Reclamation of tax upon conversion of bearer shares

In a decision of 9 October 2014, the European Court of Justice ruled that the tax on the conversion of bearer securities is contrary to European legislation. The Court ruled on this after a request for a preliminary ruling was referred to it by the Belgian Constitutional Court.   To recall: holders of bearer securities were obliged to convert their securities into registered securities or dematerialised securities at the latest on 31 December 2013. In order to accelerate this conversion process, the Belgian legislature on 28 December 2011 introduced a tax that had to be paid on the conversion. This tax went up as the deadline of 31 December 2013 approached. For example, for a conversion performed during the course of 2011, 1% had to be paid on the capital. During the course of 2012 this rate was already 2%.   In general there were two tax subjects. For securities that were recorded as dematerialised securities this was the financial institutions, while for registered securities, the issuing companies themselves were the tax subjects.   As a result of the decision of the European Court of Justice, the Belgian Constitutional Court will be obliged to nullify the Belgian law. However, tax subjects who paid in 2013 and in the last part of 2012 can already reclaim their payment now, since they still fall under the period of two years as of the day on which the legal claim arose (article 202/8 of the Code on Miscellaneous Levies and Taxes). Tax subjects who no longer fall within this two-year period will have to await the decision of the Constitutional Court in order to reclaim their payment.   However, holders of securities to whom the tax is re-billed cannot reclaim the tax themselves. They should contact the financial institution or issuing company of the securities in order to reach some kind of an arrangement.