Economy and Banking Sector of Belgium

Belgium is a founding member of the European Union located in Western Europe. The Belgian economy is strongly globalized.

The gross value added (GVA) is generated by manufacturing industry, energy and water; construction; market services and non-market services.

The banking sector of Belgium is highly influenced by the neighbouring countries: Germany, France, Luxembourg and the Netherlands. Of the total 103 banks operating in Belgium 41 banks are branches of the banks from these countries.

Location Western Europe
Population (2016)11 289 853 ↑ (0.00%)
EU Status member since 1952
Economy
National Currency EUR (Euro) since 1 January 1999
GDP 
    Nominal GDP (2015)409.8 bln EUR ↑ (+0.02%)
    Nominal GDP per Capita (2015)36 500 EUR ↑ (+0.01%)
    Real GDP Growth (2015)1.4 % ↑ (2014: 1.0 %)
Inflation Rate 
    CPI, MoM (Sep 2016)-0.4 % ↓ (Aug 2016: 1.3 %)
    CPI, YoY (Sep 2016)1.8 % ↓ (Aug 2016: 2.0 %)
    CPI, Year Average (2015)0.6 % ↑ (2014: 0.5 %)
Unemployment Rate (2015)8.5 % no change(unchanged)
Government Bond Yield (Sep 2016)0.18 % ↑ (Aug 2016: 0.15 %)
Credit Ratings (as of Sep 2016)
    FitchAA very high credit quality, outlook negative
    Moody'sAa3 high grade, outlook stable
    S&PAA high grade
Taxation
Withholding Tax 0.0 - 25.0%
Double Taxation Agreements 100 signed agreements
Information Exchange 
    Exchange on Request 17 signed agreements
    Automatic Exchange starts in September 2017
FATCA IGA in effect since 23 April 2014, Model 1
Banking Sector
Financial Market Development 4.7 (max 7.0) rank: 29th out of 138 countries
    Banks' Soundness 5.2 (max 7.0) rank: 57th out of 138 countries
Banking Industry Country Risk 2(1 - lowest risk, 10 - highest risk)
    Economy Risk 2
    Industry Risk 3
Deposit Guarantee Scheme 
    Maximum Protected Amount 100 000 EUR
Country Ceiling for Deposits 
    Local Currency (Euro)Aaa prime
    Foreign CurrencyAaa prime
Deposit Rates (Aug 2016, EUR)0.13 % ↓ (Jul 2016: 0.18 %)
Banking Sector Structure 
    Number of Banks97
    Recent Changes (2015) new banks: 1, closed banks: 4
    Consolidated Assets (2015) 970.29 bln EUR ↓ (-2.62%)
Major Banks
 KBC Bank  BNP Paribas
 Belfius Bank  ING Group
 List of Banks in Belgium

Belgian Economy

National Currency

Belgium joined the Euro Area on 1 January 1999.

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GDP

According to Eurostat, nominal GDP of Belgium in 2015 was 409.8 bln EUR.

Belgium underperforms the European Union in terms of real GDP growth with the average annual differential coming to -0.3% over the past 10 years (2005 - 2015). In 2015 real GDP growth was 1.4% which was below the Euro Area average (1.6%) and below the European Union average (1.9%). Real GDP growth in 2016 - 2021 are IMF's estimates.

Real GDP Growth in Belgium.
Chart 1. Real GDP Growth in Belgium. Source: Eurostat, International Monetary Fund.

In 2015, nominal GDP per capita in Belgium was 36 500 EUR.

Belgium has an above-average level of wealth in terms of per-capita GDP at purchasing power parity (PPP); this economic welfare indicator has, on average, exceeded that of the European Union by 12.8% over the past 10 years (2005 - 2015). GDP per capita at PPP in 2016 - 2021 are IMF's estimates.

GDP Per Capita at Purchasing Power Parity in  Belgium; European Union = 100.
Chart 2. GDP Per Capita at Purchasing Power Parity in Belgium; European Union = 100.
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Inflation Rate

According to Eurostat, inflation rate in Belgium in 2015 expressed as annual percentages of average consumer prices was 0.6% which was above the Euro Area average (0.0%) and above the European Union average (0.0%). Inflation rates in 2016 - 2021 are IMF's estimates.

Inflation Rate in Belgium.
Chart 3. Inflation Rate in Belgium. Source: Eurostat, International Monetary Fund.
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Taxation in Belgium

Withholding Tax

Withholding taxes are imposed at source of income and are often applied to dividends, interest, royalties, rent and similar payments. The rates of withholding tax are often reduced by double taxation agreements.

Withholding tax rates applied on payments of interest and dividends in Belgium are shown in Table 1.

Dividends Interest
Natural person, resident 25.015.0
Natural person, non-resident 25.015.0
Table 1. Withholding tax rates in Belgium.
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Double Taxation Agreements

Double Taxation Agreement (DTA) is an agreement between two or more countries for the avoidance of double taxation.

Belgium signed DTAs which already came info force with the following jurisdictions (for agreements which came into force after 01 January 2013 the date of coming into force is given in brackets):

 Albania
 Algeria
 Argentina
 Armenia
 Australia
 Austria
 Azerbaijan
 Bangladesh
 Belarus
 Bosnia and Herzegovina
 Brazil
 Bulgaria
 Canada
 Chile
 China (Jan 2013)
 Cote D'Ivoire
 Croatia
 Cyprus
 Czech Republic
 Denmark
 Ecuador
 Egypt
 Estonia
 Finland
 France
 Gabon
 Georgia
 Germany
 Ghana
 Greece
 Hong Kong
 Hungary
 Iceland
 India
 Indonesia
 Ireland
 Israel
 Italy
 Japan
 Kazakhstan
 Korea, Republic of
 Kuwait
 Kyrgyzstan
 Latvia
 Lithuania
 Luxembourg
 Macedonia
 Malaysia
 Malta
 Mauritius
 Mexico
 Moldova, Republic of
 Mongolia
 Montenegro
 Morocco
 Netherlands
 New Zealand
 Nigeria
 Norway
 Pakistan
 Philippines
 Poland
 Portugal
 Romania
 Russian Federation
 Rwanda
 San Marino
 Senegal
 Serbia
 Singapore
 Slovakia
 Slovenia
 South Africa
 Spain
 Sri Lanka
 Sweden
 Switzerland
 Tajikistan
 Thailand
 Tunisia
 Turkey
 Turkmenistan
 Ukraine
 United Arab Emirates
 United Kingdom
 United States
 Uzbekistan
 Venezuela
 Vietnam

There are also several agreements between Belgium and other jurisdictions which were signed but haven't yet come into force (for agreements signed after after 01 January 2013 of signing the agreement is given in brackets):

 Bahrain
 Congo, The Democratic Republic of the
 Isle of Man
 Macau
 Macedonia
 Oman
 Qatar
 Seychelles
 Tajikistan
 Uganda
 Uruguay (Aug 2013)
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Information Exchange

There are 3 ways for jusrisdictions to exchange information on tax matters:

  • spontaneously;
  • on request;
  • automatically.

Tax Information Exchange Agreements (TIEAs) enable exchange of information on request relating to a specific tax investigation, either criminal or civil.

Belgium signed TIEAs which already came info force with the following jurisdictions (for agreements which came into force after 01 January 2013 the date of coming into force is given in brackets):

 Gibraltar (Jun 2014)
 Saint Kitts and Nevis (Feb 2014)

There are also several agreements between Belgium and other jurisdictions which was signed but haven't yet come into force (for agreements signed after 01 January 2013 of signing the agreement is given in brackets):

 Andorra
 Anguilla
 Antigua and Barbuda
 Bahamas
 Belize
 Bermuda (Apr 2013)
 Cayman Islands (Apr 2014)
 Dominica
 Grenada
 Guernsey (Apr 2014)
 Liechtenstein
 Monaco
 Montserrat
 Saint Lucia
 Saint Vincent and The Grenadines

Automatic information exchange allows jurisdictions to exchange information automatically, without having a specific tax investigation.

Belgium signed the automatic information exchange agreement on 29 October 2014 and committed to start the automatic information exchange in September 2017.

Further Information:
Automatic Exchange of Information on Financial Accounts
Countries Which Will Not Automatically Exchange Account Information

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FATCA

Foreign Account Tax Compliance Act (FATCA) which became law in the United States in March 2010, focuses on reporting made by foreign financial institutions about financial accounts held by US taxpayers or foreign entities in which US taxpayers hold a substantial ownership interest. The FATCA-reporting is facilitated by Intergovernmental Agreements (IGAs).

Belgium has FATCA agreement with the U.S. in effect since 23 April 2014 (Intergovernmental Agreement Model 1). Financial institutions operating in Belgium are required to identify U.S. taxpayers by January 1, 2017 and to report the information for 2017 and the subsequent years. The agreement is reciprocal: Belgian financial accounts hold in U.S. financial institutions will be reported to Belgian authorities.

Further Information:
FATCA and European countries

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Belgian Banking Sector

Financial Market Development

According to World Economic Forum's Global Competitiveness Report 2016-2017, financial market development in Belgium is scored 4.7 out of maximum 7.0 and ranked 29th out of 138 analysed economies. Soundness of banks is scored 5.2 bringing Belgium into the 57th place, trustworthiness and confidence of financial market is scored 4.5 (52nd place).

Financial Market Development in Belgium.
Chart 4. Financial Market Development in Belgium. Source: WEF.
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Banking Industry Country Risk

Banking Industry Country Risk Assessment (BICRA) is a methodology designed by Standard&Poor's "to evaluate and compare global banking systems". A BICRA is scored on a scale from 1 to 10, ranging from the lowest-risk banking systems (group 1) to the highest-risk (group 10). The BICRA methodology has two main analytical components: "economic risk" and "industry risk". Each of the components is then further divided into 3 "factors" that result in an economic and industry risk score for each country.

Belgium is included into group '2' with economic risk scored '2' and industry risk scored '3'.

BICRA Group 2
Economic risk 2
    Economic resilience low
     Economic imbalances very low
    Credit risk in economy low
Industry risk 3
    Institutional framework intermediate
    Competitive dynamics intermediate
    Systemwide funding low
Government support assessment supportive

Table 2. BICRA for Belgium. Source: S&P's.

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Deposit Guarantee Scheme

Deposit Guarantee Schemes compensate certain deposits held by depositors of a bank that becomes unable to meet its obligations.

From a depositor's point of view it is important to know:

  • if the depositor is eligible within the terms of the deposit guarantee scheme;
  • if the depositor's bank is a participant in the deposit guarantee scheme;
  • if the depositor's type of deposit is covered by the deposit guarantee scheme.

All these details about deposit guarantee scheme in Belgium are summarised in Table 3.

Scheme Participantsall credit institutions operating in Belgium, branches of non-EEA banks, branches of Belgian banks abroad
Scheme Exemptionsbranches of EEA-banks (covered by their home countries)
Eligible Depositorsnatural persons, legal entities
Covered Accountstime deposit, sight and savings accounts
Covered CurrenciesEEA currencies
Maximum Protected Amount100 000 EUR
Paid In CurrencyEUR

Table 3. Deposit guarantee scheme in Belgium.

EEA stands for European Economic Area and consists of all EU member states plus Liechtenstein, Norway and Iceland.

EEA currencies are all official currencies of EEA members. Switzerland is not a EEA member, but because CHF is the official currency of Liechtenstein, CHF also belongs to EEA currencies.

So, only the deposits made with Belgian banks in the following currencies are covered by the deposit guarantee scheme of Belgium

 EUREuro
 BGNBulgarian lev
 CZKCzech koruna
 DKKDanish krone
 HUFHungarian forint
 ISKIcelandic króna
 CHFSwiss franc
 NOKNorwegian krone
 PLNPolish złoty
 RONRomanian new leu
 SEKSwedish krona/kronor
 GBPPound sterling

It should be also noted that deposits in non-EEA currencies (for example, USD and JPY) are not covered by the Belgian deposit guarantee scheme.

Further Information:
Deposit Guarantee Schemes in Europe

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Country Ceiling for Deposits

Moody's country ceilings for deposits specify the highest rating that can be assigned to local- or foreign- currency denominated deposit obligations of a bank or other deposit taking institution domiciled within that country.

Local currency (Euro) deposit ceiling for Belgium is set to Aaa (prime), foreign currency deposit ceiling is Aaa (prime).

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Deposit Rates

In Aug 2016, an agreed annualised deposit rate in local currency (Euro) of new contracts with agreed maturity up to 1 year between credit institutions and households was 0.13% which was below the Euro Area average (0.53%).

Deposit Rates in Belgium.
Chart 5. Deposit Rates in Belgium. Source: ECB.

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Banking Sector Structure

Currently there are 97 credit institutions operating in Belgium.

Recent structural changes (2013 - 2015) of the banking sector of Belgium are summarised in Table 4.

201320142015
Number of Opened Banks561
Number of Closed Banks664

Table 4. Recent structural changes in the banking sector of Belgium.

All the credit institutions operating in Belgium can be classified into several categories. Table 5 summarises the number of banks in each category.

CategoryNumber of Banks
Banks34
Branches of foreign banks62
Central banks1

Table 5. Number of banks by category in Belgium.

The list of the most recently opened banks in Belgium is provided in Table 6.

NameStart Date
 MeDirect Bank SA (new)April 2015
 Compagnie de Banque Privée Quilvest SA (new)December 2014
 Banque PSA Finance SA (new)September 2014
 Caisse d'Epargne Nord France Europe (new)September 2014
 Natixis Bank SA (new)September 2014
 Edmond de Rothschild (Europe) (new)July 2014
 Union Bank of India (new)July 2014
 CACEIS Bank Luxembourg SA (new)November 2013
 Banque Internationale à Luxembourg (closed)September 2013
 Mediterranean Bank plc (closed)September 2013

Table 6. The most recently opened banks in Belgium.

There are 62 branches of foreign banks from 13 different countries in Belgium. Table 7 shows 10 countries having the biggest number of branches in Belgium.

Country of OriginNumber of Branches
 France15
 Netherlands11
 Luxembourg11
 United Kingdom8
 India4
 Germany3
 Ireland2
 Spain2
 United States2
 Pakistan1

Table 7. Number of branches of foreign banks in Belgium grouped by country of origin.

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