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What is withholding tax on reserves, actually?
When a company makes a profit there are several options:
· leave the profit in the company
· distribute it as a dividend
· or build up reserves (such as liquidation reserves or via VVPRbis)
When you eventually distribute those reserves to yourself as a shareholder, you pay withholding tax: a tax on income from capital.
The standard rate is 30% but until now, systems such as VVPRbis and liquidation reserves made it possible to benefit from a reduced rate.
For VVPRbis, this typically amounts to 15% withholding tax. For liquidation reserves, you first pay an anticipatory levy of 10% when the reserve is created. At a later distribution, additional withholding tax is due.
Until recently, this additional levy amounted to 5% if the distribution took place after a waiting period of 5 years. Since the previous reform, it has also been possible to distribute after 3 years, but at an increased rate of 6.5%.
And that is exactly where a new change is now being introduced.
So what is changing exactly?
The new programme law increases the tax burden on these preferential regimes.
• For VVPRbis dividends, the rate increases from 15% to 18%.
• For certain liquidation reserves, the additional withholding tax on distribution after 3 years increases from 6.5% to 9.8%.
The aim is to align the effective tax rate of liquidation reserves with VVPRbis, namely around 18%.
It is important to note that 9.8% is not calculated on the original profit, but on the amount remaining after the earlier anticipatory levy of 10% has already been paid when the liquidation reserve is created.
The end result is a total effective tax burden of approximately 18%.
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When does this increase take effect?
The new rules will apply from 1 July 2026.
In concrete terms:
• Dividends distributed or made payable no later than 30 June 2026 can, in principle, still benefit from the current VVPRbis rate of 15%.
• Dividends distributed or made payable from 1 July 2026 onwards will fall under the new rate of 18%.
For many entrepreneurs, this raises an important question: “Should I distribute my reserves quickly?”
Does the increase apply to all reserves?
Not entirely. There are a few important nuances.
1. VVPRbis: no transitional regime
For VVPRbis, the rule is fairly clear: for dividends granted or made payable from 1 July 2026 onwards, the new rate of 18% will in principle apply.
Dividends distributed or made payable no later than 30 June 2026 can still fall under the 15% rate, provided that all VVPRbis conditions are met.
2. Liquidation reserves: distinction based on the year of creation
For liquidation reserves, the situation is more nuanced. The applicable regime depends on the financial year in which the liquidation reserve was created.
For liquidation reserves created in financial years ending on or before 30 December 2025, the following rates apply in principle:
• Distribution before a waiting period of 3 years: 20% withholding tax
• Distribution after 3 years, but before 5 years: 6.5% withholding tax
• Distribution after 5 years: 5% withholding tax
For liquidation reserves created in financial years ending on or after 31 December 2025, the following rates apply in principle:
• Distribution before a waiting period of 3 years: 30% withholding tax
• Distribution after 3 years: 9.8% withholding tax
The applicable regime therefore depends both on the financial year in which the reserve was created and on the moment it is distributed.
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Why is this tax being increased?
The measure is part of broader budgetary efforts by the government.
The objective is to:
· generate additional revenue
· simplify tax regimes
· reduce differences between systems
But for entrepreneurs, it mainly means less tax advantage when distributing dividends.
What is the impact on your net income?
A difference of 3% may seem small, but it can quickly add up.
Example:
· Dividend of €100,000
· At 15% → €15,000 tax
· At 18% → €18,000 tax
Difference: €3,000 less net income. For liquidation reserves, the impact mainly lies in the higher tax at the time of distribution after the waiting period.
For liquidation reserves, the calculation is slightly more technical.
Example:
• On €100 of profit, you first pay €9.09 in advance levy when the liquidation reserve is created.
• An additional levy is later applied to the remaining amount.
• Under the former system, the total tax burden was around 13.64%.
• Under the 6.5% regime, it was around 15%.
• Under the new regime, it rises towards 18%.
The tax benefit of liquidation reserves is therefore becoming significantly smaller than before.
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Should you distribute reserves now, while you can?
That depends on your situation. There is no one-size-fits-all answer.
Potentially interesting if:
· you have sufficient cash in your company
· you were planning to distribute a dividend anyway
· you fall under VVPRbis
In that case, you may still benefit from the lower rate
Be cautious if:
· your cash flow is under pressure
· you intend to sell your company in the longer term
· your current account balance is affected
A dividend distribution reduces your equity, which may have consequences, for example for a later sale value.
What about the capital gains tax?
An important nuance that is often forgotten is the link with capital gains tax.
In the event of a later sale of shares, the value of your company on 31 December 2025 may come into play as a reference point for the calculation of the capital gain.
Distributing a large amount of reserves today decreases the value of your company, which may have an impact on your long-term tax planning. This makes the decision more complex than simply ‘saving 3%’.
Are there any other points of attention?
Yes, and they are often underestimated.
1. Administration and formalities
Paying out a dividend is not a simple bank transfer. Depending on your company type, this may include:
· a decision by the general meeting
· a balance sheet test and/or liquidity test
· a correct declaration of withholding tax
2. Timing is crucial
If you still want to fall under the old rate, the distribution must be correctly and timely decided, granted or made payable. For VVPRbis, 30 June 2026 is an important date.
It is therefore essential that the decision is properly substantiated from both a legal and accounting perspective.
3. Payment of withholding tax
The withholding tax must be paid within 15 days after the dividend is granted or made payable.
4. New anti-abuse provision
The legislator also wants to prevent entrepreneurs from liquidating their company in order to distribute liquidation reserves in a tax-efficient way, only to restart the same activity afterwards through a new company.
In such situations, the tax authorities may still tax the dividends received as movable income in personal income tax, unless there are sufficient economic reasons or the activity is only restarted after a longer period.
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What does this mean for you in concrete terms?
This measure is not a minor technical change. It directly affects how you extract money from your company.
The key takeaway:
· dividend distributions become more expensive
· timing becomes more important
· strategic choices become more complex
How to proceed?
As an entrepreneur, now is the time to take a closer look at your situation.
Ask yourself the following questions:
• Do I have reserves that I want to distribute soon?
• Do I qualify for VVPRbis or do I have liquidation reserves?
• Can I still distribute at the current rate before 1 July 2026?
• In which financial year were my liquidation reserves created?
• What is the impact on my cash flow?
• Does this affect my long-term plans?
The right choice depends on your specific context.
We help you move forward
The increase in withholding tax may seem like a small adjustment but its impact can be significant, especially in terms of timing, cash flow and your future plans.
Don’t feel like working all of this out on your own? We’re happy to walk you through it so you can get the most out of your reserves, without any surprises afterwards.
