Market abuse: what you need to know about the new regulations

In order to comply with the EU directive, Belgium is implementing new regulations on market abuse. The preliminary draft law establishes and refines investigatory powers. How can you navigate the law?

Since June 2016, a new legal framework has applied to market abuse that takes place within the European Union. The Market Abuse Regulation (MAR) (596/2014) ensures that Member States' own regulations adapt to financial developments in order to prevent abuse on the financial markets (including derivatives) and commodities markets.

Three types of abuse have been identified:

  •  Market manipulation;
  •  Insider dealing;
  •  Unlawful disclosure of restricted information.

The EU legislator believes that market abuse harms the integrity of financial markets and undermines public confidence in both securities and derivatives. It should be noted that the regulation's scope of application extends to traded financial instruments.

"Market integrity is essential for the financial markets to be integrated, effective and transparent." European Parliament, 16 April 2014

Belgium ensures compliance

On 31 March, the Belgian Council of Ministers approved a preliminary draft law (FR or NL)  which will apply the EU regulation on market abuse to Belgium. Although the regulations are directly applicable to Belgium, some of their provisions have required implementation in national law.

The preliminary draft law, once approved, will establish and improve investigatory powers. Which measures does it contain? As examples, we can cite disqualification from the profession, the request to hand over electronic communications data, police searches and confiscations, and new measures on market informers.

Sanctions are heavy. The EU now requires the imposition of fines totalling between 1 and 15 million euros, or 15% of the total annual turnover of the company in question.

A test for the repurchase of shares

The regulation transposed into law also affects trading to repurchase own shares. From now on, transactions to repurchase shares must comply with the provisions of the regulations in order to benefit from a presumption of legitimacy. And transactions must now be carried out on regulated markets or MTFs (multilateral trading facilities). The use of derivatives does not benefit from this presumption of legitimacy.



Capital Markets Union: It’s Not About Us, It’s About You

How to harmonize capital markets and regulation across Europe? Petra De Deyne, Regulatory Affairs Manager for Global Markets at BNP Paribas, presents the new initiative of the European Commission to build a single market for all 28 Member States of the Union.

After the crisis of 2007-2008, financial stability was the key priority for the European Commission. In order to restore that stability, the resilience of banks needed to be strengthened and systemic risk in the markets needed to be contained, which had Brussels produce that famous “tsunami” of regulation. Today, most of the work to make banks and markets stable again is done and the respective legislation has been or will soon be implemented.

Growth as a priority

The next item on the European Commission’s to-do list is now to create growth. Therefore, corporates need to grow their businesses, invest and expand. Historically, corporates have been very much dependent on bank lending if they want to expand. However, on the back of capital and liquidity requirements imposed by bank regulation, some banks have found it more difficult to fulfil their role of traditional lender. Seeing their bank funding channels drying up, larger corporates turned to capital markets, but did not always meet favourable borrowing conditions and interested investors. For some of the smaller corporates, getting funding had become as good as impossible. A survey done by the ECB and the European Commission in 2014 on the access to finance of enterprises (SAFE) showed that 35% of SMEs did not get the full financing they asked their banks for in 2013.

Looking at the US, we notice that corporates get about three quarters of their funding directly from the capital markets, and rely only to a small extent on bank lending. In Europe the situation is the other way round. So Europe wondered if they could create a funding landscape that would resemble more the US situation. That would mean that those in need of financing would meet directly with those that have money to invest. It would reduce the dependency of the real economy on banks, which would again contribute to financial stability. However, what is needed in that case is a harmonized, well integrated capital market in Europe. And this is where comes in the initiative of the European Commission: build a Capital Markets Union.

So in short, this is what CMU is about: it is a plan to create a single market for all 28 Member States of the European Union, where, on the one hand, funding choices for corporates will be diversified beyond bank lending and where, on the other hand, investment opportunities and the investor base will be broadened.

So what’s the plan?

“The Plan”, which the European Commission published in October 2015, sets 4 clear objectives:

  1. Support job creation and growth
  2. Connect financing effectively to investment projects across the EU
  3. Make the financial system more stable
  4. Deepen financial integration and increase competition

“The Plan” also defines 5 priority areas for action, with over 30 different initiatives for reviews, assessments, reports, initiatives and legislative proposals, all to be taken between now and sometime in 2018.

The first priority is to provide more funding choices for Europe’s corporates and SMEs. Here we will see initiatives to support venture capital and innovative forms of financing, such as crowdfunding. The EU is also thinking about ways to provide necessary data on SMEs to investors, so that they can make well informed investment decisions.

Second, long term investment has to be promoted. An initiative here is to make sure that capital requirements for insurers are reviewed so that they see their investment needs more efficiently met. Measures will also be taken to promote investment in infrastructure projects.

Third, the range of investment choices both for retail and institutional investors has to broaden. In this area, we will see, amongst others, incentives to promote pensions savings and private placements.

The fourth priority is to enhance the capacity of the banks to step up lending. This may sound contradictory, as the idea of the CMU is to move away from traditional lending. However, for a lot of SMEs, banks will still remain the prime source of financing. So Europe wants to make sure that banks can offload more assets from their balance sheet so that they have extra space to lend.

And lastly, the EU wants to dismantle barriers that would hamper cross-border investment across the Member States. This is quite an ambitious area, where certain tax issues will be tackled, and where we will see a certain harmonization as far as national insolvency laws and securities laws are concerned.

Immediate action

Simultaneously with the publication of “The Plan”, the European Commission issued a couple of legislative proposals and 3 consultations, as a matter of launching the short term actions right away and getting the train out of the station.

The European Commission takes immediate action in the field of securitization. This may seem quite controversial as some will still consider this as the root of all evil. However, it is a critical tool to finance the economy and it sits high on the Commission’s agenda. In order to kick start the securitizations market, the EU has come up with a legislative proposal, the purpose of which is twofold:

  • First, it aims at reinstalling confidence. Therefore, a quality label is introduced: “Simple, Transparent and Standardized” securitizations. That means that any “STS” securitisation will comply with over 20 different standards, thus helping investors to better understand these products and ensuring quality. Second, it incentivizes banks to restart the activity again by giving these STS securitizations a better capital treatment, compared to other forms of securitisation.
  • Next to that, the EU has issued a proposal to adjust Solvency II rules for insurers, so that they would have to deploy less capital when investing in long term infrastructure projects or in European Long Term Investment Funds (ELTIFs).

Also note that the European Commission is looking into covered bonds. Currently there are 26 different covered bond frameworks in the EU, an area which could possibly benefit from a certain level of harmonization. While the idea is not to create a single framework for Europe, the Commission would look to promote best practices, step up transparency and remove barriers that would hamper cross-border investments. We also saw a consultation venture capital and a call for evidence on the cumulative impact of financial legislation.

Reduce paperwork

In the medium term, a review of the Prospectus Directive is on the cards. This is a logical move, given that the EU would like to attract many more corporates directly onto the capital markets to issue debt. Making prospectuses cheaper and less burdensome for smaller issuers on the one hand and more user friendly for investors on the other hand, would be a welcome help in that respect.

Another initiative is a Green Paper (this is a first, general exchange of views between the EC and the industry to explore a certain topic) on Retail Financial Services. Here he European Commission is exploring ways to enhance competition and make sure that consumers have access to a broader range of services in order to get the best deal around, when it comes to mortgages, savings products, insurance, banks accounts etc.

In the long term, count 2017/2018, we can expect further steps to support SME growth markets and private placements, along with plans for a pan-European Pension Fund. As already mentioned earlier, matters regarding withholding tax and insolvency law will get attention as well.

Benefits for companies

All in all, CMU certainly has a fully packed and ambitious agenda. Now what’s in it for companies, really? Potentially a lot. However, we appreciate that the road to a real CMU may be a far longer one. 2019 seems awfully close for some of the changes to  happen. Rebalancing financial intermediation for example will most probably be a gradual, organic process that will go hand in hand with political interests, FinTech developments etc., rather than a major shift on a particular point in time.

Also, it will need a change in mind-set and behaviour by all stakeholders involved. The effects of a CMU may be more pronounced for the corporate sectors of certain countries with relatively small capital markets. For these countries, some of the initiatives could be particularly beneficial. Their domestic capital markets may currently not be able to cater for their large corporates, pushing them away to international markets. CMU could bring them back home and expand their markets.

The benefits of CMU will be different for the different types of companies:

  • Start-ups will get special attention, as their innovation and entrepreneurial spirit are key to Europe’s growth potential. At this moment start-ups can turn to crowdfunding, but this is only developing and there is already some investment by business angels. However, these funding channels remain small and local and will not always provide the necessary funding at critical moments in their expansion. The initiatives to step up venture capital for example may be particular beneficial in that respect.
  • Small companies that are struggling to get bank funding, especially in those countries that have been hit the hardest by the crisis, may unlock more funding via securitization. SMEs in particular could be positively impacted, as the intended side effect would be that securitisation allows banks to step up the lending capacity, knowing that bank lending for this type of corporates may remain a very important source of funding. Next to that, the European Commission also wants to work closely together with the SME growth markets, a new market sub-category created under MiFID II to facilitate access to capital for SMEs, to ensure that the regulatory environment for these markets delivers the expected results.
  • Medium and large-sized companies, which may already have access to capital markets, should also feel the effects as CMU will support investors who wish to place larger amounts of capital in the market. The initiative to promote private placements, building on successful experiences such as the one in Germany and through supporting market-led initiatives such as the one by ICMA on the use of standardized documentation could be quite helpful. Tackling tax issues could come in helpful as well.

What is important too is that the European Commission is also planning to review the functioning of the European corporate bond market and to see how market liquidity can be improved. A well-functioning secondary market will be crucial for the success of the primary debt markets.

So all in all, the Capital Markets Union is an ambitious, yet challenging plan of the European Commission. Ambitious because it intends to reengineer Europe’s traditional funding channels. Challenging because of the wide range of issues that need to be tackled to get there and the tight deadline. The outcome should be that corporates meet with investors in an efficient market place, thus broadening the scope of options for both parties to contribute to economic growth.

(Source: Focus Magazine CIB)




Kilometervergoeding voor elektrische fiets niet altijd fiscaal vrijgesteld

Werknemers die met de fiets naar het werk rijden, kunnen een fietsvergoeding krijgen tot 22 eurocent per kilometer. De regeling geldt in principe ook voor elektrische fietsen. Sommige modellen zoals de speed pedelec, vallen echter uit de boot.

De elektrische fiets wint terrein: ruim één op vier verkochte tweewielers is een elektrisch exemplaar.  Steeds meer mensen gebruiken hun fiets ook om te pendelen. Werkgevers kunnen hun fietsende medewerkers een fietsvergoeding uitbetalen. Tot 0,22 EUR per kilometer is die vergoeding fiscaal onbelast. Het moet dan wel gaan om een “klassieke” elektrische fiets:

  • met een maximumsnelheid van 25 km/u;
  • met een motor van maximum 250 watt;
  • met trapondersteuning, wat betekent dat de fietser ook moet trappen, er mag dus geen sprake zijn van een autonome motor.

Niet voor speed-pedelecs

Die voordelige regeling geldt dus niet voor speed pedelecs, zeg maar de Formule 1-versie van de elektrische fiets. Speed pedelecs kunnen snelheden tot 45 km/u halen. Sinds 1 oktober moeten bestuurders daarom een helm, rijbewijs en verzekering hebben.

Voor alle duidelijkheid: pendelaars die gebruik maken van een speed pedelec kunnen wel degelijk een kilometervergoeding krijgen van hun baas. Maar die uitkering wordt dan wel  beschouwd als een belastbaar inkomen. De werknemer zal dus zowel RSZ als bedrijfsvoorheffing moeten betalen. Op die regel bestaat één uitzondering: medewerkers die kiezen voor een forfaitaire aftrek van hun beroepskosten. Zij hebben recht op een fiscale vrijstelling van maximum 380 EUR.

Wat met bedrijfsfietsen?

Werkgevers kunnen hun medewerkers een fiets ook ter beschikking stellen. Alle kosten die daaruit voortvloeien, onder andere het onderhoud, zijn vrijgesteld van belastingen. Voorwaarde is dat de medewerker de fiets daadwerkelijk gebruikt voor zijn woon-werkverkeer, al zijn zuivere privé-verplaatsingen ook toegestaan. Deze regeling geldt alleen voor de klassieke elektrische fietsen. Speed pedelecs vallen (opnieuw) niet onder deze fiscale vrijstelling.

(Bron: Partena)


How the tax deduction for innovation affects you

The patent income deduction is ceasing to exist. Belgium has adopted a new tax incentive, called the ‘innovation income’ deduction: below is what you need to keep in mind for your company.

End of the patent income deduction 

Since the 2008 tax year, 80% of companies' gross earnings generated by their patents could be exempted from tax. Since then, there has, in actual fact, been a 6.798% maximum effective tax rate. The intended aim was to stimulate innovation through research and development while promoting the protection of innovation through patents.

What was the problem? Only a limited number of Belgian companies were able to make use of this deduction. This is why - in addition to the new recommendations from the OECD (Base erosion and profit shifting) - Belgium has repealed the regime restricted just to patents so that its scope can be extended. In order to reassure companies which are already affected, there will be a transitional regime which, subject to conditions, will allow such companies to continue to benefit from the former regime for a further five fiscal years.

Law extended from patents to innovation

The Chamber adopted the new deduction for innovation income at the beginning of February 2017. It entered into force with retroactive effect on 1 July 2016.

What changes for you? In addition to patents, new intellectual property rights will, going forward, now be eligible and other adjustments are set out in the law.

Key points:

  • From now on, the deduction also applies to innovation revenue from plant variety rights, orphan drugs, data and market exclusivity and copyright-protected computer programs.
  • Compensation for violation or alienation of intellectual property rights may be taken into account in respect of tax deduction.
  • From now on, the deduction remains valid even if mergers or divisions occur within the company.
  • Unused deduction can be carried forward to a subsequent taxable period. 

The rate of the deduction is currently set at 85% but note, this is after deduction of costs directly linked to R&D activities. In the event of a negative net innovation income, the negative amount will be deducted from other intellectual property rights.

The deduction is applicable to worldwide revenue from the year in which the patent application is lodged (not the year in which it is granted). If rejected, the deduction is cancelled and default interest will apply.

"This tax deduction for innovation allows us to conform to the new OECD directives on tax evasion while preventing profits from being artificially shifted. We are reinforcing the competitiveness of our SMEs and Belgium's position in terms of innovation by taking a common sense approach and extending the scope of the deduction." Johan Van Overtveldt, Minister of Finance.


Bent u uw waakzaamheidsplicht nagekomen?

De waakzaamheidsplicht tegenover leveranciers is vaak moeilijk in de praktijk om te zetten, omdat ze vaak verkeerd begrepen wordt. Wat houdt deze verplichting in België in?

In België zijn opdrachtgevers verplicht heel wat informatie in te winnen bij hun dienstverleners. Zo kan een opdrachtgever die een beroep doet op een onderaannemer, hoofdelijk aansprakelijk worden gesteld als die onderaannemer schulden heeft bij de sociale zekerheid op het moment dat een contract wordt gesloten en op het moment dat de prestatie wordt betaald. Dit betekent dat de opdrachtgever hoofdelijk aansprakelijk kan worden gesteld voor de betaling van de schulden van zijn medecontractant. Om zo'n situatie te vermijden, is waakzaamheid dan ook geboden.

Informatie verkrijgen

Om gegevens over de sociale situatie van een onderneming te verkrijgen, is er in de eerste plaats het attest in het kader van overheidsopdrachten, dat algemeen wordt gebruikt om deel te nemen aan openbare aanbestedingen. Anderzijds bestaan er ook attesten voor de bekendmaking van schuldvorderingen van de RSZ. Die vertellen de opdrachtgever of hij 35% moet inhouden op de facturen van zijn onderaannemer.

Al deze attesten zijn verkrijgbaar bij de RSZ, via de post of online.

Een attest aanvragen

Het attest dat de RSZ aflevert, vermeldt de vennootschap en vermeldt of die aangiften heeft ingediend bij de sociale zekerheid en of ze nog sociale bijdragen verschuldigd is (en zo ja, welk bedrag).

Goed om te weten:

  • Het attest is maar beperkt geldig, namelijk 3 maanden vanaf de datum van aflevering.
  • Houd rekening met artikels 30bis en 30ter. De inhoudingsplicht is van toepassing op opdrachtgevers, aannemers en onderaannemers in drie sectoren: de bouw, de bewakingssector en de vleesverwerking. Iedereen moet nagaan of zijn aannemers of onderaannemers fiscale of sociale schulden hebben. Als dat het geval is, is het verplicht een bepaald percentage van het factuurbedrag in te houden: 35% voor de RSZ en 15% voor de FOD Financiën.

Schakel een risicobeheerder in

De risico's gekoppeld aan de digitalisering maken het beheer van de risico's binnen een onderneming ingewikkelder. De risicobeheerder was vroeger een strategische functie binnen heel grote concerns, maar krijgt tegenwoordig ook een plaats binnen grote kmo's en andere middelgrote ondernemingen. Zijn rol bestaat erin alle risico's, dus ook die welke onder de waakzaamheidsplicht vallen, te identificeren, te voorkomen en te financieren.

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