Win-win loan or friendly action:
Flemish companies can choose
April 2021 – The Flemish government wants to give Flemish companies a boost in the wake of the coronavirus crisis by giving private individuals a tax incentive to invest. On the one hand, it offers them the possibility to invest via a "winwinlening" (a subordinated loan). On the other hand, since 11 February 2021, it offers them the "vriendenaandeel" (a capital contribution).
The framework
As a private individual, you can invest up to 75,000 euros in a company. You can do this by granting a loan. Winwinlening' is a subordinated loan with a term of five to ten years.
You can also opt for a 'vriendenaandeel' (friend share). You then invest in the capital of that company.
Both types of investment are entitled to a tax credit of 2.5% for five years.
The company, for its part, can raise up to 300,000 euros via these investments (loans or capital).
The beneficiaries
The company you invest in must be an SME according to European standards. This means that the company has fewer than 250 employees, an annual turnover of no more than EUR 50 million and/or a balance sheet total of no more than EUR 43 million, and must meet the criterion of independence (i.e. it may only be linked to other companies to a limited extent).
You can grant 'winwinleningen' to independent entrepreneurs, liberal professions and legal persons. Of course, you can only acquire vriendenaandelen if the SME is a company.
Some additional exclusions apply to vriendenaandelen. The company may not be a real estate company or a management company, and it may not have any links with tax havens. The legislator has also provided for anti-abuse provisions to prevent you from first reducing the company's capital and then increasing its capital again with the vriendenlening.
It should be emphasised once again that the company may not raise more than 300,000 euros using both forms of investment combined.
The investors
You can only invest as a natural person and you must be a Flemish taxpayer. Employees of the company are excluded (both from winwinlening and vriendenaandeel). This also applies to directors and their partners.
The acquisition of a vriendenaandeel is not possible if you or your partner holds more than 10% of the shares (or convertible securities) and voting rights.
The granting of a "winwinlening" is not possible if you or your partner directly or indirectly holds more than 5% of the shares or voting rights of the borrowing company.
The agreement
Winwinlening is obviously a loan with interest. It is a subordinated loan with a term of five to ten years. The interest rate for loans concluded in 2021 must be between 0.875% and 1.75%.
The loan must be repaid. It can be repaid at once on the due date or in monthly, quarterly, half-yearly or annual instalments. You can also provide that the entire outstanding balance can be demanded at a given time.
Naturally, withholding tax is payable on the interest.
The "vriendenaandeel" is a capital contribution. It must be a fresh capital contribution (a conversion of convertible bonds is not considered). It can also be the incorporation of a company.
The contribution cannot be used to distribute dividends or liquidation reserves. Cumulation with federal tax shelters for equity investments (start-ups, growth companies and corona shares) is not permitted.
The issue agreement must also contain a number of provisions, such as the price of the shares (determined by an auditor or an external accountant), the voting rights, the number of shares before and after the issue of the vriendenaandelen, etc.
The tax advantage
In both cases, there is an annual tax credit of 2.5% of the invested capital.
The maximum you can invest (in one or more companies) is 75,000 euros.
If there are problems with the company, winwinlening still gives you a tax advantage. In this case, you receive a tax credit of 30% of the amount lost, for example, due to the company's bankruptcy. For the time being (until 31 December 2021), this tax credit is even 40%.
A "vriendenaandeel" does not qualify for this one-off tax credit. In the case of vriendenaandelen, the tax benefit disappears in the event of the bankruptcy or dissolution of the company or the death of the shareholder.
