ANNUAL FINANCIAL REPORT 2010 2010 - TiGenix

Belgium has concluded tax treaties with more than95 countries, reducing the dividend withholding tax rate to 15,10, 5 or 0 per cent for residents of those countries, dependingon conditions, among others, relating to the size of theshareholding and certain identification formalities.Prospective holders should consult their own tax advisors asto whether they qualify for reduction in withholding tax uponpayment or attribution of dividends, and as to the proceduralrequirements for obtaining a reduced withholding tax upon thepayment of dividends or for claiming reimbursement.2.10.2 Capital gains and losses(a) Belgian resident individualsBelgian resident individuals acquiring the Shares as a privateinvestment should not be subject to Belgian capital gains taxon the disposal of the Shares and capital losses are not taxdeductible.However, capital gains realised by a private individual aretaxable at 33 per cent (plus local surcharges) if the capital gainis deemed to be realised outside the scope of the normalmanagement of the individual’s private estate.Capital gains realised by Belgian resident individuals on thedisposal of the Shares for consideration, outside the exerciseof a professional activity, to a non-resident company (or abody constituted in a similar legal form), to a foreign state(or one of its political subdivisions or local authorities) or to anon-resident legal entity, are in principle taxable at a rate of16.5 per cent (plus local surcharges) if, at any time during thefive years preceding the sale, the Belgian resident individualhas owned directly or indirectly, alone or with his/her spouseor with certain relatives, a substantial shareholding in the Issuer(i.e., a shareholding of more than 25 per cent in the Issuer). Thisrule does not apply if the Shares are transferred to the abovementioned persons provided that they are established in theEuropean Economic Area (EEA).(b) Belgian resident companiesBelgian resident companies are normally not subject to Belgiancapital gains taxation on gains realised upon the disposal ofthe Shares provided that the conditions relating to the taxationof the underlying distributed income in the framework of thedividend received deduction, as described in Article 203 ofthe Belgian Income Tax Code are satisfied. Capital losses are, inprinciple, not tax deductible.(c) Other taxable legal entitiesBelgian resident legal entities subject to the legal entitiesincome tax are, in principle, not subject to Belgian capital gainstaxation on the disposal of the Shares, except in the case of thetransfer of a substantial shareholding to an entity establishedoutside the EEA (see the sub-section regarding Belgian residentindividuals above).Capital losses on Shares incurred by Belgian resident legalentities are not tax deductible.(d) Belgian non-residents(I) Non-resident individualsCapital gains realised on the Shares by a non-residentindividual that has not acquired the Shares in connectionwith a business conducted in Belgium through a fixedbase in Belgium or a Belgian permanent establishmentare generally not subject to taxation, unless the gain isdeemed to be realised outside the scope of the normalmanagement of the individual’s private estate andthe capital gain is obtained or received in Belgium. Insuch an event the gain is subject to a final professionalwithholding tax of 30.28 per cent. However, Belgiumhas concluded tax treaties with more than 95 countrieswhich generally provide for a full exemption from Belgiancapital gain taxation on such gains realised by residentsof those countries. Capital losses are generally not taxdeductible.Capital gains will be taxable at the ordinary progressiveincome tax rates and capital losses will be tax deductible,if those gains or losses are realised on Shares by a nonresidentindividual that holds Shares in connection witha business conducted in Belgium through a fixed base inBelgium.Capital gains realised by non-resident individuals onthe transfer of a substantial shareholding to an entityestablished outside the EEA are generally subject to thesame regime as Belgian resident individuals. However,Belgium has concluded tax treaties with more than95 countries which generally provide for a full exemptionfrom Belgian capital gain taxation on such gains realisedby residents of those countries. Capital losses aregenerally not tax deductible.54 • TiGenix • Rights Offering