Linkedin
Facebook
Email
more
On 23 October 2025, the Chamber finally approved the bill (initially submitted on 15 January 2025) addressing shortcomings in the tax transposition of the EU Mobility Directive. This new law (published in the Belgian Official Gazette on 24 November 2025) ensures that the simplified sister company merger can now proceed in a tax-neutral manner, just like other merger and demerger operations, provided the usual conditions are met. In addition, clarifications were made regarding reorganisations involving associations and foundations subject to corporate income tax, and regarding the tax-neutral partial demerger (“geruisloze partiële splitsing”).
BACKGROUND
New Reorganisation Forms Following the Implementation of the Mobility Directive
The transposition of the EU Mobility Directive into Belgian company law (Companies and Associations Code) by the Act of 25 May 2023 (Belgian Official Gazette, 6 June 2023 – hereinafter “Mobility Act”) introduced the following new reorganisation forms as from 16 June 2023:
- Simplified “sister company merger”: A merger between sister companies – having an identical shareholder structure – without the issue of new shares and without an auditor’s report (simplified, fast and cost-efficient procedure). Applicable both nationally and cross-border.
- Disproportionate partial demerger: A partial demerger in which shares of the demerged company may now also be allocated to the shareholders/partners of that company (greater flexibility in distributing activities among companies). Applicable both nationally and cross-border.
- Cross-border “demerger by separation”: A new form of demerger whereby part of the assets of a company are transferred to another company, and the newly issued shares of the acquiring company are allocated to the transferring company itself (not directly to its shareholders). This form differs from the existing cross-border transfer of a branch of activity since the transferred assets need not constitute a complete “business unit”.
Amendments to the Tax Definitions of Reorganisation Forms
In an attempt to align tax definitions with the new corporate law concepts introduced by the Mobility Directive, the Act of 28 December 2023 (Belgian Official Gazette, 29 December 2023) amended the tax definitions of mergers, (partial) demergers and equivalent operations. This Act equated the “simplified sister company merger” with a “merger by acquisition”.
However, the provisions governing tax neutrality (a.o. art. 211 ITC92) were not adjusted accordingly. As a result, uncertainty persisted regarding the treatment of tax-exempt reserves and capital reductions in this new form of merger, leading many companies to suspend planned restructurings.
THE REPAIR ACT
To remedy this mismatch, the recently approved bill was submitted on 15 January 2025.
Tax Neutrality of Simplified Sister Company Mergers
An exception is now provided to the usual requirement of issuing new shares, allowing simplified sister company mergers to also qualify for tax-neutral treatment, meaning:
- Tax-free reserves remain untaxed; and
- No reduction of the equity of the absorbed company in favour of the acquiring company is deemed to occur.
The law explicitly confirms that simplified sister company mergers can be tax neutral, provided the following general conditions are met:
- The operation must not have tax evasion or avoidance as its main or one of its main purposes (anti-abuse test, Art. 183bis ITC92);
- Only domestic or intra-European companies are involved in the transaction; and
- For outbound mergers, the transferred assets and tax-exempt reserves must remain allocated to a Belgian permanent establishment.
No Neutrality for “Indirect” Simplified Sister Company Mergers
Unlike company law (which allows mergers between companies “whose shares are held directly or indirectly by the same person”), the tax law is stricter: (“all shares in the merging companies must be held directly by one and the same person”).
Therefore, if the sister companies do not share the same direct shareholder(s) (e.g. through an intermediate holding company), the merger without share issuance will not qualify for tax neutrality.
The legislator justifies this stricter approach by referring to the complexity of indirect mergers involving intermediate holdings. In practice, this form of merger will likely remain a dead letter: companies with indirect common shareholders may still merge, but will generally opt for a regular sister merger (with share issuance) if they wish to benefit from tax neutrality.
“Roll-over” of Share Acquisition Value After a Tax-Neutral Simplified Sister Company Merger
The acquisition value of the shares in the merged company equals the sum of the original acquisition value of the shares in the acquiring company, and the acquisition value of the shares in each absorbed company. This implies that in a tax-neutral simplified sister company merger, no capital gain can be recognised.
This clarification on “acquisition value” will be particularly relevant in the context of:
- the proposed new capital gains tax (for individuals and companies), and
- determining the tax-paid capital in the context of a tax-exempt contribution of shares (Art. 184, fourth paragraph ITC92).
For taxable simplified sister mergers (e.g. failing the anti-abuse test, Art. 183bis ITC92), a tax step-up in the share acquisition value applies, equal to the fair market value at the time of the taxable transaction.
Holding Period for the Capital Gains Exemption (Corporate Income Tax)
T For the shareholder company, the law introduces a split acquisition value principle for assessing the minimum one-year holding period for applying the capital gains exemption (Art. 192 ITC92) on any future gain realised on shares in the merged company. This ensures that the direction of the simplified sister merger is irrelevant for this purpose.
Tip: If a sale of the shares in the merged company is envisaged shortly after the merger, it may be fiscally advantageous to opt for a regular sister merger (with share issuance and “roll-over” acquisition date of exchanged shares under tax neutrality), despite its more burdensome procedure.
Note, however, that the direction of the simplified sister merger can be decisive for: the DRD (Dividends Received Deduction) on future dividends from the merged company and the application of the VVPRbis regime for reduced withholding tax on dividends (to be assessed at the level of the acquiring company).
Reorganisations Involving Associations and Foundations Subject to Corporate Tax
The legislator also clarified the tax treatment of reorganisations involving associations or foundations that are subject to corporate income tax. The situation is comparable to that of simplified sister company mergers, since no shares are issued in such transactions either.
Amendments to the Code of Registration Duties
The law also explicitly provides that the exemption from contribution duty (Art. 117 Registration Duties Code) applies to parent–subsidiary mergers; simplified sister company mergers; and tax-neutral partial demergers, even though no new shares are issued in such cases.
This legally confirms prior Court of Cassation case law (9 March 2006) and administrative practice (Decision of 11 March 2024).
Retroactivity and Transitional Period
Originally, the legislator intended the amendment to apply retroactively as from 16 June 2023 (the date of entry into force of the Mobility Act). However, following a critical opinion by the Council of State, retroactivity was ultimately removed.
For sister company mergers executed between 16 June 2023 and prior to the official entry into force of the law on 25 November 2025 (day after publication in the Belgian Official Gazette), reliance may still be placed on the administrative decision of 11 March 2024, which had already recognised tax neutrality in practice.
A question remains as to how mergers will be treated that are legally completed thereafter but with tax retroactivity to a date prior to the law’s entry into force.
What Does This Mean for Your Business?
This law brings legal certainty and financial breathing space for companies wishing to simplify their group structures without tax barriers, particularly:
- Family businesses;
- Scale-ups;
- Non-profits (associations / foundations subject to corporate tax)
Less administration, lower costs, and more room for strategic decision-making.
If you would like to receive additional information on this matter or require tax assistance, the RSM Belgium Tax team is at your disposal via [email protected].
