Notional interest deduction
Question discussed at the 2008 general meeting
The law of 22 June 2005 introducing a tax allowance for risk capital permits companies established in Belgium to deduct from their tax base a notional amount of interest on their risk capital. The Bank falls within the scope of this law and makes use of this tax concession.
Since 2006, the Bank has therefore deducted from its taxable profits a percentage of its adjusted equity capital. It estimates the resulting tax saving at 17 million euro for the 2007 financial year.
The gold stocks held by the Bank are not an “item held as an investment which, by its nature, is not normally destined to produce taxable regular income” (cf. Art. 205ter, § 4, 2°, C.I.R.). On the contrary, it is an asset allocated to the central bank activities pursued by the Bank (management of Belgium’s official foreign exchange reserves) which also generates proceeds. Consequently, the Bank did not deduct the value of the gold stocks from its equity capital in order to determine the notional interest deduction.
According to an article published in a Belgian daily paper on 4 March 2008, a member of the federal parliament succeeded in obtaining the Bank’s annual accounts and the estimate of the tax saving resulting from the notional interest deduction. This information was disclosed in breach of the discretion obligation by a person who had access to it in the course of his or her duties, whereas, in the case of the annual accounts, publication was scheduled for 14 March 2008.
On that same day, 4 March, in order to ensure the maximum equality of treatment for the shareholders, the Bank issued a press release confirming the estimate of the tax saving resulting from the notional interest deduction, and published its annual accounts.