- Pieter Dierckx - Leo Peeters
- crowdfunding , alternatieve financing platform , start-up PIVAK , start-up , tax shelter , FSMA
On 27 May 2016, the Federal Government approved the preliminary bill on various provisions in the Council of Ministers.Amongst others, this bill is intended to regulate “alternative funding services” and develop and permit the introduction of a financial framework for crowdfunding platforms (funding vehicles), start-up funds and private start-up PRIVAKs.
These structures will make it possible to reap the full benefit of the tax relief decided last July.
1. Mobilisation of private capital for the benefit of start-up companies
The Programme Act of 10 August 2015 includes various measures which permit private capital to be mobilised in favour of start-up companies (companies under four years old).
This relates to:
- tax relief for tax payers who purchase new shares in such start-up companies (“tax shelter”), and also
- exemption from withholding tax on the interest on loans provided to such companies, if these investments are made via a crowdfunding platform under Belgian law or under the law of a different Member State of the European Economic Area (EEA).
These tax benefits assume the establishment of the status of the crowdfunding platform.In this framework, private individuals may benefit from tax relief on personal income tax amounting to 30 or 45 % (of the invested capital), if they invest directly in the capital of start-up companies. A company may raise a maximum of 250,000 Euros in this manner, over the period of its existence. The investor may invest 100,000 EUR per annum. The tax shelter applies to investments made from 1 July 2015.
Tax relief is currently not possible for investments via a crowdfunding platform or start-up fund. A number of formalities relating to the start-up fund, and the recognition of alternative funding platforms still required clarification. So enforcement of the measures provided by the aforesaid Programme Act entailed the Federal Government taking the necessary steps to place these crowdfunding platforms under the supervision of the Financial Services and Markets Authority (FSMA).
2. Introduction of funding platforms and start-up funds in the framework of tax relief
The draft texts, which were approved on 27 May 2016 by the Federal Government in the Council of Ministers, now permit the introduction of platforms which enable investors to benefit from tax relief.In particular, the bill relates to the following aspects:
- The creation of the status of “alternative funding platform”, which implies that in addition to the direct investment which already gives rise to the tax relief today, the private person will be able to invest in a start-up company via a platform.
- The creation of a “start-up fund”. According to this, the investor will be able to acquire shares from a fund that will invest in start-up companies. This structure has the advantage for investors that the risks are spread, because the fund will invest in a portfolio of companies, not one company.
3. What types of investments does this concern?
In concrete terms, henceforth (after the Act comes into force), four forms of investment will benefit from the tax relief, namely:
- Direct investment in a target company (in shares, already applicable since 1 July 2015);
- Investment in a target company via platform-based commercialisation (here the investor is a direct shareholder of the company);
- Investment in an alternative investment vehicle which then invests in a target company (“one to one”). – This is a platform-based investment (here the investor is not a shareholder of the company, the “vehicle” remains the shareholder);
- Investment in a start-up fund that invests in several companies (various different projects are grouped together thereby spreading the risk).
4. Tax relief – in practical termsThe tax reduction applies:
- to a direct investment: in the income year in which the investment was made;
- to an investment in a start-up fund: in the income year in which the fund made its
Please note that the tax relief is non-reimbursable and non-transferrable, and neither is it a tax credit, such as, for instance, the Win-Win Loan.
5. No final texts available as yet
At this time, there is only a government bill, which is still subject to amendment. As soon as more definitive texts become available, we will explore the new regulatory (financial) framework for crowdfunding platforms (funding vehicles), start-up funds and private start-up PRIVAKs in more depth.