Key takeaways
- The **Cayman tax** makes certain low-taxed foreign structures transparent: their income is taxed on the Belgian founder, even without any distribution.
- The regime has existed since the programme law of 10 August 2015 and covers trusts without legal personality as well as entities subject to a tax rate below 15%.
- The reform in force since 1 January 2024 widens the scope and adds an exit tax when the founder moves their tax residence abroad.
- The Constitutional Court partially annulled several provisions of that reform on 18 September 2025, with retroactive effect.
- Distributions remain taxed at 30% and an annual declaration is still mandatory, whether or not the structure is active.
A Belgian director who holds a Dutch foundation, a trust abroad, or a low-taxed asset-holding company no longer freely chooses when to pay tax on that structure's income. Since 2015, the Cayman tax has attributed it to them directly, year after year, whether they receive a single euro or not. The reform that took effect in 2024 tightened the regime, before a Constitutional Court ruling annulled part of it in 2025. This article explains what the regime covers, what changed, and how to stay compliant.
What the Cayman tax is and which structures it covers
The Cayman tax was introduced by the programme law of 10 August 2015 (Belgian Official Gazette of 18 August 2015), codified in the Belgian Income Tax Code. Its principle fits in one sentence: income from a foreign legal construction is taxed in Belgium as if the founder or beneficiary had received it directly, even if the structure distributes nothing.
Two categories of structures are covered. On one hand, trusts without legal personality. On the other, entities with legal personality that are subject to an income tax whose effective rate remains below 15% of what they would pay under the Belgian regime. A royal decree lists the entities covered within the European Economic Area; entities outside the EEA are assessed structure by structure.
The tax transparency mechanism for the Belgian founder
In practice, the Belgian resident founder reports the structure's income every year in their own tax return, according to the nature of that income (interest, dividends, capital gains). Actual distributions from the construction are, in turn, treated as dividends and taxed at a rate of 30%, unless the founder proves that they correspond to capital they themselves contributed or to income already taxed in Belgium.
on distributions
rate applied as for a Belgian dividend
low-tax threshold
triggers classification as a legal construction
year introduced
programme law of 10 August 2015
The 2024 tightening, known as "Cayman Tax 2.1"
The programme law of 22 December 2023, in force since 1 January 2024, extended and tightened the regime after a Court of Audit report pointed to several gaps. The table below summarises the main changes.
| Before 2024 | Since 1 January 2024 | |
|---|---|---|
| Dedicated funds (UCIs) | Case-by-case assessment, no legal threshold | Belgian family holding above 50% |
| Founder's tax residence transfer abroad | No specific taxation | Exit tax on undistributed reserves |
| Distributions from exempt capital gains | Exempt | Taxed as a dividend at 30% |
The exit tax treats the founder's transfer of tax residence abroad as a deemed distribution of the construction's accumulated reserves, taxed at 30%. The reform also extended the notion of founder to persons holding rights in a construction through an intermediate company subject to ordinary taxation, whether Belgian or foreign, to close the door on chain structures.
The partial annulment by the Constitutional Court in 2025
Several parties challenged the 2024 reform before the Constitutional Court. In its ruling n° 117/2025 of 18 September 2025, the Court annuls, with retroactive effect, several provisions it found disproportionate:
What the 18 September 2025 ruling changed
Definition of substantial economic activity
The restriction to structures offering goods or services on a market is annulled. The Court confirms, however, that a structure whose sole purpose is managing the founder's private assets does not, by nature, carry out an economic activity and therefore remains excluded from the substance exemption.
Exit tax on latent capital gains
Annulled for the share of reserves accumulated before the founder became a Belgian tax resident.
Counter-proof for non-resident companies
The founder can now show that a foreign company falls under a CFC-type regime, not only a Belgian company.
50% threshold for dedicated funds
The taxpayer must be able to prove that a third-party holding below 50% is not tax-driven.
The ruling does not abolish the regime: it corrects specific parameters, with a retroactive effect that can reopen already-settled files. Anyone affected by a legal construction should have their situation reviewed in light of this decision.
How to stay compliant
Reporting the existence of a legal construction remains due every year, whether or not the structure makes a distribution. It belongs in the personal income tax return, in the section devoted to foreign accounts and structures, alongside the income received. Omitting it exposes the taxpayer to a tax increase and, in cases of bad faith, to criminal penalties.
This matter directly touches the governance of a Belgian company as soon as it holds, or one of its directors personally holds, an asset-holding structure abroad: a holding, a foundation, or a civil company. Reviewing the articles of association and mandates through company law support helps clarify who genuinely carries founder status before the tax authorities do it instead.
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