Entrepreneurs Up2Date - DBI deduction under pressure: why the DBI cavek is becoming more attractive for companies
The Definitive Taxed Income (FDI) system has been a cornerstone of tax neutrality between companies for decades. The principle is simple and fair: when a company pays corporate tax on its profits, these profits cannot be taxed a second time when they flow through a dividend to another company. The FDI deduction was therefore introduced to avoid double economic taxation and thus enable an efficient capital structure within business groups.
This principle was already designed in Belgium in the 1960s and later refined. At the European level, too, it was considered fundamental that dividends within a group should not be taxed again. The 1990 Parent-Subsidiary Directive established this principle at the European level, which has since ensured greater uniformity between Member States.
Stricter conditions over time
Over the years, the legislator tightened the rules of the game. This created three essential conditions that an investment must meet in order to qualify for the DBI deduction:
1. Participation condition: own at least 10% of the shares, or invest at least €2,500,000.
2. Permanence condition: hold the shares for at least one year.
3. Valuation condition: the profit of the target company must have undergone normal taxation, comparable to the Belgian corporate tax rate.
These conditions seem clear, but in practice they have a significant impact on how companies invest, especially when it comes to listed stocks.
New condition for “large” companies from tax year 2026
From tax year 2026, there will be an additional obligation for large companies: if they do not acquire 10% of the shares but invest at least €2,500,000, they must book this participation as Financial Fixed Asset. This accounting format requires a sustainable economic bond with the target company.
New reality from 2026 When investing more than €2.5 million, large companies must demonstrate that they have a long-term, economic relationship with the target company. This is a major barrier for stock market investments.
According to article 1:24 of the Companies and Associations Code, a company is considered “large” if it meets at least two of the following criteria:
- annual average number of employees: 50
- annual net turnover (excl. VAT): €11,250,000
- balance sheet total: €6,000,000
For a significant part of Belgian companies, this means that a direct DBI investment in individual shares becomes difficult to achieve.
Investing in individual stocks with corporate funds is becoming more challenging
As a company, those who want to invest directly in stocks and still retain the DBI deduction must either buy 10% of the company—which is practically impossible with large listed companies—or invest at least €2.5 million in one share. For most SMEs, this is far out of reach. In addition, from now on, large companies must also demonstrate that their investment is part of a sustainable, economic relationship. In listed companies, where people often only own a small fraction stake, this is almost never detectable.
The DBI caveq remains attractive and relevant
Because direct FDI investments have become so strict, the legislator created an alternative that is workable for companies: the DBI order. This fund invests in the shares of companies that meet the DBI conditions and pays out at least 90% of the income received and realized capital gains annually. As a result, the dividend that the company receives is in principle eligible for a DBI deduction.
A DBI cavek does not require a minimum investment of €2.5 million, no 10% participation and no mandatory retention period of one year. In this way, the fund offers both flexibility and tax efficiency. Of course, the stock market risk remains present, but that applies to any stock investment; a longer investment horizon remains desirable.
Individual stocks vs. DBI cavek
Individual stocks - Participation condition (10% or €2.5 million) - Burden of proof of a sustainable economic relationship (for large companies) - Annual holding required - Risk of non-compliant participations
DBI order - No participation requirement - No minimum investment - No retention period - FBI-compliant investment policy
New changes to the DBI caveq
In addition to the stricter restrictions on individual stocks, some rules for DBI caveks are also changing. For example, in order to be able to apply a DBI deduction from 2025, a company must at least €45,000 allocate gross remuneration to a director, and from 2026 at least €50,000. The flat-rate benefits of any kind may account for a maximum of 20% of that remuneration.
Another change concerns the new 5% capital gain tax that is used when shares of a DBI cavek are sold. It is remarkable that a purchase of shares by the fund does not qualify as a sale, but as a dividend payout—and can therefore still be covered by a DBI deduction.
Investing in equity funds — risk and return
A DBI cavek is and remains an equity fund. The stock market risk is therefore inevitable. In the short term, fluctuations can be large; on average, once every four to five years, the stock markets end a year negative.
In the longer term, however, the financial markets show a completely different picture. Historically, stocks have yielded positive returns about three out of four years, and the long-term return is often two to three times higher than that of bonds or savings products. In addition, the latter's income is taxed in the company at the corporate tax rate. Those who invest with corporate funds and show sufficient patience may therefore be better off with an DBI cavek.
Inflation protection
Inflation remains an insidious threat to purchasing power. Money that stays in a current or savings account for years inevitably loses value. Under normal circumstances, inflation is around 2% per year, but extreme situations—such as in 2022, when energy prices went through the roof—could temporarily quadruple this figure. Because companies usually adjust their prices to inflation, stocks are a firm protection against monetary depreciation in the long term.
Lastly
For companies that want to invest in a tax-efficient way while looking for sufficient diversification and flexibility, the DBI cavek remains a particularly attractive tool. It combines tax benefits with professional diversification, without the heavy participation conditions associated with individual stocks.
Value Square has an extensive range of DBI funds, we would be happy to inform you about them during a personal conversation.
wim.descamps@value-square.be — petrick.step@value-square.be
