4. Tax
4.1 Withholding Tax
Are payments of principal, interest or other payments made to lenders subject to withholding tax?
The attribution or payment of interest that is sourced in Belgium is in principle subject to withholding tax at a rate of 30%. Belgian domestic law provides for numerous exemptions depending on the type of debt as well as the status of the lender and the creditor. If no such exemption applies, a reduced rate or exemption may be available under one of Belgium’s many double taxation treaties.
There is in principle no withholding tax due on the payment of principal and other payments, such as e.g. a guarantee payment.
4.2 Other Taxes, Duties, Charges or Tax Considerations
What other taxes, duties, charges or tax considerations are relevant to lenders making loans to (or taking security and guarantees from) entities incorporated in your jurisdiction?
The establishment of a mortgage on an immovable good located in Belgium is subject to a registration duty of 1% and an inscription duty of 0,3%. The establishment of a mortgage on a ship that is not designated for sea transport triggers a 0,50% registration duty.
The deeds related to loans or credits granted by banks are subject to a documentary right of 0,15 EUR per original copy.
4.3 Usury Laws
Are there usury laws or other rules limiting the amount of interest that can be charged?
The legislator prohibits usury, i.e. an abnormal high interest rate. Usury rules apply very rarely. Applicable interest rates tend to be quite high and can be re-characterised as a prohibited private penalty. In that case, courts can reduce the applicable rate to a more reasonable level. According to case law, interest rates up to 20 % have not been considered abnormal (please note however that in the current low interest rate environment, courts could consider lower interest rates as being usury).