Belgium Introduces New Tax System for Carried Interest

Carried interest refers to the share of profits received by fund managers from the investment funds they work for, and in which they also invest.

Starting in 2025, Belgium has introduced a new tax regime for this type of income. Under the reform, carried interest is now treated as investment income, taxed at a special flat rate of 25%.

Scope of the New Regime

This 25% rate applies only to the portion of income that exceeds the return a regular investor would receive. In other words, the “extra” or disproportionate gain earned by the manager is subject to the carried interest regime.

The normal, proportionate return — equivalent to what an ordinary investor would earn — continues to be taxed (or exempt) under the general rules.

Example: Capital Gains on Shares

If the carried interest originates from a capital gain on shares, the gain must be divided into two parts:

• The extra (disproportionate) part is taxed at 25% under the carried interest regime and excluded from the new capital gains tax.

• The normal (proportionate) part remains subject to the general capital gains tax rules, depending on the applicable circumstances.
  

This reform clarifies the tax treatment of carried interest. It aligns Belgium more closely with international practices, while ensuring that only the excess remuneration linked to fund performance benefits from the special rate.