Investing from Belgium
You can apply the Bogleheads® investment philosophy if you live in Belgium, but you must be aware of a few details. This page introduces a series of them. Please seek advice in the Bogleheads forum and contact a professional advisor before acting on them.
The general guidance given in Bogleheads® investing start-up kit for non-US investors, Investing from outside of the US and EU investing is applicable.
This page is not intended for US (tax) resident investors, as their situation is very specific.
Saving and investing in Belgium
The Belgian investor has access to:
- Regulated and unregulated saving accounts (with government protection until 100,000 Euro).[note 1]
- Various instruments that offer protection of the principal: Certificate of Deposit (kasbons), term accounts, government bonds (staatsleningen or Obligations Linéaires -Lineaire Obligaties; abbreviated OLO, in one of these nice Belgian bilingual abbreviations), and corporate bonds.
- Most Belgian retail banks offer access to several stock exchanges as most banks have an in-house broker.
- Alternatively the Belgian investor can use one of the (foreign) often online low-cost brokers such as Interactive Brokers (IB).
- Belgian brokers will ensure that you comply with the dividend withholding tax, tax on capital gains for bonds, taxation on the size of your investment accounts, taxation for funds that are not legal entities, and so on. If you select a foreign broker make sure you understand how you can remain compliant with the Belgian tax legislation, and what parts of the declarations and payments you will have to do yourself.
- Please note that the stock market in Belgium is very small, dominated by a few companies and not very diversified.[note 2]
- As Belgium is very integrated into the EU, investors seeking broader diversification can consider the EU as the home-market.
- Many people (72% in 2014) own their house in Belgium. The mortgage payments may provide some tax benefit depending on the calendar year during which the loan was registered and the region in which the borrower is domiciled.[note 3][note 4][note 5]
- Mutual funds and ETFs: In Belgium, an investor is currently able to buy index funds in the form of exchange-traded funds (ETFs) through a bank or broker, and there are companies offering index mutual funds. Please note that ETFs have a much smaller total expense ratio (TER) than the comparable Belgian mutual funds.
- Saving through insurance contracts:
- Tak-21 savings insurance (Tak-21 spaarverzekering): Life insurance insuring the combined premiums (after costs) and a guaranteed fixed return augmented with an optional bonus. There is government protection until 100,000 Euro.
- Tak-23 investment insurance (Tak-23 beleggingsverzekeringen): Life insurance investing in underlying mutual funds.
- Tak-26: Not an insurance, hence no premium tax of 2%, but no exception on tax on return.
- The tax on the insurance premium (2%), the high total expense ratio (TER) (typically larger then 1.3%), and entry fees (typically 3%, even going up to 6%, but all negotiable) and exit fees for these funds are very high compared to what is commonly considered acceptable for Bogleheads.
Taxation of investments in Belgium
Taxation of investments from outside of Belgium
Investors that hold funds that hold securities are taxed at multiple levels on dividends. Depending on the tax treaties (for example, US tax treaties or US estate taxes) there will be withholding taxes by the country of domicile of the asset, or the country of the domicile of the fund, or both.
This taxation will apply before the taxation of the domicile of the investor applies.
No credit for actual foreign taxes paid on other income is available under Belgian domestic law, but foreign taxes are deductible against taxable income. Belgian dividend withholding tax will be calculated against the amount of that remains after the foreign dividend tax is withheld.
As of 2020 there is no easily accessible way for individual investors to recuperate these foreign withholding taxes incurred by funds, this is especially true for funds domiciled in Ireland. This has been named international withholding tax leakage, often referred to as "dividend leakage". While this is highly technical fiscal material, investors should carefully consider the effect of foreign withholding tax on their investment because it lowers expected returns.
See International withholding tax and Estimating Level 1 dividend tax withholding paid by Ireland domiciled funds for some common figures on well known funds.
The dividend leakage through funds is likely lower then the taxation an individual investor would pay if investing outside of a fund.
Taxation of investments by Belgium
- 30% taxation on income (interest, dividends, royalties) from investments that are really received by the individual investor.
- The first 940 euro interest on regulated (gereglementeerde) savings accounts is exempt. Interest above that is taxed at 15%.[note 6]
- Except dividends that are reinvested within the fund. There is no dividend taxation on these for Belgian investors. As Belgium does not have any capital gains tax, there is no Belgian taxation on the growth of equity funds.
- Except life insurance that is not taxed on the return, if duration of the contract is longer then 8 years, or death-coverage is more than 130% of the capital.
- Apart a few other other exceptions such as real-estate collective investment trusts (bevaks),[note 7] social investments, and some other movable assets.
- The dividend withholding tax on the first 800 Euro of dividends can be recovered through the yearly tax.
- No taxation on capital gains, including the dividends immediately reinvested in accumulating funds.
- Except for capitalizing funds with more than 10% bonds; These funds do not distribute the interest received as dividends, they are reinvested in the fund. When selling the fund, the capital gains on bonds portion will be subject to 30% tax withholding.[note 8]
- No taxation on net-wealth..
- Belgium imposes an inheritance tax.[note 9]
- Tax on stock exchange transactions (0.12%, 0.35%, 1.32%).
Retirement investing in Belgium
In Belgium, retirement savings are often formulated according to a "four pillar" funding system. The first two pillars are pensions, the third pillar is tax-advantaged savings and the fourth pillar is a different kind of after-tax savings.
First and second pillar: pensions
- The first pillar consists of a state pension (rustpensioen) that provides a basic income from age 67, the level of which is linked to the statutory minimum wage and the amount of years that a person has contributed.
- The second pillar consists of the collective pension schemes (groepsverzekering) linked to the employer. A majority of the Belgian employees employed in the private work space have some level of collective pension. Previously these pensions were often 'defined benefit', now they are mostly 'defined contribution' by the employer. These have a guaranteed (accumulating) return of 1.75%,[note 10] with a possible participation in the gains. A limited number pension schemes allow to divert a portion of pre-tax earning to the scheme or allow an extra personal contribution.
The third pillar includes the tax advantaged investments. Two kinds of tax-advantaged saving exist: individual personal pension saving and long term saving. Contracts are typically until age 60 or 65.
- Individual pension saving
- Available via a bank or via life insurance. For insurance contracts, the underlying product is a Tak-21 or Tak-23 respectively.
- There is the choice to save in a life insurance with guaranteed return (pension saving insurance - pensioenspaarverzekering) or to save indirectly in a funds (pension saving funds - pensioenspaarfonds).
- The pensioenspaarverzekering guarantees fixed return augmented with an optional bonus. The return is announced each year.
- The returns of the pensioenspaarfonds are determined by the underlying funds. The typical choices are defensive, moderate, or aggressive. By law these funds are mixed funds with bonds and stocks (between 50 and 70% stocks), and they need invest the majority of theirs funds in European assets.
- Has a maximum contribution of max 990 or 1270 euro per year. The contributions result in a tax-credit of 30% if you invest the lower euro maximum, or 25% if you invest the higher amount (add local taxes to both) for the yearly investing. Withdrawals before the end of the contract are taxed at 33%.
- At age 60 the balance is subjected to a 8% 'liberating' tax.. No other taxation will happen on interest, dividends or capital gains. Contributions after age 60 still benefit from the tax credit, and are completely free from any final taxation.
- Long-term saving (Langetermijnsparen)
- Available through Tak-21 insurance contracts for people who do not have a mortgage payment deduction with a maximum of 2.390 euro.[note 11] Contribution and income limits are shown in the accompanying table.
- The contributions result in a tax-credit of 30%. Withdrawals before the end of the contract are taxed at 33%.
- At age 60 the balance is subjected to a liberating 10% tax. No other taxation will happen on interest, dividends or capital gains. Contributions after age 60 still benefit from the tax-credit, and are completely free from any final taxation.
Rebalancing is possible inside the third pillar but you needs to remain within the same "type" to avoid taxation. One switch per year is often allowed without costs.
Asset allocation for an investor from Belgium
As investor you need to decide your asset allocation.
Your chosen asset allocation together with the general evolution of the market will be the largest determinant of the results that you will get.
Stock asset allocation
When deciding on their stock allocation, every investor needs to make a number of decisions:
- What regional allocation will I adhere to?
- Do I want global diversification?
- Do I overweight one region?
- Do I overweight my region and introduce a home-bias?
Bogleheads choose an asset allocation that is widely diversified. Have a look at the main article to check if you need to deviate from a globally diversified equity allocation.
Stable assets asset allocation
Also known as "bonds" asset allocation or "fixed income" asset allocation. With the current bond returns you need to decide how much of your stable assets you invest in bond (funds) and how much you keep in high(ish) yield savings accounts or other cash like assets.
Within the stable assets allocation, the typical choices for the Belgian investor investor are:
- A diversified set of Euro bonds
- Global bonds, hedged to Euro
- Or, cash or other fixed income investment like saving account, term-accounts, Tak-21 insurance contract, ....
Or a combination of the above.
Belgian investors have access to many options for bonds: government bond funds (government bonds reduce credit risk); corporate, investment grade and high yield bond funds; and inflation-linked funds.
A Belgian investor can hold bonds that are euro-denominated, or bonds in other currencies that can be hedged back to Euro. Generally bonds in your own Euro currency or hedged back to Euro are advised if bonds are used for stability. This avoids currency volatility, which is a big part of short term volatility with bonds.
Funds are available across the duration spectrum. Lower duration means lower interest risk, but typically each risk reduction also reduces the expected return.
Which funds to invest in from Belgium
Traditional index funds are not widely available in Belgium. Investors in Belgium have a large choice on the ETFs to implement their chosen asset allocation..
The Index funds and ETFs outside of the US wiki page mentions useful aspects of ETFs to consider, such as: whether the fund distributes dividends; if it is synthetically or physically replicating; and the distinction between base currency and trading currency.
There are multiple options on the choice of where to acquire your funds. Almost every bank provides the opportunity to buy bank-owned mutual funds and give access to the major stock exchanges for access to ETFs. In addition, domestic and international online brokers provide their services in Belgium. Please make your choice taking into account the transaction fees as well as the cost that you are charged for your portfolio; either fixed fee or fee per position. Please take into account that these fees are subject to change and also depend on your 'relation' and contract with the broker.
If choosing a foreign broker make sure you "register" the account, and that you understand if you need to pay the taxes[note 12] yourself, or if the broker will withhold these for you.
Type of ETF useful for investing from Belgium
In general it is good to select widely-diversified Euro-denominated low-cost ETF from a reputable ETF provider.
Belgian investors can reduce tax and compliance costs for equity funds through non-registered accumulating ETFs domiciled in Ireland:
- Since January 2018 the transaction tax for funds "not registered" in Belgium, but still registered in a different country of the European Economic Region (EER), has been lowered to 0.12%, as opposed to 1.32% for funds "registered" in Belgium, and 0.35% if not registered in the EER.
- Accumulating ETF funds for equity funds, because Belgium taxes distributed dividends at 30% (but does not tax reinvested dividends, nor taxes capital gains if the fund is held longer than six months).
- Also for bond funds, because bond funds are subject to a 30% capital gains tax.[note 8]
- Domiciled in Ireland, because Ireland does not tax foreign investors on dividends or estates and provides access to a wide treaty network.
- Euro-denominated ETFs avoid the fees of currency exchange fees when buying or selling.
The site justETF is a place to start searches for non-US ETFs that satisfy your requirements.
Sample equity ETF index funds
Like many international investors, people investing from Belgium could consider approximating the global equity market.[note 14]
Example funds, using the following selection criteria: total market, all-cap, low costs, fund size is decent, full replication or a high amount of stocks relative to the index when using optimized sampling, accumulating:
|Fund||Type||Total Expense Ratio[note 15]||Approximate
(not float adjusted
|Vanguard FTSE All-World UCITS ETF USD Accumulation (EUR) (VWCE)||ETF||0.22%||88%||85% est||Follows the FTSE All-world index. 3300 stocks. |
Developed and emerging markets, no small cap
|iShares Core MSCI World UCITS ETF (IWDA/EUNL/SWDA)
or SPDR MSCI World UCITS ETF (SWRD)
|66%||75%||Follows the MSCI world index. 1600 stocks. |
Developed world large cap; no emerging, no small cap
|iShares Core MSCI Emerging Markets IMI UCITS ETF (EIMI/EMIM/IS3N/IEMA[note 16])||ETF||0.18%||22%||10%||Follows the MSCI Emerging market IMI. 2700 stocks.|
|iShares MSCI World Small Cap UCITS ETF (WSML/IUSN)
or SPDR® MSCI World Small Cap ETF (WDSC/ZPRS)
|12%||15%||Follows the MSCI World Small Cap Index of world mid and small cap stocks - 3200 stocks|
Depending on the coverage they desire, investors can choose to only invest in the developed markets; or they can add emerging markets, and they can also choose to add small caps.
- For the pure developed markets, IWDA and SWRD are the prime candidates for Belgian investors.
- For those wanting to include developed and emerging markets, VWCE can be a simple solution. IWDA or SWRD with EIMI is a good alternative.
- To include small caps, you can select the three funds that follow MSCI indexes. This avoids problems with differing index definitions, which could lead to investing twice in the same country, or not at all in other countries, or both:
- IWDA (iShares Core MSCI World) - excludes emerging Market and small caps
- EIMI - Emerging Market - excluding small cap - EM represent about 10% of the global capitalization.
- WSML (Ishares MSCI World Small Cap UCITS ETF) - world small-cap stocks - excluding emerging markets - according to MSCI definition, small caps are about 15% of the market. Using the Morningstar style box, it seems that 20% could be needed to correctly fill the small cap portion.
- Based on this, a division 15-20% WSML, 10-15% EIMI, 70-75% IWDA is a good approximation of the world market.
Sample EURO and European equity ETF index funds
To introduce a home bias or tilt to the region, a Belgian investor can use one or more of the following.
Funds to focus on Europe:
|Fund||Type||Total Expense Ratio[note 15]||Description|
|iShares MSCI Europe UCITS ETF (Accumulating) (IMAE)||ETF||0.33%||Follows the MSCI Europe Index|
|Vanguard European Stock UCITS ETF (Distributing) (VEUR)||ETF||0.12%||Follows the FTSE Developed Europe Index|
Equity investing in the Eurozone:
|Fund||Type||Total Expense Ratio[note 15]||Description|
|iShares MSCI EMU UCITS ETF (CEMU)||ETF||0.33%||Follows the MSCI EMU Index of large and mid cap Euro stocks|
|SPDR® MSCI EMU UCITS ETF (EMUE)||ETF||0.25%||Follows the MSCI EMU Index of large and mid cap Euro stocks|
Sample bond ETF index funds
As of 2018, with the current bond returns you need to decide how much of your stable assets you invest in bond (funds) and how much you keep in high(ish) yield savings accounts.
Belgian investors have access to many options for bond ETFs through one of the ETF exchanges: government bond funds (government bonds reduce credit risk); corporate, investment grade and high yield bond funds; and inflation-linked funds.
Funds can hold bonds that are euro-denominated or bonds in other currencies. Generally bonds in your own Euro currency or hedges to Euro are advised if bonds are used for protection. This avoids currency volatility, which is a big part of short term volatility with bonds.
Funds are available across the duration spectrum. Lower duration means lower interest risk, but typically each risk reduction also reduces the expected return.[table 1]
Please check the dividend and capital gains tax of the chosen fund.[note 8]
Some examples for global bond funds, from a Justetf.com search for world bonds accumulating with AUM > 100M€:
|Fund||Type||Total Expense Ratio[note 15]||Description|
|iShares Core Global Aggregate Bond UCITS ETF EUR Hedged (Acc) (EUNA/AGGH)||ETF||0.10%||The Bloomberg Barclays Global Aggregate Bond (EUR Hedged) index tracks bonds issued in emerging and developed markets worldwide. Rating: Investment Grade. Currency hedged to Euro (EUR).|
|Vanguard Global Aggregate Bond UCITS ETF EUR Hedged (accumulating VAGF/ distributing VAGE)||ETF||0.10%||The Bloomberg Barclays Global Aggregate Bond (EUR Hedged) index tracks bonds issued in emerging and developed markets worldwide. Rating: Investment Grade. Currency hedged to Euro (EUR).|
|iShares Global Govt Bond UCITS ETF EUR Hedged (distributing IGLE)||ETF||0.25%||FTSE G7 Government Bond Index. Currency hedged to Euro (EUR).|
|Xtrackers II Global Government Bond UCITS ETF EUR Hedged (accumulating DBZB)||ETF||0.25%||DEUTSCHE BANK Global Investment Grade Government EUR Hedged Index. Currency hedged to Euro (EUR).|
Examples for broad market, Europe bonds funds:
|Fund||Type||Total Expense Ratio[note 15]||Description|
|iShares Core Euro Government Bond UCITS ETF (IEGA)||ETF||0.09%||Tracks Barclays Euro Treasury Bond Index|
|Vanguard EUR Eurozone Government Bond UCITS ETF EUR Accumulation (VGEA/VETA)||ETF||0.07%||Tracks Bloomberg Barclays Euro Aggregate: Treasury Index|
|iShares Euro Aggregate Bond UCITS ETF (IEAG)||ETF||0.25%||Tracks Barclays Euro Aggregate Bond Index|
|iShares Euro Inflation Linked Government Bond UCITS ETF (IBCI)||ETF||0.25%||Tracks Barclays Euro Inflation Linked Government Bond Index|
|iShares Euro Government Bond 1-3yr UCITS ETF (IBGS)||ETF||0.20%||Tracks Barclays Euro Government Bond 1-3yr Term Index (other maturities are also available)|
- Deposits up to 100,000 euro (and some other investments) are backed by deposit insurance. See Fonds de Protection (Protection Fund).
- Benchmark indices of Belgian stocks include the BEL All-Share Index (BAS) and the BEL 20 Index of large cap stocks.
- As of 2015, the (federal) Belgian tax code allows a tax reduction for capital repayments of a mortgage loan concluded before 1 January 2005, with a maximum of EUR 2,290 (applicable together with the life insurance premiums). See: "Detailed description of deductions for individual income tax purposes in Belgium". PwC. Retrieved May 24, 2016.
- For loans concluded after 2005, investors are entitled to a tax break on interest payments, capital repayments and life insurance premiums (e.g. your loan protection insurance) paid in the framework of a home loan for your own and only home. The total deductible amount is limited depending on the region in which your property is located. See: Does my home loan entitle me to any tax benefits?.
- The deductibility of mortgage payments was repealed in 2017 in the Brussels region, and in 2020 for the region of Flanders. Wallonia continues to offer a form of deductibility. See: "Detailed description of deductions for home loan repayments in Belgium". wikifin.be. Retrieved December 25, 2020.
- In a regulated savings account the interest earned in 2015 up to 1,880 euros is exempt from taxes (withholding tax). The yield above 940 euros is taxed at 15 %.
Regulated savings accounts must meet certain conditions:
- The base rate can be changed daily;
- The fidelity premium paid amount is fixed for a year;
- The bank may not grant a rate higher than the regulated maximum interest rate.
Translated from Soorten spaarrekeningen (Types of savings accounts). For an explanation of base rates and fidelity premiums see this translated version of Wat levert een spaarrekening op? (What does a savings account produce?), viewed November 11, 2015.
- Bevak is an acronym for Beleggingsvennootschap met vast kapitaal. See Bevak (in Dutch), from wikipedia.
- Funds that hold more then 10% bonds and that do not fully distribute all interest received are are subject to a capital gains tax of 30%, with no credit for losses. As such it seems wiser to postpone the taxation to the moment of the sale where dividends might be offset with the losses in the fund price. Please note that to escape the capital gains tax, all of the dividends need to be distributed, and this needs to be explicitly mentioned in the documentation of the fund. Without this clear mention, the brokers will still withhold the capital gains tax even if the fund is distributing.
- Belgium's inheritance tax, droits de succession or successierechten, is collected at the federal level but distributed to the regional level. Information regarding the tax can be found at Successions in Belgium and Calcul des droits de succession, available in French and Dutch.
- The guaranteed return of collective pension schemes was 3.75% until the end of 2015. It is 1.75% since then.
- The tax deductible contributions under the long-term investing system are subject to a ceiling. The maximum is 15 percent of the first 1,600 euro of the taxpayer’s net earned income, plus 6 per cent of the balance of that income, up to an absolute maximum. If the saver is already receiving a tax allowance for repayment of the capital on a mortgage loan or for other life insurance premiums (excluding pension savings contributions), the euro maximum constitutes the total amount deductible for all these items together. See: Stinglhamber, P.; Zachary, M.-D.; Wuyts, G.; Valenduc, Ch. (December 2007). "The determinants of savings in the third pension pillar".
- For example, dividend withholding tax, transaction tax, and capital gains tax for bond funds.
- The tax treaty between Ireland and the US lowers the dividend withholding tax to 15% for Ireland-domiciled funds. Luxembourg domiciled funds pay the default 30%.
- As of 2015, developed market and US stock market had (non-float) capitalization comprising approximately 75% of the global market: emerging market capitalization comprised approximately 25% of the global market. Small Cap stocks make up approximately 10% of the market. Figures are not float adjusted and Korea is considered an emerging market consistent with MSCI indexes. Excluding so-called “control holdings” emerging markets represent 17% of the total. Control holdings do not trade in the market. An example of this would be a government that holds 50% of a company’s stock to maintain control of it, these shares will not trade freely and will not be available to investors. See Burton Malkiel's blog posting: "How Much Should We Invest in Emerging Markets?". Wealthfront. Retrieved July 15, 2016.
- Does not include buying and selling costs.
- IEMA is a valid Emerging Markets funds, if you do not need smallcaps.
- The following table provides annual returns for Barclays Euro bond indexes. Data source: Barclays Guides and Factsheets, available for download.
(View Google Spreadsheet in browser, then File --> Download as to download the file.)
Note: If the spreadsheet is blank, select a different sheet, then back to that sheet. The image will be refreshed.
- EU investing
- Investing from the Netherlands
- Investing from the UK
- Nonresident alien taxation
- Nonresident alien investors and Ireland domiciled ETFs
- "Eurostat-Data". Retrieved November 13, 2015.
- "Belgium - Income Tax". KPMG. Retrieved December 26, 2020.
No credit for actual foreign taxes paid on other income is available under Belgian domestic law, but foreign taxes are deductible against taxable income.
- "Detailed description of income determination for individual income tax purposes in Belgium". PwC. Retrieved November 8, 2015.
- "Income from movable assets] (in Dutch)".
- "Reclaim taxation of dividends". Retrieved July 6, 2020.
- "Taxes on saving and investing". Retrieved Feb 19, 2019.
- "Tax on stock exchange transactions". test-aankoop web site. Retrieved Feb 19, 2019.
- "Transaction tax for popular trackers". tijd.be web site. Retrieved Feb 19, 2019.
- "Belgian old age pension (Rustpensioen)". Bureau for Belgian Affairs (SVB).
- "Federale Overheidsdienst Financien, (in Dutch)". Retrieved May 24, 2016.
- Stinglhamber, P.; Zachary, M.-D.; Wuyts, G.; Valenduc, Ch. (December 2007). "The determinants of savings in the third pension pillar".
- "Emerging markets index". MSCI.com website. Retrieved April 17, 2021.
- "MSCI world small cap index" (PDF). MSCI.com website. Retrieved April 17, 2021.
- Bogleheads® forum post: , BeBH65. July 16, 2016
- Beurs van Brussel, Belgian stock exchange
- The determinants of savings in the third pension pillar, Belgian National Bank
- Jan Annaert; Frans Buelens; Marc Deloof (October 3, 2012). "Long Run Stock Returns: Evidence from Belgium 1838-2010". University of Antwerp. Available at SSRN.