1. Thursday, June 23rd, 2011
Financial Innovation
SWIFT
A Belgian approach in the heart of Europe Times Square
NY 10036
1

2. “Financial Innovation,
A Belgian Approach in the Heart of Europe”
Please turn off your cell phones !
Thank you.
2

3. Overview Programme “Financial Innovation,
A Belgian Approach in the Heart of Europe”
Welcome speech A relevant practical case
Steven Vanackere, Belgian Deputy Prime Minister André Claes, Partner at Deloitte
and Federal Minister of Foreign Affairs and
Institutional Reforms Financial innovation in Europe
Eileen Dignen, Managing Director, Banking Accounts
Investing in the Belgian Financial Sector and Initiatives, SWIFT Americas
Filip Dierckx, Vice-Chairman of the Executive Board
BNP Paribas Fortis Bank SA/NV, Vice-Chairman Febelfin US investment in Belgium,
The Amcham perspective
Unique tax incentives in Belgium Marcel Claes, Chief Executive Officer at Amcham
Albert Wolfs, Head of the Fiscal Department for
Foreign Investments (Belgian Ministry of Finance)
Moderated by Robert
Tortoriello, Partner at Cleary, Gottlieb,Steen
and Hamilton
3

4. “Investing in the Belgian financial sector”
Filip Dierckx, Vice-Chairman of the Executive Board BNP Paribas Fortis Bank SA/NV,
Vice-Chairman Febelfin
Febelfin
June 23, 2011
4

5. Agenda
• Belgian Financial Sector
• „Financial Innovation‟ Seminar
5

6. • Febelfin represents 236 financial institutions of which 105 banks including 6 US banks
• Consists out of 5 constituent associations
• Members are Banks, Asset Managers, Financial Niche players, Lease companies and
Stock Brokers
• 9 members with special status
6

7. 7

8. Belgium
 In the heart of Europe
 Home to European Institutions and NATO HQ
 Open and well diversified economy
• GDP (PPP): $399 billion (30th worldwide)
• GDP - real growth rate: 2.1% (2010)
• GDP - per capita: $36,100 (18th worldwide)
• Harmonized unemployment rate: 8.4%
• Inflation rate (consumer prices): 2.3% (HICP)
8

9. Belgium
 Export and imports account for more than 70% of GDP
• 8th largest exporter of goods worldwide
• 13th largest exporter of services in the world
100.0
80.0
60.0
Exports and imports of
goods and services 40.0
(% of GDP)
20.0
0.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Exports Euro Area Imports Euro Area
Exports Belgium Imports Belgium
9

10. Belgium
 Highly educated, multilangual and productive workforce
• Active population of 4.5 mio out of 10.8 mio total population
• Belgian workforce has one of the highest productivity rates in the EU
Luxembourg
Belgium
France
Overall productivity
(GDP in PPS per person Netherlands
employed relative to United Kingdom
EU27, EU27=100)
EU15
Germany
Denmark
0 20 40 60 80 100 120 140 160 180
10

11. The Banking Sector Number of banks established in Belgium
(End of December 2010)
 Open, international and diversified landscape 59
• 80% Foreign Banks of which majority 26
20
branches, 20% Domestic Banks
Domestic Banks Branches Subsidiaries
Foreign Banks (85)
11

12. The Banking Sector
Share of foreign banks in
the banking sector’s activities volume
 Open, international and diversified landscape (share in total bank assets, as a %, 2009)
• 80% Foreign Banks of which majority
branches, 20% Domestic Banks
• Large Market Share of Foreign Banks
12

13. The Banking Sector
 Open, international and diversified landscape
• 80% Foreign Banks of which majority
branches, 20% Domestic Banks
• Large Market Share of Foreign Banks
• Regional Decision Centres
13

14. The Banking Sector Total bank credits as compared to total bank deposits (as
a %, 2009)
 Open, international and diversified landscape
• 80% Foreign Banks of which majority
branches, 20% Domestic Banks
• Large Market Share of Foreign Banks
• Regional Decision Centres
• High Credit to Deposit ratio
14

15. The Banking Sector European comparison of the sector’s contribution to the
economy – Total assets of the whole of credit institutions as
compared to the GDP (as a %, 2009)
 Open, international and diversified landscape
• 80% Foreign Banks of which majority
branches, 20% Domestic Banks
• Large Market Share of Foreign Banks
• Regional Decision Centres
• High Deposit to Loan ratio
• Bank Assets to GDP ratio in line with
Eurozone average
15

16.  Financial Crisis of 2008 and 2009 Economic Recession
International activities & exposure
of Belgian financial sector
Financial Market Funding
Domestic Funding (Savings)
Domestic Lending (mortgages & corporate)
16

17.  World Class Centres of Excellence
Euroclear number of transactions after netting
• World player for settlement services (in millions, period figures)
• Annual transactions worth more than
€500 trillion
• +2000 financial institutions as client
• Active in around 90 countries worldwide
17

18.  World Class Centres of Excellence Average daily traffic
Messages (millions)
• Worldwide Interbank Telecom services
• Serving +9000 banking
organizations, securities insitutions and
corporate clients
• Active in +200 countries
18

19.  Inexpensive and Safe Payment Services
• Cost of retail bank amongst lowest in Europe
• Belgian payment landscape aligned to Single Euro Payment Area (SEPA)
 7 out of 10 Belgians use Internet Banking
 New Innovative payment applications
• Joint venture Banking and Telecom sector in progress
• Offering payment solutions for small amounts with near field technology
19

20.  New Belgian financial architecture and EU supervision are being aligned
• Based on European model
• NBB &
Financial Services and Markets Authority
20

21. Thank you for your attention.
21

22. “Unique tax incentives in Belgium”
Albert Wolfs, Head of the Fiscal Department for Foreign Investments
(Belgian Ministry of Finance)
Foreign Investments
June 23, 2011
22

23. Federal Public Service Finance
UNIQUE TAX INCENTIVES
in BELGIUM
2011
Fiscal Department for Foreign Investments
Albert WOLFS
23

24. 24
Effective (Average) Corporate Tax Rate (ECTR) 2009*
*(based on asset and source of finance)
Especially in Belgium, the ECTR is considerably below statutory tax rates (-9,3%)
Sources : Report 2009, made by ZEW (Centre for European Economic Research) for the EU Commission
Project : Taxud/2008/CC/099, Mannheim and Oxford, October 2009 24

25. 25
Effective (Average) Corporate Tax Rate (ECTR) 2009*
*(based on asset and source of finance)
Especially in Belgium, the ECTR is considerably below statutory tax rates (-9,3%)
Netherlan
Germany
Belgium
USA
Italy
ds
UK
France
Japan
Sources : Report 2009, made by ZEW (Centre for European Economic Research) for the EU Commission
Project : Taxud/2008/CC/099), Mannheim and Oxford, October 2009 25

26. INVEST IN BELGIUM
www.invest.belgium.be
1. Notional Interest Deduction
2. Tax Ruling
3. Dividend withholding tax exemption
4. Holding regime
5. Other tax incentives
26

27. 1. Notional Interest Deduction
What is it?
 A notional interest calculated and deducted
yearly from the taxable basis
 used to off-set operational or financial income
(thus lowering effective tax rate)
27

28. 1. Notional Interest Deduction
Who?
Companies subjected to
- Corporate tax
- Non-residents / Corporate Tax
28

29. 1. Notional Interest Deduction
How does it work ?
Annual Tax Deduction
=
EQUITY X RATE (OLO 10 years)
29

30. 1. Notional Interest Deduction
EXAMPLE 1:
Assets Liabilities
(Return on Equity: 4%) Group Financing Share Capital
10,000 10.000
P&L Account Before N.I.D. After N.I.D
Profit before tax 400 400
N.I.D. (3,425%) / - 342,5
Taxable 400 57,5
Corporate Tax (33,99 %) 135,96 19,5
Effective Tax Rate 33,99 % 4,89%
30

31. 1. Notional Interest Deduction
EXAMPLE 2: Assets Liabilities
Business Assets Share Capital
10,000 10.000
Net Result
Effective Tax Rate
(Return on Equity)
≤ 3,425 % 0%
4 % (Previous slide) 4,89 %
5% 10,71 %
8% 19,44 %
31

32. 1. Notional Interest Deduction
« Qualifying » equity
 Equity = total equity as defined under Belgian GAAP
(includes retained earnings)
 in the opening balance sheet of the taxable period
 “adjusted” to avoid double use and abuse.
32

33. 1. Notional Interest Deduction
Interest Rate
 RATE = annual average of the monthly published rates
of the long term Belgian Government Bonds (10-year OLO)
 Fixed yearly
for 2011 (Tax Year 2012) :
 3,425 %
33

34. 1. Notional Interest Deduction
Other particularities
 Permanent measure
 + 0,5% for SME’s
 Carry forward of 7 years
 No ruling nor agreement is needed
 Suppression of the 0,5% capital duty as of 1/1/2006
 EU compliant
34

35. 1. Notional Interest Deduction
OPPORTUNITIES
 It’s a valuable tool for further development of Coordination Centre
activities
 Opens possibilities for international groups of allocating new
activities to a Belgian entity such as intra-group financing, central
procurement or factoring
THUS: increases attractiveness of Belgium for capital intensive
companies, equity funded headquarters and treasury centers.
35

36. 2. Tax Ruling
 Advanced decisions or ruling is about creating
CONFIDENCE to invest in Belgium;
 The investor describes the facts, allowing the tax
administration to determine, in advance, how the tax laws
are to be applied on a CASE BY CASE BASIS
 It ensures a LEGALLY BINDING ACCURATE FORECAST
of all the tax implications of your investment project
36

37. 2. Tax Ruling
Unlimited application field for ruling:
 Transfer pricing
 Business Restructuring
 Deductible expenses
 Financing
 Branches
 Bonded warehouses, etc.
37

38. 3. Dividend withholding tax exemption
Parent company
(treaty partner of Belgium)
• No WHT • 10% shareholding
• No LOB • 12 months
Belgian Subsidiary
38

39. 4. Holding regime
 Participation exemption
 dividends received : deduction of 95%
 Deductibility of interest paid to acquire shares
 No capital duty
 Exemption of realized capital gains on shares
39

40. 5. Other incentives
 Tax treaty network (new favorable US-Belgium
tax treaty)
 Expat regime
 R&D incentives
 Bonded warehouses and VAT deferal
 European pension funds
 Tax shelter for audiovisual sector
 Etc.,…
40

41. INVEST IN BELGIUM – increase your profits
Need to know more ?
Federal Public Service Finance
Fiscal Department for Foreign Investments
Rue de la Loi, 24 (Parliament Corner)
1000 Brussels - BELGIUM
Albert WOLFS
Email: albert.wolfs@minfin.fed.be
Tel.: +32 257 938 67
Fax: +32 257 951 12
41

42. “A relevant practical case”
André Claes, Partner at Deloitte
Deloitte
June 23, 2011
42

43. Tax Opportunities in
Belgium
Illustration
June 23, 2011

44. Introduction
• The purpose of this presentation is to illustrate various tax opportunities using a
Belgian company.
• More in particular, we will illustrate through different practical cases the
attractiveness of Belgium as:
– a holding company location;
– a finance company location;
– IP company location;
– a principal company location.
• Although envisaged separately in this presentation, those ideas could possibly
also be combined.
44 Copyright © 2011 Deloitte Development LLC. All rights reserved.

45. HoldingCo Case Study – Technology distribution company
Project / Need
• European holding company project
US
Dividend
Sale of
shares
Company profile
• European HQ located in Belgium
Belco
Operating
Operating & Interest Finance What Belgium offered
holding activities
income Loan company • Repatriation of dividends from European
subsidiaries to the US parent company at
Dividend no WHT cost
• 1.7% tax rate on dividends received by
European European Belco, effective tax rate possibly close to
Sub Sub zero
• Deductibility of all expenses relating to the
holding of the shares, including interest
45 Copyright © 2011 Deloitte Development LLC. All rights reserved.

46. FinCo Case Study – Technology Distribution company
Project / Need
US Dividend • Funding of European operations through
cash pooling
Equity
Company profile
European • Former Belgian Coordination Center
Holdco
What Belgium offered
Finance
• Offset of net interest income with notional
NID company
Cash pool leader
interest deduction (NID) allowing the cash
pool leader to be taxed only on a spread, if
European European any, between interest income and notional
Sub Sub interest
Cash pool member Cash pool member
Cash Pool • Repatriation of income to the US parent at
no WHT cost
46 Copyright © 2011 Deloitte Development LLC. All rights reserved.

47. IPCo Case Study – Highly innovative equipment manufacturer
Project / Need
US • Sale of self-developed patented technology
to third parties
Belgian 80% PID
exemption Company profile
IPCo
• R&D developed in Belgium
Cost plus
License
remuneration
What Belgium offered
Royalties Sale
• Apply an 80% deduction on:
(un)related Low risk – royalty income
licensee manufacturer
– deemed royalty income included in the sales
Sales price Sale
price of products
• Repatriate dividends to the US parent at no
Clients WHT cost
47 Copyright © 2011 Deloitte Development LLC. All rights reserved.

48. Central Entrepreneur Case Study – Specialized software distributor
Project/ Need
• Central entrepreneur for Europe
US
Company profile
• Creation of a new business unit
Central Residual • Belgium ranked within top 3 location by
Entrepreneur Profit site selection analysis
What Belgium offered
Service fee
• Excess accounting profit ruling allowing
Limited Risk for the exemption of a substantial
percentage of the residual profit of the
Service business centralized into a central
Providers entrepreneur established in Belgium
• Repatriate dividends to the US parent at
no WHT cost
48 Copyright © 2011 Deloitte Development LLC. All rights reserved.

49. About Deloitte
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network
of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed
description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. Please see
www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.
Copyright © 2010 Deloitte Development LLC. All rights reserved.
Member of Deloitte Touche Tohmatsu Limited

50. “Financial Innovation in Europe”
Eileen Dignen, Managing Director, Banking Accounts and Initiatives,
SWIFT Americas
Febelfin
June 23, 2011
50

51. The Financial Industry,
SWIFT and Innovation
Belgian Economic Mission in US
Eileen Dignen
June 2011

52. • Launch of Innotribe:
Sibos 2009 Hong Kong
• Open innovation
• Network of innovators
from across industries to
explore the future of the
financial industry and to
co-create
• Community dialogue:
52 www.swiftcommunity.net

53. Key technology trends
• Cloud computing
• Vertical integration
• Open source
• Cyber security
• Networking
53

54. SWIFT and Innovation
Critical
Mission Deliverables success
factors
Facilitation & training Senior management
Build the Proof of Concept commitment to support and
Enhance E2E development facilitate roll out
Skills process
Tools KPI / Monitoring Adequate budget
Processes Co-investment
Metrics Events Clear priorities translated in
Value detailed project plans
Network Frame of responsibilities
changes over time Delivery tracked and impact
required to support
Involvement
measured
collaborative innovation
and transform SWIFT in Solid programme
an agile company, management
able to succeed in a
t1= now t2 time
changing environment. Mandate for continuous
Adopt Demo ransfer
Adapt T communication on progress
54

55. Thank you

56. “US investment in Belgium,
the Amcham perspective”
Marcel Claes, Chief Executive Officer at Amcham
Amcham
June 23, 2011
56

57. The American Chamber of
Commerce in Belgium
Why US Investment in Belgium is
important and attractive?
June 2011

58. Introduction
American Chamber or Commerce in Belgium
• Founded in 1948 by IBM, JP Morgan, Kodak, GM
• 500+ company members: 1/2 US, 1/3 Belgian
• Membership led/funded non-profit organization
• Independent, i.e. no US or Belgian government subsidies
• Networking and knowledge sharing focused
• Issue driven: representing US business interests
…the undisputed leader to improve business and
investment opportunities for the US-Belgian
business community
58

59. Belgium remains important destination for
US Investment
• More than 900 different US companies with approx. 1800 affiliates in Belgium,
• Many US companies with a large presence, also in financial services: BNY
Mellon, Citibank, State Street, MasterCard, NYSE Euronext, JP Morgan, but also
SWIFT, Euroclear, etc.
• Significant investments by many well known names:
Ford, Exxon, P&G, Pfizer, J&J, Baxter, DuPont, Google,
• Approximately 400 Headquarters of US companies
Belgium is an anchor point in the important
Transatlantic relations

60. US Investment in Belgium is important and
recovered from crisis
• 75 billion Euros US Direct Investment-stock in Belgium
• After fast growth from 2004 to 2007, USDI inflows were lower in 2008
and 2009
• US investment has recovered significantly since 2009, expect to be in
record territory in 2010 and positive for 2011
• Direct employment of 130.000 people (2009),
• Approx. 300.000 employed including indirect jobs or over 10% of all
private sector employment in Belgium

61. US presence is still Manufacturing focused but
growing services investments
• 70.000 US jobs in Belgium in wholly-owned affiliates of manufacturing
based companies or over 50% of all US jobs
• Very strong US presence in certain sectors, e.g. over 50% of all pharma
jobs in Belgium
• Manufacturing: over 1/3 of total US investments (in 2009)
- down from 52% in 1990, mainly because of rapid increase of
financial services/investments
Growing services activity offers a lot of growth
potential

62. Belgium’s 3 regions have their own strengths
• Flanders: has about 60% of the US investments
– Heavy concentration of manufacturing companies
(automotive, chemical, pharma)
– Main logistic access: airport, harbors
• Brussels, as Belgian, Flemish and EU Capital and separate region attracts
25% of US investments
– Mostly Services and Headquarter operations
• Wallonia: about 15 % of US investment
– Now starting to play its’ strengths: available, cheap and accessible
infrastructure (logistics), available high quality resources
– Attracting some good new investments: Google (greenfield datacenter
€250 mio), Baxter, J&J, GSK …
62

63. Top 10 reasons to invest in Belgium:
• Central location in heart of Europe
• Cross and multi-cultural, multilingual
• Highly educated, skilled an productive workforce
• Capital of Europe, proximity to EU and Nato HQ
• Attractive corporate tax regime with NID, very relevant for Financial Institutions and
company headquarters
• Attractive regime to support Innovation and R&D
• Competitive “effective” labor and other business conditions in spite of high nominal
charges and rates- many deductions
• Top quality of life at reasonable cost
• Attractive real estate
• Specific cluster benefits in areas such as financial transaction processing:
SWIFT, Euroclear, Mastercard, BNY Mellon, etc
Belgium is Europe’s “best kept secret”
63

64. Contact Information
www.amcham.be
Marcel Claes
Chief Executive
American Chamber of Commerce in Belgium
Handelsstraat 41 rue du Commerce
1050 Brussels
Tel +32/(0)2/289.10.81 Email: mclaes@amcham.be

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