The Stock Exchange Tax confirmed

The European Court of Justice decided on 30 January 2020 (Case C-725/18) that the Belgian stock exchange tax for transactions through overseas banks and brokers is not incompatible with the European rules on freedom of services and capital. That was a decision following a referral from the Belgian Constitutional Court. The latter has confirmed this decision and dismissed the claim of taxpayers that the stock exchange tax was not compatible with the Belgian constitutional principle of equality.


Until the end of 2016, the stock exchange tax was only due on transactions entered into or executed in Belgium through an intermediary (a bank or a stockbroker) established in Belgium.

As a result, the stock exchange tax could easily be avoided via an overseas bank or internet platform. In order to close this escape route and to create a level playing field between Belgian and foreign intermediaries, as of 1 January 2017 the scope was extended to transactions settled abroad.

Since 2017, the tax is also due on transactions through foreign intermediaries and trading platforms. Several actions for annulment were submitted to the Belgian Constitutional Court based on a possible infringement of the Belgian constitutional principle of equality and the freedoms guaranteed by the European Treaty.

For example, it would be considerably riskier, more expensive and more administratively burdensome for a Belgian who issues an order (to buy or to sell financial instruments), to use the services of an overseas intermediary. Investors would therefore be treated differently and more unfavourably. In addition, the measure would discourage investors from using the services of an overseas service provider.

In a first decision of 8 November 2018, the Constitutional Court decided to refer three preliminary questions to the European Court of Justice. The Constitutional Court asked for certainty about an alleged infringement of the free movement of services and capital (Art. 56 and 63 Treaty on the Functioning of the European Union).

In its judgment of 30 January 2020, the ECJ ruled that the regulation can indeed discourage investors from using overseas service providers. However, the ECJ considered this restriction to be justified by overriding reasons in the general interest, such as ensuring the efficient collection of the stock exchange tax, effective tax supervision and the prevention of the evasion of the stock exchange tax.

The decision of the Constitutional Court

The decision of the European Court of Justice has no direct effect in Belgium and on 4 June 2020, the Belgian Constitutional Court rendered its final decision in favour of the Belgian State (nr 79/2020).

On the European aspect of the pleas, the Court only refers to the decisions of the European Court of Justice and concludes that the claims were unfounded and that extending the scope of the stock exchange tax to overseas intermediaries is compatible with the European freedoms.

The other claim was that there was a violation of the Belgian constitutional principle of equality (articles 10, 11 and 172 of the Constitution). It is only if an investor works with an overseas intermediary that the investor is personally liable for the timely declaration and payment of the tax and that he runs the risk of substantial penalties. As a result, there would be an unjustifiable difference in treatment between Belgian issuers of orders depending on whether they use a Belgian or an overseas intermediary.

In line with the European Court of Justice, the Constitutional Court also found that there is a difference in treatment. However, given the purpose and the effect of the measure, this difference is based on an objective criterion, i.e. the place where the intermediary is established. According to the Court, this criterion is relevant because it is linked to the obligation for every Belgian resident to pay the stock exchange tax on stock exchange transactions.

Apart from creating additional budgetary revenue, the creation of a level playing field between a Belgian and an overseas intermediary was also an objective of extending the scope. The objective is also considered legitimate. Moreover, the legislation is reasonably justified. A foreign intermediary can indeed appoint a representative established in Belgium (as if it were a Belgian intermediary). The principal can therefore appoint a proxy to meet all his tax obligations. The possibility of outsourcing the formalities means that the administrative burden can be reduced.

In view of the above, the Constitutional Court dismisses the claim that there was an infringement of the principle of equality and rejects the action for annulment outright.


This is, for the time being, the end of the court case about the stock exchange tax. Belgian resident investors and issuers of orders must accept that the stock exchange tax haunts them worldwide, even for transactions that are entirely settled abroad.

However, not all practical and legal questions have been answered about the application of the stock exchange tax. The stock exchange tax is due on so-called mandatory corporate actions and there is a different rate for transactions involving investment funds and stocks depending on whether they have a European passport. Moreover, when a European Financial Transaction Tax is introduced at some stage in the future, the stock exchange tax may have to be (partially) cancelled and replaced.