3
  4. 4. 1. Introduction 1. Introduction Furthermore, new tax provisions were adopted Furthermore, new tax provisions were adopted on 27 December 200644 to create aanew favourable December 2006 to create new favorable Belgium recently implemented the EU Directive implemented the EU tax regime in line with the EET-principle5. Thanks to regime in line with the EET-principle5. Thanks 1 2003/411 (the so-called IORP Directive) by adopting a so-called IORP Directive) by adopting these provisions, a well-designed pension fund loca- to these provisions, a well-designed pension a new and transparent flexible framework, which new and transparent flexible legal legal framework, fund Belgium Belgium can benefit from a “zero” ted inlocated in can benefit from a “zero” corporate which promotes Belgium“the prime location” for in- promotes Belgium as as as “the prime location” for corporate income tax. income tax. international and pan-European pension funds. ternational and pan-European pension funds. The Act of 27 October 20062 on the supervision of The Act of 27 October 20062 on the supervision of 2. Legal framework : Structure and organization IORPs (Institutions for Occupational Retirement Pro- IORPs (Institutions for Occupational Retirement Pro- 2. LegalOFP of the framework - Structure vision) defines the legal structure, the organization vision) defines the legal structure, the organization and organization of the OFP and the functioning of pension funds. and the functioning of pension funds. 2.1. Separate legal entity Moreover, the prudential legal framework Moreover, the prudential legal framework applies 2.1. Separate legal entity A pension fund established in Belgium takes6 the le- applies the “prudent person”– principle and grants A pension fund established in Belgium takes the the “prudent person”– principle and grants optimiza- gal form of an OFP : optimization opportunities to the pension fund, legal form of an OFP: tion opportunities to the pension fund, its sponsoring - Organization for Financing Pensions its sponsoring undertakings and the pension plan - Organization for Financing Pensions undertakings and the pension plan participants. The - Organisme voor de Financiering van Pensioenen participants. The Act offers a flexibility which allows - Organisme voor de Financiering van Pensioenen Act offers a flexibility which allows the pension fund to - Organisme de Financement de Pensions. the pension fund to best respond to the specific - Organisme de Financement de Pensions. best respond to the specific needs and wishes of the needs and wishes of the multinational or group of Autonomy.. The OFP is a separate legal entity solely Autonomy The OFP is a separate legal entity solely companies. or group of companies. multinational liable for its funds and obligations and distinct from liable for its funds and obligations and distinct from A pension fund located in Belgium may have A pension fund located in Belgium may have the sponsoring undertakings76.. the sponsoring undertakings cross-border activities and operate several pension cross-border activities and operate several pension It is specifically designed to allow for a flexibleflexible It is specifically designed to allow for a gover- plans applicable to employees working in different plans applicable to employees working in different nance structure and organization. governance structure and organization. countries (host countries). The pension fund will, however, solely be subject to the Belgian legal and 2.2. Autonomous legal framework 2.2. Autonomous legal framework regulatory prudential framework. If the employees Unique. Since the OFP is Unique. Since the OFP is a new legal entity, it is not affiliated to the pension fund are working in countries applicable to other legal entities. subject to laws applicable to other legal entities. belonging to the European Economic Area (EEA), the The Act of 27 October 2006 is transparent and and Act of 27 October 2006 is transparent go- relevant legal provisions3 of of their country’s social legal provisions3 their country’s social and verns thethe OFP’s structure and organization also governs OFP’s structure and organization but but and labor laws must be respected. The pruden- labour laws must be respected. The Belgian Belgian also its activities and its functioning. its activities and its functioning. prudential framework on the one hand one hand a tial framework offers, offers, on the a guarantee The Act is available in English, French, Dutch and The Act is available in English, French, Dutch and guarantee of solid securing the interests and pen- of solid management management, securing the German on the website of of the Belgian competent German on the website the Belgian competent Su- interests and the plan rights of the and, on the other sion rights of pension participants plan participants pervision Authorities, thethe FSMA (www.fsma.be). Supervision Authorities, CBFA (www.cbfa.be). The and, on the other hand, provides a high degree of The Act is implemented by Royal Decrees, which are hand, provides a high degree of flexibility in the level Act is implemented by Royal Decrees, which are also flexibility in the level of funding by sponsoring also available on the FSMA-website. Furthermore, of funding by sponsoring undertakings. The justifica- available on the CBFA-website. Furthermore, the undertakings. The justification “on a case by case” the FSMA issues circulars and memoranda7 tion “on a case by case” basis relates to the “specific” CBFA issues circulars and memoranda8 commenting basis relates to the “specific” characteristics of the commenting on the practical implications of the characteristics of the pension plans and their partici- on the practical implications of the legislation. pension plans and their participants. legislation. pants. 2.3. Simple and flexible structure 1 Directive 2003/41/EC of the European Parliament and of the Council on 1 Directive 2003/41/EC of the European Parliament and of the Council on 2.3. Simple and flexible structure the activities and supervision of of Institutions Occupational Retirement Pro- Governance.. In accordance with the OECD Guidelines Governance In accordance with the OECD Guideli- the activities and supervision Institutions for for Occupational Retirement Provision (IORPs) of 3 June 2007. nes for pension fund governance9, the governance for pension fund governance8, the governance vision (IORPs) of 3 June 2003. 2 Most provisions entered into force on 1 January structure of the OFP ensures an appropriate division structure of the OFP ensures an appropriate division 2 Most provisions entered into force on 1 January 2007. 3 Mandatory legal provisions of the host countries (‘host country’ is the of operational responsibilities as well as oversight of operational responsibilities as well as oversight 3 Mandatory legal provisions of the host countries (‘host country’ is the country whose social and labor legislation applies to the relationship and supervision responsibilities. responsibilities. country whose social and labour legislation applies to the relationship between the sponsoring undertaking and the plan participants), within the between the sponsoring undertaking and the plan participants), within the 6 The Act of 27 October 2006 provides for a transitional period of 5 years limits of EU/international law. limits of EU/international law. (until 1 January 2012) to the benefit of already existing pension funds which, 4 Act of 27 December 2006 relating to diverse provisions. 4 Act of 27 December 2006 relating to diverse provisions. pursuant to the previously applicable legislation, took the legal form of a non- 5 EET: “exempt-exempt-taxation”: (E): tax exemption for the contributions 5 EET : “exempt-exempt-taxation” : (E) : tax exemption for the contributions profit association (vzw-asbl) or mutual fund (ovv-aam). paid into a pension fund for the accrual of pension benefits (tax relief for the 6 Hence, safeguarding the accrued pension benefits and entitlements of paid into a pension fund for the accrual of pension benefits (tax relief for the 7 Hence, safeguarding the accrued pension benefits and entitlements of the contributions paid by the sponsoring undertakings and by the pension plan the pension plan participants against bankruptcy of their employer, the contributions paid by the sponsoring undertakings and by the pension plan pension plan participants against bankruptcy of their employer, the sponso- participants); (E): tax exemption of income generated by the contributions, sponsoring undertaking. gains realized(E) :the pension fund, income gains during the accrual period participants) ; by tax exemption of capital generated by the contributions, ring undertaking. the FSMA’s website, www.fsma.be. 7 Also available on prior to the payment pensionbenefit; (T): taxation of the pension benefits gains realized by the of the fund, capital gains during the accrual period 8 OECD available on the CBFA’s website, www.cbfa.be. 8 Also guidelines for pension fund governance, adopted by the OECD upon to the payment of the benefit ; (T) : taxation of the pension benefits upon prior payment of the benefits. 9 OECD guidelines for pension fund governance, adopted by the OECD Council on 28 April 2005. payment of the benefits. Council on 28 April 2005.4
  5. 5. Consequently, the OFP must consist of at(at least) or 2 least 2 bo- participants applicable to the pension plans whichof legislations and beneficiaries in the management itdies :more bodies: their pension plans by the OFP. operates.- a general assembly A general assembly The creation, composition, powers and functio- creation, composition, powers andThe sponsoring undertakings whose pension plans functioning of these committee(s) can be decided ning of the social committee(s) can be decided uponare operated by the OFP are members of the general operated by the OFP are members of the gene- by theby the parties involved. No requirements other upon parties involved. No legal legal requirementsassembly9. TheThe general assembly hasthe overallral assembly10. general assembly has the overall other than the establishment of a written document than the establishment of a written document aresupervision and oversight responsibility and may besupervision and oversight responsibility and may be imposed by Belgian law. law. are imposed by Belgiangranted broad powers (to be defined in the bylaws11).granted broad powers (to be defined in the bylaws ). 10- a board of directors- A board of directors 2.5. Creation of the OFP and authorization to act as 2.5. Creation of the OFP and authorizationThe OFP must have at least one operational body: a pension fundThe OFP must have at least one operational body : to act as a pension fundthe board of directors. The latter defines the Adopt bylaws. The OFP can simply be created bythe board of directors. The latter defines the general Adopt bylaws. The OFP can simply be created bygeneral policy of the OFP and is responsible for the adopting bylaws. One ordinary member-sponsoringpolicy of the OFP and is responsible for the operatio- adopting bylaws. One ordinary member-sponsoringoperational activities of the OFP. undertaking suffices to that end. The bylaws do notnal activities of the OFP. undertaking suffices to that end. The bylaws do not- Other operational bodies (under the control of the need to be drafted by a notary nor do they requireContractual Freedom. The new legal framework is need to be drafted by a notary nor do they requireboard of directors) court approval. The bylaws will be published in theContractual Freedom. Theflexibility and contractualbased on the principles of new legal framework is court approval. The bylaws will be published in the Belgian State Gazette.based on the parties setting up the OFP can structurefreedom : the principles of flexibility and contractual Belgianfor authorization. Prior to commencing Apply State Gazette.freedom: theto their own needs and wishesstructureit according parties setting up the OFP can provided Apply for authorisation. Prior OFP must apply for its pension fund activities, the to commencing itsit according to their own is complied with.the basic double structureneeds and wishes provided pension fund activities, the OFP must applycountry) IORP-authorization from the Belgian (home for thethe basic double structure is complied with. IORP-authorization from the Belgian (home country) competent authority, the FSMA. The request file to2.4. Comply with host country social competent authority, the CBFA. be downloaded to be be submitted to that end can The request file from and labour legislation2.4. Comply with host country social and submitted to that end can be downloaded from the the FSMA’s website.Respect oflegislation regulation. One or more so- labor local social CBFA’s website.most important documents to be Amongst theRespect of local socialmay be set up The partiescalled social committees regulation. to allow the Amongst to the FSMA are: documents to be remit- remitted the most importantinvolvedmeetthe pension plan of the host country’sOFP to in the requirements can set up one or ted to bylaws are : - The the CBFAmore committeeslegislations the OFP to meetpen-social and labour to enable applicable to the the - The financing plan the bylawsrequirements of the host country’s social and laborsion plans which it operates. - The statement of investment policy principles (SIP), - the financing planEmployee involvement. Social committees will pro- - A description of the pensionpolicy principles (SIP), - the statement of investment plans which the OFPve useful to involve different groups of pension plan - intends to administer a description of the pension plans which the OFP9 Voting rights can be determined in the bylaws. intends to administer10 Voting or certificate of incorporation bylaws.10 Bylawsrights can be determined in the(“statuten” – “statuts”).11 Bylaws or certificate of incorporation (“statuten” – “statuts”). 5
  6. 6. 12 - The management agreement 11 - the management agreement workers in Belgium. Hence, a multinational group workers in Belgium. Hence, a multinational group information regarding the sponsoring undertakings - Information regarding the sponsoring undertakings without a company basis in Belgium may decide to and the members of the operational bodies. and the members operational bodies. set up its pan-European or international pension fund in Belgium. Belgium. The FSMA decides upon the application within 3 CBFA decides Adequate liabilities covered by appropriate assets. Adequate liabilities covered appropriate months following remittance of the complete file. remittance of the complete file. In respect of the pension plans which it is operating, If the OFP envisages engaging in cross-border acti- the OFP envisages engaging in cross-border OFP must establish an adequate amount of the OFP must establish an adequate amount of liabi- activities within the EEA, the notification procedure12 vities within the EEA, the notification procedure13 fo- lities (i.e. (i.e. technical provisions) corresponding liabilities technical provisions) corresponding to the foreseen by the IORP Directivemust be complied with. reseen by the IORP Directive must be complied with. financial obligations which result from thefrom the to the financial obligations which result pension This notification can be introduced simultaneously This notification can be introduced simultaneously plans. These technical provisionsprovisions must be pension plans. These technical must be covered by with the authorization request. with the authorization request. appropriateappropriateinfra 3.3). infra 3.3). covered by assets (cf. assets (cf. Global management/netting. Different pension Global management/netting. Different pension plans 2.6. Conclusion plans may be managed globally15. However, the 2.6. Conclusion may be managed globally16. However, the OFP is free The legal framework sets forth simple principles for OFP is free to decide differently and organize a The legal framework sets forth simple principles for to decide differently and organize a ring-fencing on a the organization and the governance structure of the ring-fencing on a voluntary basis between different the organization and the governance structure of the voluntary basis between different pension plans. OFP and allows parties to adapt the organization and pension plans. OFP and allows parties to adapt the organization and Solidarity. The OFP can also determine itself the functioning to their specific situation. Solidarity. The OFP can also determine itself the functioning to their specific situation. degree of solidarity it wishes to apply amongst its degree of solidarity it wishes to apply amongst its sponsoring undertakings. These rules need to be sponsoring undertakings. These rules need to be 3. Prudential framework 3. Financial framework laid down in the so-called management agreement. laid down in the so-called management agreement. This agreement isis concluded between the OFP This agreement concluded between the OFP and 3.1. Conditions of operation 3.1 Conditions of operation the sponsoring undertakings and defines defines the and the sponsoring undertakings and the rules of CBFA14 When authorized by the FSMA13 the OFP may start the OFP’sthe OFP’s functioning. The management rules of functioning. The management agreement operating pension plans providing for retirement may allow compensation (“netting”) to be (“netting”) agreement may allow compensation organized benefits15. 14 without prejudice to the relevant applicable social and to be organized without prejudice to the relevant No Belgian activity is required. The Belgian law required. applicable social and labor legislations and provided labour legislations and provided the minimum vested does not require that one or more sponsoring un- not require that one or more sponsoring rights of the plan participants and plan participants the minimum vested rights of the beneficiaries are undertakings be located in Belgium, northat at least dertakings be located in Belgium, nor that at and beneficiaries are safeguarded. safeguarded. one pension plan which the OFP operates applies to one pension plan which the OFP operates applies to 3.2. Qualitative rules as opposed 3.2 Qualitative rules as opposed 12 If any. The management agreement is concluded between the OFP 11 If any. The management agreement is concluded between the OFP to quantitative rules to quantitative rules and its members sponsoring undertakings, determining its terms and The legal framework of the Belgian legislation The prudential framework ofthe new Belgian legisla- and its members sponsoring undertakings, determining its terms and conditions of operation and the rules of of its functioning.these rules are conditions of operation and the rules its functioning. If If these rules describes the rules which the OFP must respect in tion describes the rules which the OFP must respect are defined in bylaws, the law does not impose the conclusion of a mana- defined in the the bylaws, the law does not impose the conclusion of a relation to the technical provisions, the investments in relation to the technical provisions, the investments gement agreement.13 Notify the intention to accept sponsorship from a management agreement. and the management. The law sets qualitative rather and the management. The law sets qualitative rather 12 Notify theundertakingaccept sponsorship from EEA-member state (host sponsoring intention to established in another a sponsoring undertaking than quantitative rules, both for the determination of than quantitative rules, both for the determination of established innotification must be addressed to the home The notification country). The another EEA-member state (host country). country’s com- the technical provisions and for the investments. the technical provisions and for the investments. must be addressed to the Belgium : CBFA).competentmay also engagefor petent authorities (i.e. for home country’s The OFP authorities (i.e. in Belgium: FSMA). The OFP may also engage in cross-border activities cross-border activities outside the EEA. A simplified notification proce- 3.3 Technical provisions outside the EEA. A simplified notification procedure applies to that end. 3.3. Technical provisions if “fully” funded. In the Cross-border activities dure applies to that end. 13 In the event of cross-border activities, the OFP can start its activities Cross-border activitiesactivities,funded. In the event event of cross-border if “fully” the IORP Directive 14 In the event of cross-border activities, the OFP can start its activities after completing the cross-border activities notification procedure (i.e. of cross-border the technicalIORP Directiveare fully requires that activities, the provisions requires after completing the cross-border activities notification procedure (i.e. within 2 months for cross-border activities within the EEA following the that theat all times in respect of fully total range all funded technical provisions are the funded at of within 2 months for cross-border activities within the EEA following the principal 3 months FSMA-review and authorization period). times in plans operated total range of pension plans pension respect of the by the pension fund. principal 3 months CBFA-review and authorization period). 14 For non-Belgian pension plans (i.e. pension plans not applicable to operated butthe pension fund. funding requirement. Prudent by dynamic “fully” 15 For non-Belgian pension plans (i.e. pension plans not applicable to salaried and self-employed workers in Belgium), the Belgian legislation Prudent butlegislator has not adopted a quantitative The Belgian dynamic “fully” funding requirement. salaried and self-employed workers in Belgium), the Belgian legislation does not impose any restrictions or conditions for the content of the approach in this respect but requires a prudent The Belgian legislator has not adopted a quantitative does not impose any restrictions or conditions for the content of the pen- pension plans. Indeed, if the pension plan can be considered in the host approach in this respectbased on economical and calculation method, but requires a prudent calcu- sion plans. Indeed, if the pension plan can be considered in the host EEA- EEA-member state as a pension plan within the meaning of the IORP lation method, based on economical and actuarial as- member state as a pension plan within the meaning of the IORP Directive Directive (for non EEA-member states : the same definition of retirement 15 The Act only imposes as exceptions to this rule: the separate (for non EEA-member states : the same definition of retirement benefits 16 The Act only imposes as exceptions to this rule : the separate mana- benefits as the one used in the Directive), the OFP is authorized to operate management of pension plans applicable to salaried workers and of it. For one usedplans applicable to salaried authorized to operate it. For as the pension in the Directive), the OFP is workers and self-employed gement of pension plans applicable to salaried workersand of pension pension plans applicable to self-employed workers and the separate persons plans applicable to salaried workers and of “retirement benefits” pension working in Belgium, a different definition self-employed persons plans applicable to self-employed workers and the separate manage- management of pension plans which are subject to recovery measures is retained to better correspond definition of “retirement benefits” is retai- working in Belgium, a different to the Belgian situation. ment of pension the FSMA. are subject to recovery measures decided decided upon by plans which ned to better correspond to the Belgian situation. upon by the CBFA.6
  7. 7. actuarial assumptions which the be able to justifybesumptions which the OFP needs to OFP needs to . (SIP) and in accordance with the assumptions used to Derivates may be used provided they contribute inCoherent. Theable to justify. OFP must establish, as technical provi- the financing plan. reducing the investment risks or facilitate efficientsions, an amount sufficient establish, as technicalCoherent. The OFP must to guarantee the pension Derivatesmanagement. The key message is again: portfolio may be used provided they contribute tobenefits already in payment and the accrued pen-provisions, an amount sufficient to guarantee reducing the investment risksuse facilitate efficient if you can justify a different or of derivatives asthe pension benefits already ina payment valuationsion benefits in accordance with prudent and the reasonable and prudent, considering all elements, it portfolio management. The key message is again : ifaccrued The calculation basis ofaccordance with amethod. pension benefits in the technical provi- you can justify a be allowed. of derivatives as reaso- will in principle different useprudent valuation method.financing plan which thesions must form part of the The calculation basis nable and prudent, considering all elements, it will inof the technical provisions must form part of theOFP and the sponsoring undertakings agree upon. principle be allowed.financing plan which the OFP and the sponsoringDC. For defined contribution pension plans, the pro- 3.6 Financing planundertakings agree upon. to the sum of the vestedvisions to accrue are equal The OFP must establish a financing plan in 3.6. Financing planDC. For defined contributionthe plan rules and by thepension rights as defined by pension plans, the pro- agreement with all sponsoring undertakings which The OFP must establish a financing plan in agree-visions to accrue are equal to the sum of the vested commit themselves to execute it and to pay thehost countries’ social and labour legislation, if any. ment with all sponsoring undertakings which commitpension rights as defined by the plan rules and by contributions pursuant thereto.DB. In respect of pension plans providing for defined themselves to execute it and to pay the contributionsthe host countries’ social and labor legislation, if any. The financing plan determines the calculationbenefits, for a guaranteed return or for biometrical pursuant thereto.DB. In respect of pension plans providing for defined method of the contributions to be paid per pensionrisks17, the calculation method of the technical pro- The financing plan determines the calculationbenefits, for a guaranteed return or for biometrical plan to ensure appropriate funding of the pensionvisions may take into account prudent interest rates method of the contributions to be paid per pensionrisks16, the calculation method of the technical liabilities and of the solvency margin, as well as towhich may e.g. consider expected investment returns. plan to ensure appropriate funding of the pensionprovisions may take into account prudent interest cover all costs and expenses. It must be submittedFlexible. Themay e.g. considerits own rules and cal-rates which OFP may define expected investment liabilities and of the solvency margin, as well as to to the FSMA.returns. method provided they may be justified byculation cover all costs and expenses. It must be submitted OFPs which themselves (as opposed to thethe specificsFlexible. TheofOFP OFP and the its own rules and the may define pension plans ad- to the CBFA.undertakings) undertake to guarantee sponsoringministered. method provided they may a high degreecalculation The OFP thus disposes of be justified by OFPs which themselves as well as OFPs which cover the pension obligation (as opposed to the sponsoringof flexibility, of the only and the pension plans ad-the specificssubject OFP to a reasonable justification undertakings) undertake to guarantee the pension biometrical risks must establish a solvency marginbasis.ministered. The OFP thus disposes of a high degree obligation as wellDecree). which cover biometrical (defined by Royal as OFPsof flexibility,vested pension rights. The technical pro-Minimum = subject only to a reasonable justification risks must establish a solvency margin (defined bybasis. may not, however, be lower than the so-cal-visions Royal Decree).Minimum = vested pension rights18 defined by theled minimum vested pension rights. The technical 3.7 Statement of investment policy principles – SIP.provisions and, if not, however, hostlower than theplan rules may applicable, the be country’s social The Statement establish a written principles - in- 3.7. OFP must of investment policystatement ofSIPso-called minimum vested pension rights defined byand labour legislation. Provided this minimum is res- The OFP must establish a written – describing the vestment policy principles – SIP statement of in-the plan rules and, if applicable, the hostrespect ofpected, the law allows a long-term view in country’s vestment policy principles – SIP - describing risk investment risk measurement methods, the thesocial and labor legislation. Provided this minimumthe calculation method to be applied. investment risk measurement methods, assetrisk management processes and the strategic the al-is respected, the law allows a long-term view in location, considering the nature and the duration management processes and the strategic asset al-respect of the calculation method to be applied. of the pension liabilities. The OFP must review this3.4. Coverage of the technical provisions location, considering the nature and the duration of statement at least every 3 years.Prudent Investments. The technical provisions must the pension liabilities. The OFP must review this sta-3.4 Coverage of the technical provisionsbe covered by assets invested according to the “pru- tement at least every 3 years.Prudent Investments. The technical provisionsdent person” principle.must be covered by assets invested according to theThe only quantitative restriction which applies and“prudent person” principle.which is imposed by the IORP Directive relates to in-The only quantitative restriction which applies andwhich is imposed by the undertakings (limited tovestments in the sponsoring IORP Directive relatesto%investments in as a whole) or in the group (limi-5 of the portfolio the sponsoring undertakings(limited % of the the portfolio whole) of sponsoringted to 10to 5 % of portfolio as a as a whole) or in theundertakings.group (limited to 10 % of the portfolio as a whole) ofsponsoring undertakings.3.5. InvestmentsPrudent and Consistent. Assets are to be invested3.5 Investmentsprudently, in line with the investment policy as defi-Prudent and Consistent. Assets are to be investedned in the statement of investment policy principlesprudently, in line with the investment policy as defined17 Risks linked to death,in the statement ofdisability and longevity principles (SIP) investment policy18 The minimum vested pension rights of the pension plan participantsand in accordance with the assumptions used in theas determined by the applicable host country social and labour legisla-financing plan and a continuity test that proves thesolvability of the IORP in the long run.tion, if any. For pension plans applicable to salaried workers in Belgium,16 Risks linked to death, disability and longevity 6 % discount rate andthese are determined on the basis of a maximummortality tables MR/FR. 7
  8. 8. Balance sheet of the OFP : assets and liabilities Assets Liabilities General rules Technical provisions17 : • In line with the prudent person principle • Amount has to be sufficient to guarantee the pensions already • Valued at market value in payment and the accrued pension rights • Ensure the security, the quality, the liquidity and the profitability • In line with a prudent actuarial valuation • Only quantitative restriction: max 5 % in sponsoring under- • No quantitative rules but prudent choice of the economical and taking (max 10 % for a group) actuarial assumptions i.e. : • Discount rate has to be chosen taking into account : Investments for the coverage of the technical provisions : a)The return of the investments covering the technical • Invested in the best interest of the plan participants and plan provisions and the future investment returns and/or beneficiaries b)The market yields of the bonds of a Member State or other • In line with the nature and the duration of the expected future high-quality bonds ; retirement benefits • Biometric tables (life expectancy/mortality, disability) • Invested mainly on regulated markets adjusted to the plan participants and beneficiaries • Investments in derivative instruments if compliant with • The method and the assumptions remain in principle prudential objective or if justified otherwise unchanged from one financial year to another • Properly diversified • 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) Other investments • based on quantitative rules (may be reduced by using • Flexibility (except 5 % in sponsoring undertaking, 10% in group) (re)insurance of the risk coverage) • Alternative for the coverage of the so-called “solvency margin”: guaranteed claim on the employer Balance 3.8 Balance sheet of the OFP : assets and liabilities 3.8. Balance sheet of the OFP: assets and liabilities The pension plans and their participants areare a given The pension plans and their participants a given and Summarized under the form of a balance sheet, are the key drivers for the investments, the determination Summarized under the form of a balance sheet, these and are the key drivers for the investments, the deter- these main principles apply in relation to the assets of the technical provisions and the funding. main principles apply in relation to the assets and their mination of the technical provisions and the funding. and their investments as well as to the liabilities. investments as well as to the liabilities. Scheme 1. Prudent management model 3.9 Dynamics of the financing framework 3.9. Dynamics of the prudential financing The main goal of the Belgian prudential framework is framework the creation of a prudent and coherent management Investments model in goal of the Belgian prudential framework is The mainwhich the investments are in harmony with (Asset Mix) the characteristics of the and coherent management the creation of a prudent pension plans and the plan model in which the investments are in harmony with participants and in which the investments match the the characteristics of the pension plans and the plan underlying technical provisions. This model grants autonomy inand inmanagement policies, which are participants the which the investments match the Pension Plan & underlying technical provisions. This model grants to be prudent and solid. Moreover, this framework participants autonomy in the management policies, which are to allows for significant flexibility in the level of funding insofar as the technical provisions are fully covered. be prudent and solid. Moreover, this framework al- lows for significant flexibility in the level of funding Technical provision Funding + Explanatory technical provisions are fully covered. insofar as the comments on Scheme 1: “Solvency margin” • The characteristics of the pension plans and their participants highly Scheme 1 : the funding Explanatory comments on influence and the investments of thedetermine the technical • The characteristics and pension plans and their provisions. highly influence the funding and the in- participants vestments and determine the technical provisions. Key is : prudence and coherence8
  9. 9. Average expected return over 10 yearsThe choice of the demographic assumptions (e.g. lifeThe choice of the demographic assumptions (e.g.expectancy/mortality, retirement age…) must be inlife expectancy/mortality, retirement age…) must be 12in line with characteristics of of pension plans andline with thethe characteristicsthe the pension planstheir participants.and their participants. 10• The pension plans and their participants influence• The pension plans %the investments. 8•To simplify, it is advisable to invest in a conservative• To simplify, it is advisable R E T U R N 6way if the average remaining duration of the pensionway if the average remaining duration of the pension“liabilities” is short and vice versa.“liabilities” is short and vice versa. 4The use ofof ALM (Asset Liability Management)The use ALM (Asset Liability Management) tech-techniques allows aligning investment strategy withniques allows aligning the the investment strategy 2with the characteristics of the pension plan and the 0 % equities 25 % equities 75 % equitiesthe characteristics of the pension plan and the popu- 100 % bonds 75 % bonds 25 % bondspopulation (i.e. “duration”).lation (i.e. “duration”).• The investments influence the technical provisions.• The investments influence the technical provisions.The discount rate for the calculation of the technical Probability intervalsThe discount rate for the calculation of the technicalprovisions can be determined taking into account 5-25 % 25-50 % 50-75 % 75-95 %provisions can be determined taking into account thethe return of the underlying investments.return of the underlying investments. Scheme 3. Example of expected long-term return on the basis ofThis return may be set e.g. by reference to the 20following simplified approach: reference to the fol-This return may be set e.g. by ALM techniques18lowing simplified approach :- The returns which were achieved in the past- the returns which were achieved in the past (see- The expected long-term consensus return •Global impact on the funding. • Global impact on the funding.example in Scheme 2); this model must be (see exam-- the expected long-term consensus return adjusted to The Belgian legislation offers a highhigh degree of Belgian legislation offers a degree of flexi-the in Scheme 2) ; the relevantmust be adjusted to theple asset mix and this model financial markets. bility in setting the target funding level, provided the flexibility in setting the target funding level, providedasset mix and the relevant financial markets.A more sophisticated approach consists of defining technical provisions are covered. The OFP may consi- the technical provisions are covered. The OFP maythe return on the basis of the expected return patternA more sophisticated approach consists in defining the consider creating a cushion for e.g. absorbing short- der creating a cushion for e.g. absorbing short-termgeneratedthean ALM study (see example in pattern ge-return on by basis of the expected return Scheme 3). term return volatility. return volatility. nerated by an ALM study (see example in Scheme 3). • A pension fund with • A pension fund with an average remaining duration of 15 years may consider that a decrease / increase of 15 years may consider that a decrease / increase of 11%% the the expected return and thus in the of in in expected return and thus in the discount Scheme 2. Example expected long-term consensus return rate results respectively in roughly 15 roughly 15 % discount rate results respectively in% higher/lower provisions. provisions. higher/lower LT consensus expected return on equities (e.g. 4.5 % + 2.5 % = 7 %) 3.10 Asset management and custody 3.10 Asset management and custody The OFP may freely appoint investment managers The OFP may freely appoint investment managers for LT consensus equity risk premium (e.g. 2.5 %) for the management of its portfolio. the management of its portfolio. The OFP may also appoint a custodian established The OFP may also appoint a custodian established and authorized in any EEA member state.LT consensus expected return on fixed income investment and authorized in any EEA member state. (e.g. 2.0 % + 2.5 % = 4.5 %) As regards the underlying assets covering the As regards the underlying assets covering the tech- technical provisions, the Belgian legislation requires, nical rule, that they be deposited withinrequires, as as a provisions, the Belgian legislation the EEA. If LT consensus real growth (e.g. 2.5 %) a rule,certificatebe deposited within the EEA.must be not, a that they of an authorized institution If not, a certificate of an authorized institution must be provi- provided to justify non-EEA-deposits. LT consensus inflation ded to justify non-EEA-deposits. (e.g. 2.0 %) 3.11 Information to the pension plan participants Example of above-mentioned consensus model : and beneficiaries Asset mix : 0 % equities and 100 % bonds The Belgian legislation fully complies with the infor- • expected LT return = 4.5% mation obligations of the IORP Directive. It thus aims Asset mix : 25 % equities and 75 % bonds • expected LT return = 25% x 7.0 % + 75% x 4.5 % = 5.125% at creating more transparency. 17 For defined contribution pension plans, the provisions to accrue equal to Asset mix : 75 % equities and 25 % bonds 19 For definedsocial vested pension plans, the provisions to accrue equal the sum of the contribution reserves. • expected LT return = 75% x 7.0 % + 25% x 4.5 % = 6.375% to the sum of the socialillustrative and results from underlying economical 18 This scheme is only vested reserves. The model to be used can be freely determined by the OFP in agreement with the sponsoring undertakings, provided it meets the prudent person 20 This scheme is only illustrative and results from underlying economi- and financial assumptions criterion. cal and financial assumptions. 9
  10. 10. 3.11 pension plan participants receive annually a The Information to the pension plan is derived from not at arm’s length that the taxable This special tax regime implies transactions and benefitparticipants and beneficiaries of the OFP statement describing the situation which is tothe considered as taxable income. basis20 of be OFP only encompasses the following The detailing the current level of financing of their and Belgian legislation fully complies with the items: By only engaging in at arm’s length accrued individual pension entitlements. information obligations of the IORP Directive. It thus transactions, the OFP can avoid the addition aims at will also be made available to all plan partici- The SIP creating more transparency. • Abnormal or of this type of income. received benevolent advantages The pension plan participantsrepresentatives upon pants and beneficiaries or their receive annually a The wording “abnormal advantages” refers to the benefit statement describing the situation of the their request. Belgian legal terminology indicating income which • Non-deductible costs other than reduction in OFP and detailingcan be requested, aiming at provi- Other information the current level of financing of isvalue and capital loss on shares transactions. derived from not at arm’s length theirthe pension plan participants (and beneficiaries) ding accrued individual pension entitlements. But duly respecting the generally applicable Under Belgian tax law, certain costs made by the le- The accurate information regarding theirto all plan with SIP will also be made available benefits. gal entity are not fully tax deductible or can avoid fiscal at arm’s length principle, the OFPare not tax participants and beneficiaries or their representatives deductible, even if ittaxable onprofessional expenses. becoming concerns such income. upon their request. 3.12 Supervision Examples of such non deductible costs are : non-de- Other information can be requested, aiming at • Non-deductible expenses The CBFA oversees and supervises the OFP. ductible taxes, fines, non-deductible car expenses, providing the pension plan participants (and Under Belgian tax law, certain expenses made by the Within the CBFA, the specific division “Supervision of restaurant and representation costs, certain social beneficiaries) with accurate information regarding legal entity are not fully tax deductible whether or not supplementary pensions” is in charge of overseeing benefits granted to employees… their benefits. it concerns professional expenses. Examples of such the OFPs. This division consists of a high expertise le- The OFP should in principle be in a position non-deductible expenses are: non-deductible taxes, vel team of multilingual actuarial, legal, financial and 3.12 Supervision to avoid these costs. fines, non-deductible car expenses, restaurant and The FSMAexperts. The division is easily accessible and economic oversees and supervises the OFP. representation costs, certain social benefits granted applies an FSMA, the specific division • Secret commissions paid Within theopen discussion philosophy. “Supervision to employees… of supplementary pensions” is in charge of This part of the taxable basisdoes not havepayments Generally, an OFP is formed by 3.13 Conclusion overseeing the OFPs. This division consists of a for which the non-deductible expenses tax reporting formalities have not been highBelgian prudential framework sets qualitative ru- The expertise level team of multilingual actuarial, complied with. In other words : payments have been les and grants flexibility in the investment strategy, the legal, financial and economic experts. The division made but beneficiariespaid not been identified to • Secret commissions have is easily accessible and applies an open (by e.g. ta- determination of the technical provisions discussion the tax authorities. Since this non-reporting prevents This part of the taxable basis is formed by payments philosophy. king into account the expected investment return), the the which the proper tax taxing the formalities have for tax authorities from reporting beneficiary, the funding and the involvement of the sponsoring under- grantor is complied with. taxed. not been sanctioned and In other words: payments 3.13 Conclusion participants and beneficiaries, takings as well as plan have This tax can easily beneficiaries have not been been made but be avoided by complying The Belgianexample, social committees. qualitative by using, for prudential framework sets identified to the tax authorities. Sincesalaries, with the tax legislation on reporting of this non- rules and grants flexibility in the investment the tech- The qualitative rules for the determination of strategy, reporting prevents and commissions. from taxing fees the tax authorities the determination of the technical provisions (by e.g. nical provisions do not impose stringent demands on the beneficiary, the grantor is sanctioned and taxed. taking into account the expectedrespect of their fun- the sponsoring undertakings in investment return), By complying with the ordinary reporting Investments : “zero”- taxation. The OFP is not liable the funding and the involvement of the sponsoring ding and the level of assets to accrue within the OFP, obligations for salaries, fees and commissions, to capital gains tax. Likewise, (Belgian and foreign) di- undertakings as well as plan participants and an OFP can avoid becoming taxable on secret whereas the governance structure and compliance vidend income and interest income will not be taxed in beneficiaries, by using, for example, committees. commissions. with the prudent person rule guarantee a solid mana- the hands of the OFP. The qualitative rules for the determination of the gement securing the interests and pension rights of If Belgian withholding tax on income has been applied technical provisions do not impose prescriptive Investments: “zero”- taxation. the plan participants. upon payment of income to the OFP, this tax will be demands on the sponsoring undertakings in The OFP is not liable to capital gains tax. Likewise, credited against the corporation tax which may be respect of their funding and the level of assets to (Belgian and foreign) dividend income and interest 4. Tax regime accrue within the OFP, whereas the governance due (cf. supra).taxed in the hands ofthe tax remainder income is not In those cases, only the OFP. structure and compliance – “zero-taxation person 4.1 Corporate income tax with the prudent which has not been set off will be reimbursed. been If Belgian withholding tax on income has This rule on benefits” a solid management securing the guarantees applied upon payment of treatment where “gross in- results in a favourable tax income to the OFP, this tax interests subject to rights of the plan income tax. OFPs areand pensionBelgian corporate participants. come” mostly becomescorporation tax which may be is credited against the “net income”. This does not, however, imply that an OFP will be The (cf. supra) and any excess credit is reimbursable. due new income tax regime of the OFP will certainly 4. Tax an ordinary corporation. To the contrary, an taxed as regime lead to a higher flexibility and more treatment respect This results in a favorable tax choices in where OFP is taxed according to the special income tax re- of investment decisions.becomes “net income”. “gross income” mostly Whereas in the past, Belgian 4.1 Corporate to open-ended investments funds of gime applicable income tax – “zero-taxation pension funds often turned toof the OFP provides to The new income tax regime UCITS-investments a on profit” the UCITS-type21. higher flexibility and the investments and to avoid increase the return of more choices in respect of OFPs are subject to Belgian corporate income tax. This special tax regime implies that the taxable basis22 This does only encompasses the following items : be of the OFP not, however, imply that an OFP will 21 E.g. BEVEK / SICAV commonly used in Belgium. taxed as an ordinary corporation. On the contrary, 19 E.g. BEVEK / SICAV commonly used in Belgium. an OFP is taxed according benefits received 22 The applicable corporate tax rate isis 33.99 % (i.e. 33 % increased with% 20 The applicable corporate tax rate 33.99 % (i.e. 33 % increased with 3 • Abnormal or benevolent to the special income tax regime applicable to open-ended investments to the The wording “abnormal or benevolent” refers funds 3 % crisis surcharge), except for the secret commissionswhichwhich are crisis surcharge), except for the secret commissions paid paid are subject of the UCITS-type19. subject rate tax309 %. 309 %. The latter tax is deductible, whereas the to a tax to a of rate of Belgian legal terminology indicating income which ordinary corporate tax of 33.99 % is not.10
  11. 11. taxes, this will no longer be necessary since the OFP investment decisions. Whereas in the past, Belgian report, information to plan participants, reporting 4.4 Other indirect taxesitself benefits from the same favourable tax regime.pension funds often turned to UCITS-investments to to the competent authorities, the UCITS-taxes.VAT- The OFP itself is not subject to etc. If fees for Thisincrease the return of the investments and to avoid exempted services are charged by a Belgianare tax- means that the OFP’s direct investments service4.2. International taxation : benefiting from doubletaxes, this is no longer necessary since the OFP provider,,the exemption applies ordinarily. encounter exempt25 whereas the OFP may indirectlytaxation treatiesitself benefits from the same favorable tax regime. If the servicewhen it opts for participation in certain these taxes provider is located outside Belgium, theVery extensive double taxation treaty network. Since preliminary question as to thesubject to the tax. ser- investment funds which are localization of their4.2 subject to corporate income tax, an OFP will, init is International taxation: benefiting from vices for VAT-purposes stamp to be taxes are due fees No subscription tax or needs duty looked into. If on a double taxation treatiesgeneral, be able to claim the benefits of the double Belgian OFP. for VAT-exempted services, as defined, are chargedSince it is subject concluded by income tax,Belgiumtaxation treaties to corporate Belgium. an OFP to the OFP by a service provider established in theis, inone of theable toextensive double taxationdoublehas general, most claim the benefits of the treaty EU but outside Belgium, no VAT should, as a generaltaxation treaties concluded aby Belgium. Belgiumnetworks. This will result in higher “net” dividend rule, Conclusion EU-member state where the ser- 4.5. be due in thehas one of the most extensive double taxation treaty The OFP enjoys a favorable tax regime, both forincome of the Belgian OFP versus most other coun- vice provider is established, nor would VAT be due innetworks. This will result in a higher “net” dividend direct and indirect taxes.tries. Belgium26.income of the Belgian OFP in comparison to most Provided the OFP avoids being taxed on non-deductibleThis implies that, if the source state provides for theother countries. costs, and to the extent foreign investments areapplication of a domestic tax at source, an OFP will 4.4. Other indirect taxesThis implies that, if the source state provides for well-chosen or well-structured, the OFP can aim atin principle be able to claim treaty exemption or re- The OFP itself is not subject to the UCITS-taxes. Thisthe application of a domestic tax at source, an OFP an overall “zero-taxation”.duction of foreign withholding tax on dividends and means that the OFP’s direct investments are tax-will in principle be able to claim treaty exemption or Thus, Belgium can boast of particularlyinterest, provided the treaty conditions are met.reduction of foreign withholding tax on dividends and exempt27, whereas the OFP mayquite unparalleled in advantageous terms which are indirectly encounterBelgium recently the treaty conditions are met.interest, provided renewed its double taxation treaty these taxes when it opts for participation in certain other EEA-countries. 23Belgium USA . Theits double taxation treaty men-with the renewed Belgian OFP is explicitely with investment funds subject to the tax.the USA the 200621. so that no local withholding taxtioned in in treaty The Belgian OFP is explicitly No subscription tax or stamp duty taxes are due on awill be due on dividends of US resident companiesmentioned as eligible for treaty benefits (subject Belgian OFP. 5. Some datatoreceived by a Belgian conditions on ‘limitations ofif meeting the treaty OFP. However, this benefit isbenefits’) treaty conditions whichwithholding tax onsubject to resulting in zero US imply “limitation of 4.5. April 1st, 2011 there were six IORP from 3 On Conclusiondividends from US equity.benefits”. The OFP enjoys aEuropean Economic Area activedi- countries of the favourable tax regime, both for in Belgium. rect and indirect taxes.4.3 VAT4.3. VAT Provided the OFP avoids to located inon non-deduc- On the same date 9 OPFs be taxed Belgium haveExempt. The VAT exemption applicable to the to theExempt. The VAT exemption applicable mana- tible costs, and to the extent foreignEuropean Union. activities in 7 countries within the investments aremanagement of UCITS has been extended to thegement by UCITS has been extended to the manage- well-chosen or list of the different OFP can aim at The complete well-structured, the Pan Europeanmanagement of OFPs.ment by OFPs. an overall “zero-taxation”.Belgium can be consulted Pension Funds located inBased on case law of the European Court of Justice,Based on case law of the European Court of Justice, on the Thus, Belgium FSMA (www.fsma.be). website of the can boast of particularlythe exempted “management” activities22 shouldthe exempted “management” activities24 should en- advantageous characteristics quite unparalleledencompass:compass : in other EEA-countries.• The “financial management” of an OFP: services• the “financial management” of an OFP : servicesconsisting of the management of the financial andconsisting of the management of the financial andother assets of the OFP25 , as well as 23other assets of the OFP , as well as• The “administrative management”: services of• the “administrative management” : services of ad-administrative management for the operation ofthe OFP, to the extent thatfor the operation to andministrative management they are specific of theessential for the that they are establishment essen-OFP, to the extent OFPs, e.g.: specific to and of thetial for the OFPs, e.g. : establishment of the annualannual report, information to plan participants,reporting to the competent authorities, etc. If fees 21 Treaty of 27 November 2006for VAT- exempted services are charged by a Belgian 22 For the definition of “management activities” falling within the scope of24 Treaty of 27 November 2006 – still to be ratified.service provider, the exemption applies ordinarily. the VAT-exemption, guidance can be found in an extensive administrative24 For the definition of “management activities” falling within the scopeIf the service provider is located outside Belgium, the Circular (N° AOIF 22/2008 – ET 113.316) of June 17, 2008of the VAT-exemption, guidance can be found in case law, including casepreliminary question as to the localization of their 23 Asset management does not include actual financial depositarylaw of the European Court of Justice (ECJ), as well as in comments dea-services for VAT-purposes needs to be looked into. activities on the securities by the OFP.ling with the management of UCITS (although the latter cannot be trans-If fees for VAT-exempted services, as defined, are 24 Since the nature of the services rendered needs to be examinedcharged tosince the missionaand activities of both entities, OFPs andposed as such the OFP by service provider established on a case-by-case basis, and since national legislations must also beUCITS, differ). The notion “management” of the OFP is specific to VAT, 26 Since the nature of the services rendered needs to be examined on ain the EU but outside Belgium, no VAT should, as a considered in light of EU law to determine the localization of the service,which is an autonomous concept of EU-law. Consequently, definitions setgeneral rule, be due in the EU-member state where case-by-case basis, and since nationalrequire a separate analysis. each contract and fee for services will legislations must also be consi-the service provider is established, nor would VAT beforth for financial law purposes may not necessarily be decisive. dered in light ofBelgium, the yearly 0.01 localizationtax the service, each 25 As regards EU law to determine the % UCITS of (for shareclassesdue in Belgium24does not include actual financial depositary activities25 Asset management . contract andprofessional investors). intended for fee for services will require a separate analysis.on the securities by the OFP. 27 As regards Belgium, the yearly 0.08 % or 0.01 % UCITS tax 11
  12. 12. ContactsFederal Public Service Finance For more informationFiscal Department for Foreign Investments on other incentivesParliament Corner and reasons to investRue de la loi – Wetstraat 24 in Belgium, please visitB-1000 Brussels, Belgium www.business.belgium.beT : +32 257 938 66F : +32 257 951 12E : taxinvest@minfin.fed.bewww.minfin.fgov.be/cellalienFinancial Services and Markets AuthorityRue du Congrès - Congresstraat 12-14B-1000 Brussels, BelgiumT : +32 2 220 52 11F : +32 2 220 52 75E : pensions@fsma.bewww.fsma.beBelgian Association of Pension InstitutionsBoulevard A. Reyerslaan 80B-1030 Brussels, BelgiumT : +32 2 706 85 45F : +32 2 706 85 44E : info@pensionfunds.bewww.pensionfunds.bewww.business.belgium.beResponsible Editor: Françoise Audag- Dechamps, Federal Public Service Chancery of the Prime MinisterRue de la Loi/ Wetstraat 16 1000 Brussels D/2011/9737/1

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