Lend to young companies and benefit from an advantageous tax framework!

Normally, a withholding tax of 30% is levied on interests earned on investments in bonds. However, thanks to the startup plan measures, you can benefit from an exemption from this withholding tax, when you lend to young companies (subject to the conditions and limits described below).

What tax exemption applies?

To support young companies, a favorable tax framework has been introduced for certain loans granted to small startups via an FSMA approved crowdfunding platform (such as LITA.co).

By investing in small startups through a loan (such as bonds) on a crowdfunding platform, you can enjoy an exemption from withholding tax (usually 30%) on the interests during the first 4 years of the loan. The exemption is limited per taxpayer and per year to the interests on the first €15,000 euros* of new loans taken out within a 4-year period on LITA.co or on another recognised crowdfunding platform.

*The amount will be indexed annually: €15 630 in 2022.

Who is eligible?

The exemption applies only to private investors who take out this loan outside their professional activity. Entrepreneurs and company directors who borrow from their private sphere may also qualify for the interest exemption.

How to benefit from the withholding tax exemption?

If you invest on LITA.co in bonds issued by a company marked “eligible for withholding tax exemption”, you can, if you are eligible, enjoy the exemption from withholding tax on the interest received during the first 4 years. All you have to do when making your investment is to indicate that you wish to benefit from the withholding tax exemption.

If you do not do so, a withholding tax of 30% on the interest received will be levied at source.

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Which companies are eligible?

The borrower must qualify as a small company (as defined in Article 1:24, §§ 1 to 6 of the Code on companies and associations). Small companies are companies that on the balance sheet date of the last completed financial year, and for two consecutive financial years, do not exceed more than one of the following limits:

• annual average workforce: 50 employees;
• annual turnover, excluding VAT: €9,000,000;
• balance sheet total: €4,500,000;

If the company no longer meets these small company conditions during the four-year period, the exemption will no longer apply to interest relating to the current and any subsequent tax periods.

The borrower must also be a startup company. The company must have been registered with the Crossroads Bank for Enterprises or a similar register in another member state of the European Economic Area (EEA) for a maximum of 48 months.

What do I have to declare to the tax authorities?

Every year (during the first 4 years after your investment), you will receive an attestation from the company by the 31 March confirming that it still meets the criteria to qualify for the withholding tax exemption. This attestation will be made available on your online account and should be kept in case the tax authorities ask for it.

You must state in your annual personal tax return the number of loans you have taken out that qualify for the withholding tax exemption (taken out via LITA.co or another recognised crowdfunding platform).

You can find all the information in the followin circulaire.