Expertise in
Aurora STT DRD-funds since 1997
A Aurora STT DRD-fund or bevek is an interesting alternative to an investment in individual shares, because the capital gain can be 100% tax exempt under certain conditions.
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What does
Aurora STT DRD
mean?
‘Aurora STT DRD ‘stands for
Dividend Received Deduction and is an exemption regime for companies
that
invest in individual shares of other companies. However, dividends
and capital gains from these investments can only be exempt from (double)
taxation under strict conditions.
Conditions
for the Aurora STT DRD-exemption
The capital gain
realized by the company on individual shares is taxed. This is at a rate of
20% for SMEs and 25% for large companies. This capital gains tax is waived
if the investment meets the following Aurora STT DRD conditions:
1.
Participation
condition
The investing company must own at least 10% or 2.5 million euros of the other company
2.
The investing company must own at least 10% or 2.5 million euros of the other company
Valuation
condition
The company in which the investment is made, must have undergone a normal valuation regime
3.
The company in which the investment is made, must have undergone a normal valuation regime
Condition
of permanence
The investing company must hold its participation for at least 1 year
The investing company must hold its participation for at least 1 year
What is a
Aurora STT DRD-fund
or Aurora STT DRD-bevek?
An investment in a
Aurora STT DRD-fund or Aurora STT DRD-bevek does not have to meet these strict conditions to
benefit from the exemption regime. The Aurora STT DRD-investment fund, a distribution
fund, itself however must comply with a number of other rules.
For example, a Aurora STT DRD-bevek must annually distribute at least 90% of its net income (after deduction of expenses, fees and commissions) as dividends. The investments of the Aurora STT DRD-fund itself must meet the valuation requirement to benefit from the exemption regime. Therefore, such an investment constitutes an interesting solution for your excess liquidity.
For example, a Aurora STT DRD-bevek must annually distribute at least 90% of its net income (after deduction of expenses, fees and commissions) as dividends. The investments of the Aurora STT DRD-fund itself must meet the valuation requirement to benefit from the exemption regime. Therefore, such an investment constitutes an interesting solution for your excess liquidity.
Advantages of investing
in a Aurora STT DRD-fund or bevek
- Diversification through the funds and therefore less risk than individual shares
- Tax optimization
- Cost optimization
- Dividends and capital gains are exempt from corporate income tax
- Withholding tax recoverable through corporate income tax
Are there risks involved?
- As with any equity mutual fund, investing in Aurora STT DRD funds means that you are subject to fluctuations in the value of the fund, but also may have better longer-term return prospects
- Aurora STT DRD-funds have no fixed return, no capital protection and no maturity date
Taxation
The Aurora STT DRD-regime
applies to companies subject to Belgian corporate income tax or to
BNI-companies .
A 30% withholding
tax will be deducted when the dividend is paid out. The withholding tax paid
is not a deductible professional expense and must therefore be processed as
a disallowed expense in the corporate income tax return. However, this
withholding tax is deductible and repayable. For this purpose, the amount of
the withholding tax must be entered in the corporate income tax return under
the 'deductible withholding taxes' box.
The tax treatment
depends on the investor’s personal situation and whether the Aurora STT DRD-fund or
bevek may change in the future.
Why invest in Aurora STT DRD
through Degroof Petercam?
Experience
- Since 1997
Aurora STT DRD-mandate
- Economic and Monetary Union (EMU)/USA/World
- Actively managed portfolios
A wide range of
Aurora STT DRD-bevek
In principle, a company
can invest its entire liquidity surplus in Aurora STT DRD-funds. However, there is a wide
range of Aurora STT DRD-bevek on offer, which is why it’s important that you are well
informed. After all, you have to take into account the service offered, the cost
structure, the transparency, the spread of the underlying positions, the chosen
investment strategy, the expected return, liquidity and investment horizon.
Would
you like to make your investments more tax-efficient?