Entrepreneurs Up2Date - DBI deduction under pressure: why the DBI fund is becoming more attractive to companies
The Definitief Belaste Inkomsten (DBI) system has been a cornerstone of tax neutrality between companies for decades. The principle is simple and fair: when a company pays corporate income tax on its profits, these profits should not be taxed a second time when they are transferred to another company via a dividend. The DBI deduction was therefore introduced to avoid double economic taxation and thus enable an efficient capital structure within corporate groups.
This principle was established in Belgium in the 1960s and later refined. At the European level, it was also considered fundamental that dividends within a group should not be taxed again. The Parent-Subsidiary Directive of 1990 established this principle at the European level, which has since ensured greater uniformity between member states.
Stricter conditions over time
Over the years, legislators have tightened the rules. This has resulted in three essential conditions that an investment must meet in order to be eligible for the DBI deduction:
1. Participation requirement: hold at least 10% of the shares or invest at least €2,500,000.
2. Permanence condition: hold the shares for at least one year.
3. Valuation condition: the target company's profits must have been subject to normal taxation, comparable to the Belgian corporate income tax rate.
These conditions appear straightforward, but in practice they have a significant impact on the way companies invest, especially when it comes to listed shares.
New condition for "large" companies from the 2026 tax year onwards
From the 2026 tax year onwards, large companies will have an additional obligation: if they do not acquire 10% of the shares but invest at least €2,500,000, they must record this participation as a financial fixed asset. This accounting classification requires a lasting economic link with the target company.
New reality from 2026 Large companies must demonstrate that they have a long-term economic relationship with the target company for investments of €2.5 million or more. This poses a major obstacle to stock market investments.
According to Article 1:24 of the Companies and Associations Code, a company is considered "large" if it meets at least two of the following criteria:
- annual average number of employees: 50
- annual net turnover (excluding VAT): €11,250,000
- balance sheet total: €6,000,000
For a significant proportion of Belgian companies, this means that direct DBI investment in individual shares becomes difficult to achieve.
Investing company funds in individual stocks is becoming more challenging
Any company wishing to invest directly in shares while retaining the DBI deduction must either purchase 10% of the company—which is practically impossible for large listed companies—or invest at least €2.5 million in a single share. For most SMEs, this is far beyond their reach. In addition, large companies must now also demonstrate that their investment is part of a sustainable economic relationship. In the case of listed companies, where often only a small fractional interest is held, this is virtually impossible to demonstrate.
The DBI-bevek remains attractive and relevant
Because direct DBI investments have become so strict, the legislator created an alternative that is workable for companies: the DBI bevek. This fund invests in shares of companies that meet the DBI conditions and distributes at least 90% of the income received and capital gains realized each year. As a result, the dividend received by the company is, in principle, eligible for DBI deduction.
A DBI bevek does not require a minimum investment of €2.5 million, a 10% participation, or a mandatory holding period of one year. This means that the fund offers both flexibility and tax efficiency. Of course, the stock market risk remains, but that applies to any equity investment; a longer investment horizon remains desirable.
Individual shares vs. DBI-bevek
Individual shares - Participation requirement (10% or €2.5 million) - Burden of proof of sustainable economic link (for large companies) - One-year holding period required - Risk of non-compliant participations
DBI-bevek - No participation requirement - No minimum investment - No holding period - DBI-compliant investment policy
New changes at the DBI-bevek
In addition to the restrictions on individual shares, some rules for DBI-beveks are also changing. For example, in order to apply the DBI deduction from 2025 onwards, a company must grant a director a gross remuneration of at least €45,000, and from 2026 onwards, at least €50,000. Fixed benefits of any kind may not exceed 20% of that remuneration.
Another change concerns the new capital gains tax of 5% that is applied when units of a DBI-bekef are sold. It is noteworthy that a repurchase of units by the fund is not classified as a sale, but as a dividend distribution—and therefore may still be eligible for DBI deduction.
Investing in equity funds – risk and return
A DBI bevek is and remains an equity fund. Market risk is therefore unavoidable. In the short term, fluctuations can be significant; on average, once every four to five years, the stock markets close the year with a negative return.
In the longer term, however, the financial markets paint a very different picture. Historically, shares have delivered a positive return in around three out of four years, and the long-term return is often two to three times higher than that of bonds or savings products. What's more, the returns on the latter are taxed at the corporate tax rate. So, if you're investing company funds and have enough patience, you might be better off with a DBI-bevek.
Protection against inflation
Inflation remains a creeping threat to purchasing power. Money that remains in a checking or savings account for years inevitably loses value. Under normal circumstances, inflation is around 2% per year, but extreme situations—such as in 2022, when energy prices skyrocketed—can temporarily quadruple this figure. Because companies generally adjust their prices in line with inflation, shares offer solid protection against currency devaluation in the long term.
Finally
For companies that want to invest in a tax-efficient manner while seeking sufficient diversification and flexibility, the DBI-bevek remains a particularly attractive instrument. It combines tax advantages with professional diversification, without the onerous participation conditions associated with individual shares.
Value Square offers a wide range of DBI funds. We would be happy to provide you with more information during a personal consultation.
