9.1 The Development of Islamic Finance in Belgium
Provide an overview of the development of Islamic finance in Belgium and explain the latter’s policy towards this type of financing.
While Islamic finance is seen as an opportunity as the growth rate is potentially high with an important pool of new clients, and there is a political initiative in Belgium to create a friendly environment for Islamic finance, it seems that there is so far a limited demand, potentially because of low awareness of Islamic products, and a limited success of investment products (e.g. Islamic funds).
9.2 Regulatory and Tax Framework regarding islamic finance in Belgium
Explain the regulatory and tax framework for the provision of Islamic finance in Belgium, any regulatory or other obstacles and any expected legislative changes or developments. Discuss the issues, concerns and opportunities relating to the issuance of Sukuk in your jurisdiction.
The regulatory regime applicable to credit institutions in Belgium is mainly shaped by the European directives and regulations dealing with the banking and investment sector, as further completed by national legislation. All the provisions and requirements in force in Belgium relevant for credit institutions would apply to Islamic banks as no specific regime is provided, or indeed required, for this type of institution. There is no specific legal or tax framework for Islamic finance in Belgium. Rather, any offering of Islamic compliant banking services would have to comply with the Belgian legal framework.
9.3 Main Shari’a-compliant Products
Outline the main shariah-compliant products used in your jurisdiction.
A few years ago, a leading Belgian bank enabled Muslims to invest in made-to-order investment funds. These were shares that were carefully selected on the basis of Islamic sharia law. Companies that are linked to alcohol, tobacco, pork, financial services, weapons and entertainment are excluded. However, this fund reportedly only had limited success.
9.4 Claims of Sukuk Holders in Insolvency or Restructuring Proceedings
Please outline the how the claims of sukuk holders would be treated in insolvency or restructuring proceedings. Does Belgium perceive sukuk instruments as equity or debt instruments?
There is no specific regulatory framework for Shariah-compliant products. Since there are per se no sukuk instruments available in Belgium the issue of how the claims of sukuk holders would be treated in insolvency or restructuring proceedings is of a solely hypothetical nature. The classification of sukuk instruments as equity or debt instruments would depend on the specific form of the respective sukuk instrument.
9.5 Recent Notable Cases
Have there been any recent notable cases on jurisdictional issues, the applicability of shariah or the conflict of shariah and local law relevant to the banking and finance sector?
There have not been any notable cases on jurisdictional issues related to islamic finance in Belgium, the applicability of Shariah or the conflict of Shariah and local law relevant to the banking and finance sector.