VVPRbis

What is the VVPRbis regime?

VVPRbis is a preferential regime that lowers the withholding tax on movable income on dividends distributed by a small company, to encourage financing through equity rather than debt. The rate falls from 30% to 18%.

It applies not to the company but to the shares: two shareholders in the same company can be treated differently depending on the origin and date of their shares.

The conditions to meet

They are cumulative and are assessed share by share, from issue through to distribution.

• Cash contribution to an SME (from 01/07/2013)
• Registered shares, fully paid up
• Held in full ownership since issue
• 20% for dividends from the second financial year after the contribution, 18% from the third onwards

The rate timetable

The reduced rate does not apply immediately after the contribution. An intermediate step of 20% comes before the 18% rate, which applies from distributions in the third financial year following the year of the contribution.

This phasing-in rewards stable capital: distributing too early means losing the benefit of the lowest rate, with no catching up later for distributions already made.

What makes you lose the regime

The difficulty is not getting into the regime but staying in it. Every condition must hold over time, and several common events in a company's life break them.

• A contribution in kind instead of a cash contribution: the regime is excluded from the outset.
• Shares not fully paid up at the time of distribution.
• Splitting of ownership, since usufruct or bare ownership breaks the full ownership required.
• An earlier capital reduction, which can taint later contributions.
• Losing SME status within the meaning of the Code of Companies and Associations.

Traceability, the practical condition of the regime

The benefit of the reduced rate has to be proven. The share register must make it possible to identify, for each share, the date and nature of the contribution, that it is fully paid up and that it has been held continuously in full ownership.

A poorly kept register is the most common reason for a refusal in a tax audit, regardless of the merits of the case. Keep it up to date as transactions happen rather than reconstructing it when the question comes up.

Not to be confused with

The terms close to VVPRbis and what sets them apart.

VVPRbis and the liquidation reserve

The liquidation reserve costs 10% when it is set up, then 9.8% on exit after 3 years, and imposes no condition on the origin of the shares. VVPRbis costs nothing upfront but imposes strict conditions on the shares.

VVPRbis and the old VVPR regime

The historical VVPR regime covered other shares and other conditions. VVPRbis, introduced in 2013, is a separate scheme: the two are not the same and do not have the same requirements.

Further reading

• Company director
• Dividends
• ISoc, Impôt des Sociétés (corporate income tax, VenB in Dutch)
• Liquidation reserve
• All glossary terms

VVPRbis: frequently asked questions