Belgium adopts a new law on tax-neutral reorganisations

On 30 October 2025, Belgium adopted legislation amending the Income Tax Code and the Registration Duties Code to address gaps in the tax treatment of tax-neutral reorganisations carried out without the issuance of new shares, including simplified sister mergers and silent (de)mergers. The reform confirms full income tax neutrality for simplified sister mergers and ensures that (de)mergers completed without issuing new shares qualify for the full exemption from registration duties, thereby eliminating longstanding legal uncertainties for corporate restructurings.

Background 

Until recently, several aspects of the tax-neutral regime under Belgian income tax law could not be fully applied to simplified sister mergers, a restructuring form introduced following Belgium’s transposition of the EU Mobility Directive (see our earlier newsflash: Draft tax law aiming at amending the tax definitions of (de-)merger currently under discussion before Belgian Parliament - Bird & Bird). The difficulty arose because multiple tax provisions require either:

• that the restructuring operation be remunerated through the issuance of new shares, or
• in the case of a parent–subsidiary (de)merger, that the parent reconstitutes the absorbed company’s tax-exempt reserves.

Simplified sister mergers fall outside these categories, as they take place outside a parent-subsidiary relationship and do not involve the issuance of new shares.

A similar issue existed in relation to registration duties. While mergers and demergers generally qualify for full exemption under Article 117 of the Code of Registration Duties, the law formally conditioned this exemption on the issuance of new shares. Simplified sister mergers and silent (de) mergers were therefore technically excluded. 

Despite this, several administrative and judicial developments pointed towards a more flexible interpretation. In particular:

• The Ruling Commission, in a decision of 6 February 2024 (2023.0973), accepted that a simplified sister merger could – under specific circumstances – benefit from full tax neutrality, provided all other statutory conditions were met.
• The tax authorities recently confirmed that the exemption from registration duties applies to simplified sister mergers.
• For silent mergers (i.e., parent-subsidiary mergers completed without issuing new shares because the parent already holds 100% of the subsidiary), the Court of Cassation expressly confirmed, in its judgment of 9 March 2006 (C.04.0095.N), that the exemption under Article 117 of the Code of Registration Duties applies.

However, these favorable positions lacked explicit legislative support, leaving a degree of legal uncertainty. The Law of 30 October 2025 removes this ambiguity. The key changes are summarized below.

Key highlights

Full tax neutrality for simplified sister mergers

The provisions governing the tax-neutral regime are amended to expressly permit full tax neutrality for simplified sister mergers, provided the other statutory conditions for tax neutrality are met. In particular, the law confirms that tax-exempt reserves of the sister absorbed company remain untaxed and that no reduction of its capital is deemed to occur upon merger.

Comparable adjustments are introduced for cross-border mergers and reorganisations involving associations and foundations subject to corporate income tax.

It is worth noting that tax neutrality remains unavailable for simplified sister mergers between entities held through an indirect common shareholding. Although the preparatory works do not explicitly state the rationale, it is generally assumed that the legislator considered such operations too complex – both from a tax and accounting perspective – to be included within the neutral regime.

Acquisition value and holding period rules clarified

Because simplified sister mergers do not involve issuing new shares in the absorbing company to replace the cancelled shares of the absorbed company, the law introduces specific rules governing the determination of acquisition value and the calculation of the holding period for the existing shares in the absorbing entity:

A specific rule determines how to calculate the fiscal acquisition value of shares in a company that previously acted as the absorbing entity in a simplified sister merger.

To determine the taxable capital gain when individual or corporate shareholders sell shares in a company that previously absorbed an entity through a simplified sister merger, a “step-up” mechanism now applies to the acquisition value of those shares for tax purposes.

The fiscal acquisition value of such shares is calculated as the sum of (i) the original acquisition value of the shares in the absorbing company and (ii) the original acquisition value of the shares in the absorbed sister company. This rule aligns with the one already existing in Belgian accounting regulation.

This new rule prevents a simplified sister merger from artificially distorting the taxable amount of capital gains, thereby ensuring the tax neutrality of such operation.

A specific rule determines how the one-year holding period must be assessed when the shares relate to a company involved in a prior simplified sister merger.

The one-year holding period is a key condition for the capital gains exemption as it applies for corporate income tax. The law provides a detailed mechanism to determine from which date the shares of the absorbing company are deemed to have been held:

1. Portion of the value originating from the absorbed sister company:
   The part of the value of the absorbing company’s shares that corresponds to the acquisition value of the shares originally acquired in the absorbed sister company is deemed to have been acquired on the original acquisition date of the shares in the absorbed company.
2. Portion of the value originating from the absorbing sister company itself:
   The remaining part of the value of the absorbing company’s shares, which corresponds to the historical acquisition value of the shares originally acquired in the absorbing company, is deemed to have been acquired on the original acquisition date of the shares in the absorbing company.

This proportionate approach departs from the general rule, under which the new shares received in a tax-neutral merger are, for tax purposes, deemed to have been acquired on the date the shareholder originally acquired its former shares in the absorbed company

As a result, some taxpayers might be considering, in certain cases, opting for a standard merger involving the issuance of new shares rather than a simplified sister merger, to avoid the application of this proportional rule.

Registration duties exemption confirmed

Article 117 of the Code of Registration Duties is amended to explicitly confirm that the full exemption applies to:

• simplified sister mergers; and
• silent mergers and (partial) demergers.

This formalises the administrative and judicial positions previously taken.

No retroactive effect

The Law applies only as from 24 November 2025. Accordingly, the legal certainty created by the Law is effective solely from that date, leaving prior transactions governed by the earlier, less explicit framework.

Although retroactive effect back to 16 June 2023 (the date simplified sister mergers were introduced into Belgian law) was considered, the legislator ultimately opted against it, deeming retroactivity unnecessary in light of the favourable administrative practice that already existed.

Conclusions

The Law of 30 October 2025 delivers long-awaited clarity on the tax treatment of reorganisations carried out without issuing new shares. By aligning Belgian tax rules with established practice for simplified sister mergers and silent (de)mergers, the reform enhances legal certainty and removes technical hurdles that previously complicated or discouraged such transactions.

Although certain restrictions remain – particularly for indirect sister mergers – the revised framework offers businesses a more predictable and stable basis for planning domestic and cross-border restructurings.