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Crowdfunding platforms mobilise to activate retail savings

BeeBonds exemption from withholding tax on loans

As part of the Belgian economic recovery plan, FSMA-approved crowdlending platforms are applying for exemption from withholding tax on loans granted by individuals to small businesses.

Eighteen months after the start of the Covid crisis, the Federal Government is working on new measures to ensure the recovery of our country and our businesses while remaining budget neutral for the State.

Among the challenges identified, improving the solvency of companies weakened by the crisis to ensure a return to growth. Gathered by this challenge in line with their primary mission, the alternative financing platforms approved in Belgium, of which Beebonds is one, are calling on the Federal Government to legislate by exempting withholding tax on interest on any loan made by a private individual to a small business. This new legal framework would thus be an extension of the law of 15 August 2015 providing for exemption from withholding tax on interest on loans to start-ups via crowdfunding platforms.

When we talk about recovery, we also talk about the need for an injection of quasi-equity capital for our most vulnerable SMEs. The solvency crisis is still affecting too many small businesses, which are being refused bank credit. On the other side of the balance, savings continue to increase in the accounts of a great many individuals.

For alternative finance platforms authorised by FSMA, this is a clear signal that they need to stimulate transfers savings to the real economy while ensuring that the cost of borrowing will not be too expensive for SMEs.

This is why they are proposing that interest received by lenders should be exempt from withholding tax.

"We have seen that the current withholding tax exemption measure unfortunately helps very few start-up companies, which are mainly financed in the form of capital. We believe that extending the exemption will provide double leverage by encouraging greater mobilisation of public savings and stimulating even more businesses to use our platforms." (Joël DuysanCEO of BeeBonds). 

This proposal by the platforms is part ofa legal framework that already exists for start-ups and would be extended to the businesses that need it most today: small businesses, i.e. businesses that do not exceed more than one of the following three criteria: a workforce of fewer than 50 employees, an annual turnover excluding VAT of less than €9 million and a balance sheet total of no more than €4.5 million.

A neutral or even positive budgetary impact for the State

Dormant savings in bank accounts are not currently subject to withholding tax on the first €980 of interest earned by the account holder. With the rates charged by the banks (on average 0.11%), you therefore need to hold more than €900,000 in your account before seeing the interest taxed by a reduced withholding tax of 15%. In other words, the savings of Belgians currently generate very little revenue for the State.

On the other hand, a shift in savings towards the real economy should enable many companies to get back on the road to relaunching their activities, providing life to a whole economic fabric whose expenditure and income will be well taxed and will generate income for the State.

Based on the trends observed in the first 2 quarters of 2021, which saw an increase in the activity of platforms of more than 30%, such a measure should make it possible to inject almost €300 million in savings into our businesses over the next 2 years.