The annual tax on collective investment undertakings[1] was introduced in Belgium in July 1993. A number of Luxembourg investment funds complained to the Commission that the change in the tax, which took effect on 1 January 2004, constituted state aid for some CIUs in Belgium.
Under the old tax regime, only CIUs established in Belgium paid the annual tax of 0.06% on the net asset value of their units, whether marketed in Belgium or abroad. By contrast, CIUs established abroad who marketed units in Belgium were not subject to the tax.
Under the new regime, all CIUs, whether established in Belgium or abroad, are subject to the annual tax up to the value of units marketed by them in Belgium. Belgian CIUs no longer pay the tax on units marketed abroad whereas foreign CIUs are now liable for the tax in respect of units marketed by them in Belgium. The annual tax is now levied on transactions carried out in Belgium whereas previously it was levied on CIUs established in Belgium.
The complainants likened the non-taxation of Belgian CIUs as regards units marketed abroad as state aid to promote exports. In their view, non-taxation would favour Belgian CIUs marketing more of their units abroad over those marketing the bulk of their units in Belgium. The Commission disagreed, taking the view that the differential treatment alleged by the complainants existed only because they applied a different rationale to the situation, viz. that of the former annual tax regime or the current Luxembourg subscription tax regime (“taxe d’abonnement”). The rationale behind the two regimes is taxation on the basis of the place of establishment of the CIU. Under the new regime, the rationale is that of the place at which the marketing transaction is carried out.
The Commission considers that the new taxation criterion applied in assessing the annual tax is consistent with the determination voiced by the Belgian Government to introduce a level playing field for different investment products, notably units of Belgian and foreign CIUs, sold on the Belgian market.
In the Commission’s opinion, applying the rationale of the new regime, the exemption for both Belgian and foreign CIUs in respect of units marketed abroad stems from the basic rule of that regime, as does taxation of both Belgian and foreign CIUs as regards units marketed in Belgium. Accordingly, this exemption does not result from a selective exception to the basic rule and so does not constitute state aid.
[1] Articles 161 and 162 of the Inheritance Tax Code.
