Key takeaways
- The liquidation reserve (art. 184quater ITC 92) allows small SRLs to constitute reserves taxed at 10% on allocation, distributable later with a reduced withholding tax.
- The programme law of 18 July 2025 cut the waiting period from 5 to 3 years and raised the rate to 6.5% for reserves constituted from 31 December 2025.
- The programme law of 30 May 2026 then raised this rate to 9.8%, applicable to distributions made from 11 June 2026 onward.
- Upon effective dissolution of the SRL, reserves are distributed without additional withholding tax, subject to the anti-phoenix clause in force since 1 July 2026.
- Only small companies within the meaning of art. 1:24 CAC are eligible for this mechanism.
The liquidation reserve for a Belgian SRL is one of the most effective tax tools available to a small company for distributing profits at a reduced cost. The principle: rather than immediately distributing a dividend at the standard 30% rate, the SRL places its profits into a reserve by paying a 10% separate contribution at the time of constitution, then distributes this reserve later at a reduced withholding tax rate. This mechanism underwent two successive reforms within twelve months. The programme law of 18 July 2025 (OG 29 July 2025) cut the waiting period from 5 to 3 years and raised the reduced rate from 5% to 6.5% for reserves constituted from 31 December 2025. The programme law of 30 May 2026 (OG 1 June 2026) then raised this rate to 9.8%, applicable to distributions made from 11 June 2026. This article explains how the mechanism works, the eligibility conditions, and what these changes mean concretely for your SRL.
What Is the Liquidation Reserve and Its Legal Basis
The liquidation reserve is defined at article 184quater of the Income Tax Code 1992 (ITC 92). It allows a small company to transfer part of its after-tax accounting profits to a specific reserve account, called a "liquidation reserve" account.
In return for this transfer, the company pays a 10% separate contribution on the transferred amount, codified at article 219quater ITC 92. This contribution is due at the time of the reserve's constitution, independently of any subsequent distribution. It is permanently retained by the State: even if the reserve is subsequently distributed at the highest withholding tax rate, the 10% contribution will never be refunded.
The value of the mechanism lies in what happens upon distribution. Depending on the time elapsed since the close of the financial year in which the reserve was constituted, the withholding tax applied on the distribution is significantly lower than the standard 30% rate.
Eligibility Conditions: Who Can Constitute a Liquidation Reserve
Not all companies are eligible. Only small companies within the meaning of article 1:24 of the Companies and Associations Code (CAC) can constitute a liquidation reserve. A company is considered small if, for the last closed financial year, it does not exceed more than one of the following criteria:
annual turnover excl. VAT
threshold, last closed financial year
balance sheet total
threshold, last closed financial year
employees (FTE)
annual average, last closed financial year
The small company condition is assessed in the financial year in which the contribution is constituted. If the company exceeds the size limit and ceases to qualify as a small company (the consecutive-breach criterion), it loses eligibility for subsequent financial years. Reserves already constituted during eligible years remain intact and follow their own rules.
In practice, the vast majority of Belgian SRLs are small companies: the EUR 9 million annual turnover threshold covers almost all SMEs. For limited companies (SA), the regime is identical under the same size conditions.
Applicable Rates According to the Date of Reserve Constitution
The programme law of 29 July 2025 introduced a distinct regime depending on whether the reserve was constituted before or after 31 December 2025. The table below summarises the withholding tax rates applicable on subsequent distribution, in addition to the 10% contribution already paid.
| Reserves up to 30.12.2025 (old regime) | Reserves from 31.12.2025 (new regime) | |
|---|---|---|
| Contribution at constitution | 10% (art. 219quater ITC 92) | 10% (art. 219quater ITC 92) |
| Distribution before 3 years | 20% | 30% |
| Distribution between 3 and 5 years | 6.5% | not applicable |
| Distribution after 5 years | 5% | not applicable |
| Distribution after 3 years (new single threshold) | not applicable | 9.8% |
| Upon dissolution | 0% | 0% |
For reserves constituted before the reform, the tiered structure remains intact: waiting between 3 and 5 years allows a rate of 6.5%, and waiting 5 full years gives the optimal rate of 5%. These older reserves are not affected by the July 2025 programme law: they follow the old regime in full.
For reserves constituted from 31 December 2025, the structure is simplified: a single time threshold (3 years) and a single reduced rate (9.8%). The early-distribution rate before 3 years is also higher (30% versus 20%), which reinforces the incentive to respect the waiting period.
The 3-Year Waiting Period: Concrete Implications
The most immediately operational change for SRLs starting to use the liquidation reserve is the shorter waiting period. Under the old regime, a manager who constituted a reserve in financial year 2023 (closed 31 December 2023) could distribute it at 5% from 1 January 2029. Under the new regime, a reserve constituted in financial year 2026 is distributable at the reduced rate of 9.8% from 1 January 2030.
- 1
Financial year N
Year-end NThe SRL constitutes the liquidation reserve from its year-N profits. The 10% separate contribution is calculated on the transferred amount and paid to the SPF Finances with the corporate tax return. The net amount appears in equity under 'liquidation reserve'.
- 2
Year N+1 to N+2
Waiting periodThe reserve remains on the balance sheet. Any distribution during this period does not benefit from the 9.8% reduced rate: a distribution during these years is subject to 30% withholding tax (new regime). The company's cash can otherwise be used freely.
- 3
From financial year N+3
Distribution at 9.8%After a 3-year period from the close of the year of constitution, the distribution benefits from the reduced rate of 9.8%. The general meeting votes on the distribution; the SRL withholds the tax and pays the net amount to the shareholders.
- 4
Upon dissolution
0% (anti-phoenix since 01.07.2026)If the SRL is dissolved and effectively wound up, liquidation reserves are distributed without additional withholding tax. Since 1 July 2026 (anti-phoenix clause), this exemption is denied if the beneficiary resumes similar business activities within three years post-liquidation.
The 3-year period runs from the close of the financial year in which the reserve was constituted, not from the date of payment of the contribution or from the date of the general meeting approving the accounts. For a financial year closing on 31 December 2025, the 3-year period is met from 31 December 2028.
Advantages and Limitations for an SRL
The liquidation reserve is often presented as the best alternative to VVPRbis for SRLs whose shares do not meet the cash-contribution requirements of that regime. It has concrete advantages, but also constraints worth weighing.
Advantages
- Accessible without conditions related to the date or type of contribution (unlike VVPRbis)
- Distribution at 0% additional withholding on dissolution: maximum long-term tax benefit
- Waiting period cut to 3 years since 2026 for new reserves (versus 5 years before)
- Overall effective rate more favourable than the standard 30% rate in all post-deadline scenarios
- Compatible with other tax strategies (remuneration, deductible expenses, PLCI)
Disadvantages
- 9.8% rate after waiting period: less favourable than the old 5% after 5 years
- Early-distribution rate raised to 30% for new reserves (versus 20% previously)
- Funds tied up in reserve for 3 years with no access to reduced-rate distribution
- 10% contribution permanently lost if the reserve is distributed before the waiting period (cumulative 10% + 30%)
- Reserved for small companies: inaccessible if size thresholds are exceeded
The main tension in the new regime is the trade-off between speed and cost. The old regime offered a 5% rate with patience, but at the price of 5 years of tied-up reserves. The new regime offers 9.8% from 3 years: for managers who are not planning to dissolve their company, the time/cost ratio has mechanically improved, even if the terminal rate is higher.
For shareholders who envisage eventually dissolving their SRL, the logic remains identical before and after the reform: constitute the maximum liquidation reserves each year and wait for dissolution to avoid any additional withholding tax. The article on dissolution and winding-up of a Belgian SRL details the procedure to follow in that case.
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Liquidation Reserve vs VVPRbis: How to Choose
Both mechanisms aim at the same objective (reducing withholding tax on distributions), but they address different profiles and cannot be combined for the same distribution. The choice depends primarily on the history of contributions and the intended distribution horizon.
VVPRbis (art. 269, §2, ITC 92) is only accessible for shares issued from 1 July 2013 in exchange for cash contributions. Its rate has been 18% since 1 July 2026 from the third financial year following the contribution. It requires no prior contribution but imposes strict formal conditions (registered shares, cash contribution, at or above par, fully paid up).
The liquidation reserve, on the other hand, is open to all small SRLs regardless of the date or nature of their initial contributions. It requires a 10% contribution at constitution but offers a 9.8% rate after 3 years (and 0% on dissolution), versus 18% for VVPRbis. For SRLs that envisage a future dissolution and that regularly constitute reserves, the liquidation mechanism is often more advantageous in the long run.
For the concrete accounting obligations linked to these distribution choices, including the equity split and appendix disclosures, see our dedicated guide.
Further Reading
- Withholding Tax on SRL Dividends in Belgium: Rates and Optimisation: an overview of all three regimes (standard 30%, VVPRbis, liquidation reserve) and their interactions.
- Corporate Income Tax in Belgium: Rates and Calculation: understanding the corporate tax base before constituting a liquidation reserve.
- Dissolution and Liquidation of a Belgian SRL: the winding-up procedure during which liquidation reserves are distributed without additional withholding tax.
