Branch 6 and Branch 26: How To Build Up Your Business Cash Reserves?

As an independent business owner, it is important to invest your funds in a tax-efficient manner with the prospect of a nice return. It is recommended to find a clever way of handling the excess reserves rather than letting them evaporate in the corporate account. But what are good and tax-efficient alternatives for your available funds besides the standard supplementary pension schemes such as EIP and PLCI?

Tak 6 resize

Excess Financial Company Resources

Excess funds are sometimes deposited in a company account for years and are barely bringing in anything. In times of increased inflation, such as now, the value of your capital will even decrease. Some of the funds used to set up a liquidation reserve may sometimes take years of waiting aimlessly for a return as well. We notice that current business owners are little acquainted with solutions to enhance the available assets within the company. Below we will give further information on two alternatives, branch 26 and branch 6, which are an interesting manner for an entrepreneur to increase his liquidity.

Branch 26

Branch 26 is an interesting investment for corporations. It is a safe investment with capital guarantee and a guaranteed minimum annual interest rate that can be taken out for a limited or unlimited period. It is an insurance contract but since no insured entity is linked to it, as is the case with branch 21 or branch 23, no legal entity tax of 4.4% is payable. Only a withholding tax is due on the realized return but this can be deducted from the corporate tax payable.

Key features:

  • Insurance contract under Belgian law
  • You do not pay a premium tax of 4.4%
  • Low entry costs
  • You enjoy maximum security, capital is guaranteed and there is an annual guaranteed return of 1.75% for 8 years, which may be supplemented by an annual profit share.
  • No exit fees after 3 years

Branch 6

Branch 6 is a Luxembourg capitalization contract that allows companies to invest in investment funds. Here, admittedly, there is no guaranteed return and the investment risk is borne by the entrepreneur himself. As with Branch 26, a withholding tax is payable only on the realized capital gain. Tax simplification is the greatest asset in this case. The company is not required to annually declare the capitalized revenue of the contract if it is not collected. This ensures that the entrepreneur does not have to go through a tax administration process each time.

Key features:

  • Insurance contract under Luxembourg law
  • You do not pay a premium tax of 4.4%
  • You do not pay a stock exchange tax
  • No tax on securities accounts applicable
  • Protection by the Luxembourg Triangle of Security
  • Low entry costs
  • Access to a very wide choice of investment funds from independent trustees as well as to a wide range of trackers
  • No exit fees, immediate availability of funds

Combination of Branch 6 and Branch 26

As a business, it is definitely worth looking into the possibilities of combining both branches into one solution. For example, there is the possibility of combining a branch 26 contract with a Belgian insurer and a branch 6 contract with a Luxembourg insurer, with the branch 26 contract forming the core of the investment that focuses on security and guarantee and the branch 6 contract acting as leverage to obtain a potentially higher return.

Taking into account the current uncertainty concerning the so-called DBI funds this solution is very interesting from several aspects.

Related posts

Ambulante plannen in opmars

A healthcare budget offers tangible value for all your employees

People
19.12.2022

It is abundantly clear that it is not easy for most companies to attract new talent today. Shortages in the labour market and the war for talent represent a major challenge. Employees expect your company to offer a range of at least equally interesting fringe benefits in addition to an attractive salary. Which fringe benefits can you as an employer offer today in order to really make a real difference? Explore the various options to include a 'healthcare' budget: a benefit that offers added value to all your employees.

Read more
Read more about A healthcare budget offers tangible value for all your employees
Sectorale verhoging

Sectoral salary increases and their positive outcome on employees’ benefits package

People
24.11.2021

The Interprofessional Agreement 2021-2022 provides the sectors with a 0.4% margin for wage cost development. Most sectors are still examining how to implement this wage standard and which freedoms they will give companies in this regard. This should become clear in the coming weeks. If employers are given the option to convert this wage increase into an equivalent benefit, you may consider introducing an additional insurance for your employees or optimising an existing one. We briefly outline the various options for you.

Read more
Read more about Sectoral salary increases and their positive outcome on employees' benefits package
Ambulante plannen in opmars

Growing Popularity of Outpatient Care Plans – Importance of a Sound Comparison

People
23.11.2021

Outpatient care plans for employees have gained popularity in Belgium in recent years. In 10 years’ time the number of employers offering an outpatient or dental care plan has doubled. More and more employers are recognizing the importance of an outpatient care plan for their employees in order to distinguish themselves on the labour market.

Read more
Read more about Growing Popularity of Outpatient Care Plans – Importance of a Sound Comparison
Ambulante kosten

7 Lessons on the Growing Popularity of an Additional Plan for Outpatient Care Costs

People
15.10.2021

To distinguish themselves on the labour market, more and more employers are offering their employees an extensive outpatient care plan in addition to the hospitalisation insurance.
Vanbreda Risk & Benefits made an analysis of the data in their portfolio of insureds with an outpatient care plan. Evelyne Lauwers, Deputy Director Health Care Consultancy, and Koen De Moor, Executive Product Manager, at Vanbreda Risk & Benefits have drawn 7 major lessons from this analysis.

Read more
Read more about 7 Lessons on the Growing Popularity of an Additional Plan for Outpatient Care Costs