Fintech Market Overview

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On 10 November 2021, the first regulation on crowdfunding services on a European level entered into force in Belgium, targeting alternative funding platforms, including crowdfunding platforms.¹

Individuals looking to invest in a young company's equity may be eligible for a tax deduction of 25%, 30% or 45%. This incentive is designed to encourage companies' attempts to obtain capital from individual investors. However, various conditions must be satisfied by both parties involved. These criteria vary depending on the age of the business - 0-4 years for start-ups and 5-10 years for scale-ups.¹

Start-ups may not attract more than €250,000 through this regime. Scale-ups may only attract €500,000 (in aggregate with investments gathered previously as a start-up). From 1 January 2021, the investment caps at the start-up and scale-up levels have been raised to, respectively, €500,000 and €1 million. A crowdfunding platform or a public start-up fund may be used to invest directly or indirectly.¹

The first interest income bracket of €15,630 may be exempt from withholding tax for individuals who wish to invest in young, small companies through crowd-lending. There are a number of conditions that investors, target companies and crowdfunding platforms must meet to qualify for this regime.¹

The Belgian legislation implementing MiFID II requires asset management companies to obtain a licence from the FSMA. A license is required for the asset management company to meet a number of requirements, including legal form, capital, shareholder structure, and management. Currently, Belgium does not have any specific regulations regarding automated digital advisory services.¹

Belgian crowdfunding platforms include the following types:

• public donation platforms for projects or enterprises
• platforms through which the public deposits money to receive a non-financial compensation (reward-based crowdfunding)
• platforms through which the public invests in a project or enterprise through a loan (loan-based crowdfunding, also referred to as crowd-lending)
• platforms through which the public invests in a project or enterprise through a contribution in capital in consideration for a participation in any profit (equity-based crowdfunding) ¹

The Belgian Act of 18 December 2016 on the recognition and definition of crowdfunding and containing various provisions on finance regulates crowd-lending and equity-based crowdfunding in Belgium.¹

Crowdfunding Act sets forth licensing and operating requirements for alternative funding platforms, as well as business conduct rules for alternative funding providers. An alternative funding service, dubbed by the FSMA as 'the financial form of crowdfunding', is defined in Article 4(1) of the Crowdfunding Act as: "The service consisting of commercialising investment instruments, through a website or any other electronic means, issued by entrepreneur-issuers, starter funds or funding vehicles in the framework of an offering, public or otherwise, without the provision of an investment service regarding these investment instruments, with the exception of, as applicable, the following services: (i) provision of investment advice and (ii) receiving and transmitting orders."¹

According to Article 4(2) of the Crowdfunding Act, every individual or legal entity providing alternative funding services within the territory of Belgium is considered an alternative funding platform.¹

Peer-to-peer lending is currently not explicitly authorized by the Belgian regulatory framework (since individuals are not permitted to make public calls to borrow money).¹

Payment services in Belgium

Fintech in Belgium

Fintech in other countries

Notes

1. https://thelawreviews.co.uk/title/the-financial-technology-law-review/belgium