Recently the Belgian market saw the appearance of a new type of product whose reason for existence will make perfect sense when used by legal entities.
This is a contract for the capitalisation of a guaranteed return, which is increased by a potential bonus (beneficial interest).
Branch 26 products are different to Branch 21 product insurances in that there is no insured risk, no insured party and no beneficiary at expiry of the contract: it is pure capitalisation.
An appealing tax regime.
At the time of signing, the amounts paid under a Branch 26 contract are not subject to the 2% tax applicable to the Branch 21et 23 plans.
If the subscriber is a trading company, interest allocated to the contract constitutes each year a taxable gain.
At expiry of the contract and when withdrawals take place, interest from capitalisation (including potential bonuses) is subject to withholding tax of 30%.
Depending on the type of subscriber, withholding tax will either be chargeable to the taxes payable by the company for the year of the withdrawal, or will be in full discharge or will be final.