An Exit Cayman Tax

To balance the 2024 budget, the Belgian government has decided to tighten the "Cayman tax" again with an exit tax.

The Cayman Tax

The Cayman tax was introduced in 2015 to allow the Belgian tax authorities to look through "legal arrangements" (trusts, low-tax companies, certain insurance contracts, etc.) and tax the income (dividends, interest, etc.) of these legal arrangements in the hands of their founder. If the founder is a Belgian resident, he must declare the income of the legal arrangement as if he had received it directly. And when the founder dies, his legal heirs are deemed to be the new founders.

The Cayman tax regime has been amended several times since 2015, and now the government is taking its inspiration from a recent report of the Court of Audit. This report highlighted a number of shortcomings of the Cayman tax regime, and it made a number of recommendations to improve the Cayman Tax, including an exit tax.

To fully understand the importance of this measure, it is important to remember that the Cayman tax is only payable by a founder who is a Belgian resident. And that is where the Court of Audit saw a loophole : if the founder emigrates to a jurisdiction where the income of the legal arrangement is not taxed or is taxed at a lower tax rate, the founder can easily circumvent the Cayman tax without any tax. Of course, if the founder pretends that he is leaving Belgium, the move would not have any effect.

Exit Tax

The government plans to hit founders of legal arrangements who leave Belgium with an “exit tax”.

This would certainly be a minor revolution in Belgium. Unlike France, Belgium does not have an "exit tax". A wealthy Belgian individual who owns a whole range of legal arrangements can now, in principle, leave Belgium without having to pay taxes.

The details of this new "exit tax" are not known yet. It is likely that the tax will be due as if the legal arrangement was liquidated. The tax would be 30% on the reserves and the deferred capital gains of the legal arrangement. This rule already exists for a conversion of a legal arrangement.

If a founder has a trust with accumulated reserves of €5,000,000, the dividend would be €5,000,000 and the tax €1,500,000. This tax would be due immediately in particular if the founder leaves the European Economic Area for destinations such as Monaco, Israel, Switzerland, the United Arab Emirates …


An immediate taxation may not be possible in case of a move to another Member State of the European Economic Area. This might be contrary to the free movement of establishment.

It is also to be seen if the taxation would be allowed under the terms of the double tax treaty between Belgium and the country where the founder moves to.

One can anticipate that the Belgian tax authorities will focus on Belgian residents moving their domicile out of Belgium.


Belgium does not prevent Belgian residents from setting up legal arrangements like trusts, but it is getting more and more difficult to have a legal arrangement. There are complex tax obligations and an increased tax risk. It is almost impossible to hide the existence of a legal arrangement from the tax authorities. Due to the automatic exchange of information ("Common Reporting Standard" or CRS), they are aware of the existence of the legal arrangement even if the taxpayer has not declared it. Furthermore, since this year the tax administration has 10 years to audit the founder and charge the Cayman Tax.