Family Office

Belgium has a long tradition of family entrepreneurship and family-owned businesses. The transfers of those businesses (ownership and leadership) have long been organised in rather pragmatic ways, which we would now gently qualify as ‘old-school’.

Evolutions in modern society, as well as its growing complexity, gradually changed this. Several family businesses began to scale up enormously, often in combination with private equity and/or third-party investments. This resulted in the need for a more diversified approach.

Next to the family business, funds accumulated within the family-owned corporate structure and became available for other investments. Family holding companies evolved into investment companies.

In recent years, these family holdings have been transformed into (single) family offices. This evolution was partly also inspired by the trendy sound of this concept. Before this, only a limited number of financial service providers were operating on the Belgian market under the ‘multi family office’ flag.

Single family offices can be seen as a response to the growing complexity of families and their wealth, including increasing tax, regulatory and compliance constraints.

Families are in need of:

• more elaborate family governance (among other things, due to more outspoken younger generations); and
• more sophisticated and diversified investment strategies.

Professional service providers, from bankers to lawyers, evidently also discovered the family office concept and contributed to a growing interest for it by showcasing a wide variety of related services.

Family offices are generally set up by entrepreneurial families who have substantial wealth to invest – in most cases due to a liquidity event (eg, following the divestment of the family business or a part thereof).

Setting up a (single) family office is seen as complex and expensive, and therefore often dissuasive.

Decisive arguments to get over the cost issue can include:

• the family’s belief in the need for family governance to preserve their wealth across generations and the pivotal role of a family office in such governance; and
• their belief in striving for professionalism to improve financial results and avoid tax, legal regulatory or compliance pitfalls.

In some cases, family offices can also contribute to a family’s wish to contribute to a societal, environmental or other impact. This is a rather recent phenomenon.

A family office is always tailored to the family and its establishment will ultimately depend on the uniqueness of the family, its values and its mission.

Family office services cover a wide range of services, from investment advice to tax and legal services and even ‘walking the dog’.

Traditionally, and certainly in the early stages, mostly private bankers and other financial advisers provided family office services. In addition to investment advice, they provided tax and legal advice (mainly estate planning services) and competed with lawyers and accountants.

At the same time, some bankers moved to (independent) boutiques offering mainly investment advice or monitoring of private banks’ investment strategies, performance and risks. These service providers and their offerings, presented with a ‘multi-family office’ label, are increasing in number.

Lawyers and accountants also started focusing on dedicated private client services. Niche firms were created and the range of services was expanded –– including, for example, advisory on philanthropy and art collections.

Today, private bankers, lawyers and accountants still offer family office services, although it is recommended to verify what is precisely meant and offered.

Furthermore, the rise of single family offices has led to a new kind of provider of family office services – that is, the professionals seeking employment within these single family offices. They include:

• accountants;
• legal counsel;
• investment advisers;
• tax advisers;
• chief executive officers; and
• chief operating officers.

Working in a family office is clearly different from acting as an external service provider to a family office, in terms of factors such as;

• dynamics;
• responsibilities; and
• accountability.

This is a relatively recent phenomenon triggering new challenges, such as:

• setting up remuneration schemes;
• managing liability and conflict of interest issues; and
• hiring the right people, especially in the start-up phase. The start-up phase generally requires collaboration between the family officers and external service providers, as all necessary expertise and experience will not (yet) be available in-house.

The location of a single family offices depends primarily upon the wishes of the family and its principal(s) in particular. Given the regional and trilingual set-up of Belgium, families may want to opt explicitly for the Flemish or the Walloon region.

When connected with the family business, the seat of the business may also determine the location of the family office.

Multi-family offices tend to be based in major cities such as Brussels or Antwerp.

Given its relatively recent success, the Belgian government has not yet taken such specific initiatives.

Historically, Belgium and its tax regime have been appealing to wealthy families. Among other things, the absence of capital gains tax and wealth tax and the existence of opportunities to avoid gift and inheritance tax have led many Dutch and French families to Belgium. However, in recent years, tax changes – mainly inspired by budgetary constraints – have reduced Belgium’s attractiveness. For example, the Belgium government is currently in the process of introducing a 10% capital gains tax.

No specific rules exist for family offices as such.

If structured as a company (which is generally the case), they will be subject to the rules that apply to companies in general, such as those relating to:

• accounting;
• (tax) compliance;
• anti-money laundering; and
• data protection.

A Belgian family office and its officers may also be subject to regulations on the supervision of the financial sector and financial services.

The applicability of these regulations will depend on:

• the type of family office; and
• its activities or services.

Single family offices come in all shapes and sizes. They are tailor-made and their activities and services are customised to the needs of the family. They are generally embedded in the existing family-owned corporate structure, mostly even at holding company level. They operate with a great level of confidentiality, although publication of annual accounts in combination with increasing transparency and compliance obligations offers increasing insights into their operations. The establishment of a single family office always:

• incurs significant costs; and
• involves the challenge of recruiting the right people with the necessary skills and experience.

Multi-family offices, which are increasing in number:

• may help to reduce costs; and
• may improve investment results by pooling investable assets.

The disadvantages are that:

• they are less tailored; and
• there may be less involvement of the family.

The number of virtual family offices is hard to measure because of their informal nature. The operation of a virtual family office often depends on one or more family members:

• organising family meetings; and
• serving as the point of contact for external service providers.

This can be a good starting point, but we believe that in the long term, the lack of a dedicated team consisting of both family members and external members, and the lack of a formal structure, can hinder the proper functioning of the family office and may lead to the loss of opportunities.

The primarily focus of family offices is on investment management (eg, bank portfolios, private equity, venture capital), safeguarding the long-term financial security of the family. Other important focuses include:

• reducing the administrative burden, mostly in connection with the investments or with the family’s property management;
• putting in place estate and succession planning; and
• developing the family governance framework.

This generally happens in collaboration with external advisers.

Single family offices also focus on the education and preparation of the next generation, to ensure the continuation of the family business and the family legacy.

In some cases, family offices also assist the family with their philanthropic activities.

In principle, all high-net-worth families can benefit from setting up a family office to:

• further structure their family wealth;
• professionalise its management; and
• streamline the family governance.

Nevertheless, the feasibility of setting up a family office and the selection of its model will depend on several factors.

Often overlooked in this regard, but nevertheless essential, is the willingness of the family to set up a family office or at least to explore this option.

The selection of the most appropriate model of family office to fulfil the families’ needs will further depend on:

• the size and complexity of the family wealth;
• the family dynamics;
• the services required; and
• the cost component.

This can evolve over time, as the family’s wealth accrues and is subsequently transferred to the next generations.

Usually, (holding) companies are used to structure the family wealth – certainly when including:

• a family business;
• stakes in other businesses; or
• incorporated investments (eg, investment funds or private equity).

Such companies, whether public or private, offer the advantage of limited liability, protecting the family members’ personal assets against business creditors. However, companies are subject to a series of formalities and compliance obligations, not only at the time of their creation but also as going concerns.

The shares of these companies are often sheltered in governance and/or estate planning vehicles, such as:

• private foundations; or
• (non-commercial) partnerships.

These vehicles can generally be organised in a tax-transparent way and aim to:

• separate ownership and management (control); and
• help to shape the family governance.

This should be seen in connection with:

• the fact that in Belgium, wealth transfers to the next generation are generally organised via lifetime gifts; and
• the usual desire of donors to retain some control over or income from the gifted assets.

Private foundations and partnerships can also be used to structure non-business investments, such as:

• art or classic car collections;
• bank portfolios; or
• landmark real estate.

Foundations are also used to shape the family’s philanthropic goals.

Trusts do not exist under Belgian law, although trusts established under foreign law will generally be recognised. However, a foreign trust generally collides with Belgian tax law.

Yes, although there might be extra formalities and compliance. Also, the cross-border (tax) consequences will need to be considered, both:

• in Belgium (eg, withholding taxes and the application of double taxation treaties); and
• in the family’s home jurisdiction.

The key factors in selecting the most appropriate ownership structure include:

• the number of family owners involved and their (tax) residence;
• the family dynamics;
• the nature and location of the family assets;
• the need for a structure with limited liability (creditors’ protection);
• the required level of (professional) management of the assets and investments; and
• if applicable, the importance or need for tax, estate and governance planning.

The requirements to establish a family office depend on the chosen legal structure.

The creation of a company usually requires a notarial deed and a financial plan must be drawn up (which can be used to evaluate founders’ liabilities in case of early bankruptcy).

The deed of incorporation and the bylaws will be published in the Belgian Official Gazette. Mandatory disclosure rules apply to:

• ultimate beneficial owners (UBOs) (shareholdings of more than 25% must be recorded in the Belgian UBO Register); and
• directors (via the Belgian Crossroads Bank for Enterprises).

Furthermore, legal entities are subject to accounting, tax and compliance obligations. Hiring employees will trigger labour law and social security obligations.

The costs largely depend upon:

• the chosen model; and
• the services provided.

Generally, staffing is the largest cost for single family offices. Belgium’s labour costs remain among the highest in the European Union.

The number of employees depends on the inhouse activities and services and can include, for example:

• asset managers/investment analysts;
• accountants and controllers;
• HR managers;
• IT staff;
• legal advisers;
• communications managers;
• philanthropy managers; and
• administrative staff.

The most common executive positions are:

• a chief executive officer;
• a chief financial officer; and
• a chief investment officer.

These key positions generally also come with a considerable cost.

Other costs to consider include:

• fees for head-hunters;
• the costs for the legal set-up of the structure;
• office space;
• the costs for:
• • web design;
  • software systems; and
  • (network) security;
• the fees of external consultants;
• the costs of events; and
• marketing.

A Belgian family office may be subject to regulations on the supervision of the financial sector and financial services by the Financial Services and Markets Authority, the Belgian monitoring body.

The applicability of these regulations will depend on the type of family office. Single family offices remain generally out of scope as they:

• limit themselves to investing and managing the family’s assets; and
• do not provide investment advice to third parties.

Specific financial regulations may nevertheless apply to the family office and its officers – for example, regarding the investors’ profiles and qualifications.

If a family office is set up as a company, it is subject to corporate income tax. Belgian corporate income tax is levied at a rate of 25%. For companies with a taxable profit above €1 million, there is a minimum tax base (limitation of certain deductions). Dividend distributions by Belgian companies are in principle subject to a 30% withholding tax. Cross-border aspects can add an extra layer of complexity.

Another point of attention is the growing network of compliance obligations for family offices. Anti-money laundering regulations, exchange of information regulations (eg, the Foreign Account Tax Compliance Act or the Common Reporting Standard), international tax initiatives (eg, the EU Directives on Cross-Border Tax Arrangements, Pillar 2, the EU Anti-tax Avoidance Directives) and complex (and non-harmonised) compliance processes of banks and other service providers lead to an enormous and costly administrative burden.

Family offices and family members are subject to both internal and external risks.

Internal risks lie within the family or the family office itself. The most obvious example is a serious (intergenerational) conflict between family members. Such conflicts not only disrupt family dynamics, but potentially also form an obstacle to the proper functioning of the family office, especially when family members are operationally involved in the family office.

Other examples of internal risks include:

• reputational issues;
• leaks of confidential and sensitive information or documents; and
• continued underperformance of family officers.

Families can try to avoid or mitigate these risks by elaborating a robust set of family governance rules, adhered to by all family members and based on effective communication. Other must-haves include:

• clear dispute resolution rules aimed at avoiding or minimising escalation;
• transparency on roles and responsibilities;
• confidentiality guidelines; and
• compliance and tax conduct policies.

Obviously, family offices and their officers can play a positive role in this. The family office itself requires:

• professional management;
• talented and skilled people; and
• accountability.

External risks follow from:

• economic or financial market circumstances;
• geopolitical events (crises);
• changes in the tax and legal or regulatory landscape; and
• cybersecurity breaches.

The family office should be equipped to identify, assess, monitor and respond to such risks. If there is insufficient in-house knowledge or experience to do so, external assistance must be sought in a timely manner.

Good and regular communication between the family office and the family is very important.

Usually, a family charter sets out the values and mission of the family regarding a selection of topics, such as:

• ownership;
• governance (decision-making);
• investment policies;
• next-gen education;
• careers in the family office and/or the family business;
• succession; and
• philanthropy.

Some family charters are construed as a framework agreement containing some basic agreements (eg, decision-making rules or conflict resolution rules), which allows other topics to be gradually elaborated by the family.

Such a ‘living’ family charter might be particularly helpful to first-generation wealth families.

Some discussion can arise on the legally binding nature of family charters. It can therefore be useful to translate, to the extent possible, the agreements in legally binding documents such as:

• the bylaws of companies (family office and family business); or
• shareholders’ agreements.

The latter typically include agreements between the family members as shareholders on topics such as:

• voting rights;
• management (board memberships);
• distribution of profits; or
• possibilities to sell shares or to exit.

Ideally, family charters and related documents result from a ‘bottom-up’ process (as opposed to a ‘top-down’ imposition of the head of the family’s decisions). This is probably the best guarantee for these documents to be truly supported and complied with by all parties.

Good family governance is based on good and regular communication. This should normally also ensure that the family governance rules are reviewed and updated when necessary or useful. This is crucial for long-term success.

Ideally, the family governance rules deal with the topic of communication with stakeholders.

When communicating with family members, it is important to agree on:

• the organisation of regular meetings;
• the content of information packs for family members; and
• the ways of communicating (including securing confidentiality).

The family office can also set out rules on:

• communication with external service providers or media; and
• communication via website or social media (from a marketing, public relations or risk management perspective).

Operations of the family office itself can be managed and overseen by the chief executive officer or chief operating officer, in accordance with its proper governance rules.

The final responsibility and decision powers, however, lie with the family. The family office is therefore accountable to the family and must report to the family.

In practice, important decisions at the family office level will also be subject to approval by the family.

Family offices should strive continuously towards (greater) professionalism. This certainly applies to newly created family offices or ‘young’ family offices. In the latter case, this goes hand in hand with the growth of the family office.

The involvement and role of family members (in the family office or the family business) might at a certain point lead to challenging discussions. Some families try to adopt objective rules in this regard, requiring education and relevant experience.

Family offices should keep investing in innovative operational technology, which is crucial to ensure adequate risk management and tax/wealth reporting. Outdated technology can hide risks or lead to non-compliance with tax and other reporting obligations, resulting in serious penalties and harm to the family’s reputation.

(a) Investment and wealth management

• Investment strategy: Family offices require a well-defined investment strategy dealing with:
• • risk (asset allocation/diversification);
  • long-term (performance) goals; and
  • monitoring and review.
• Family offices will also have to decide if they want to hire inhouse investment managers, in combination or not with external managers.
• Compliance: Family offices must be compliant from a legal, regulatory and tax perspective (including but not limited to anti-money laundering regulations). In this regard, family offices should not underestimate the burden of compliance formalities required by financial institutions, both when onboarding and thereafter.

(b) Tax management

The purpose of tax management is tax efficiency, subject to compliance with all applicable tax rules. The latter not only refers to the domestic tax regulations of the family office’s home jurisdiction but requires a cross-border approach. The following should not be overlooked:

• the tax rules of other involved jurisdictions (eg, where group companies or investments are located); and
• supranational regulations (eg, double tax treaties, exchange of (tax) information obligations).

Given the complexity, most family offices are supported by tax lawyers in this field.

(c) Succession and estate planning

Belgian inheritance taxes are levied on:

• the worldwide estate of Belgian residents; and
• the Belgian real estate of non-residents.

The (progressive) tax rates differ per region (Flanders, Brussels and Wallonia). The top rate in direct line and between spouses is:

• 30% in Brussels and Wallonia (for Wallonia a reduction to 15% will enter into force on 1 January 2028); and
• 27% in Flanders.

These taxes can be significantly reduced or even avoided by setting up a succession and estate planning, generally including lifetime gifts.

Obviously, such planning should not only be tax inspired but also aim to:

• preserve the family’s wealth; and
• ensure a harmonious transfer to the next generation.

(d) Management of real estate and luxury assets (eg, private jets, yachts, art collections)

Both real estate and luxury assets require specific and customised attention. Family offices can play a role in overviewing and managing all services and service providers involved, ranging from tax, legal, financial and insurance aspects to more practical issues such as maintenance and staff or crew.

(e) Reputational management

Given the increased focus on wealth and the wealthy by (tax) authorities, the press, social media and the public in general, media policies and reputational crisis plans can be useful.

Engaging in philanthropic activities can further help the family (office) to develop and maintain a positive public image.

(f) Education and development of upcoming generations

Family offices can (and should) play an important role in next-gen education, ranging from investment education to leadership development programmes.

(g) Hiring and management of staff (eg, domestic, personal assistants, security, others)

See also question 8. It is crucial that all staff maintain the confidentiality of all information they obtain or learn, in whatever form, in the exercise of their functions.

Philanthropy can take many forms, such as:

• gifting or bequeathing certain amounts to charities; and
• raising awareness through both education and projects focused on topics such as:
• • climate change;
  • medical research; or
  • the protection of endangered animal species.
• This often takes place via foundations or within the frame of corporate philanthropy.

Gifting or bequeathing to charities:

• can benefit from lower gift or inheritance tax rates; and
• under certain conditions, is also deductible for income tax purposes.

This form of philanthropy often directs donors to established and well-known charitable institutions and non-governmental organisations or to specific causes close to the donor.

This form of giving is quite simple and accessible, regardless of the gifted amount. However, the donor generally has little say on the use of the gifted amounts.

When substantial efforts and amounts are involved, a private (or, under certain conditions, public) foundation can be established to realise the family’s philanthropic goals.

Although more costly and triggering legal, tax and compliance obligations, the creation of a foundation allows for a more structured, professionalised and long-term approach. In the case of a private foundation, the family can design and implement its philanthropic strategy in a customised manner. A private foundation can also be used as an instrument of legacy and next-gen education.

The abovementioned tax advantages can also benefit (private or public) foundations.

Finally, corporate philanthropy – via corporate social responsibility policies, sponsorships and gifts or grants – is also on the rise and relevant for family offices that are structured as corporations. Within certain limits (percentage of the profits), Belgian corporations can benefit from a tax deduction for gifts. Corporations are often warned not to turn this into a marketing or branding instrument. This should cause no problem for purpose-driven family offices.

The idea of combining financial returns with a positive social or environmental impact is gaining momentum in Belgium.

In addition to increased interest from the finance sector in general, impact investing has been embraced by a couple of family offices located in Belgium.

Key concerns include:

• a clear definition (eg, differentiation from environmental, social and governance and sustainability);
• the measuring of impact investing (including the risk of ‘greenwashing’), including in view of its potential effect on financial returns; and
• the regulatory and legal framework for impact investing, which is still developing. At the EU level, the Sustainable Finance Disclosure Regulation and the Taxonomy Regulation are relevant. At a national level, more efforts are needed to mobilise capital for impact investments.

The number of family offices in Belgium that are committed to having a positive impact on people and the planet is increasing. A growing awareness of their long-term stewardship role, especially among the younger generations, leads family offices to increasingly integrate ESG considerations into their investment strategies. However, family offices must decide on how to align these ESG considerations with their values and investment goals. This might require an open and transparent debate within the family (office), as different perspectives may exist (eg, intergenerational or on the willingness to ‘trade off’ financial returns).

See also question 7.2. and 7.3., with an emphasis on the follow up of regulatory developments and compliance.

Family offices vary widely in terms of:

• the amount and nature of the wealth they manage; and
• the types of services they offer.

These variables will obviously determine the staffing of the family office.

One important choice to be made is which roles should be kept in-house and which should be outsourced. This will be determined by the phase the family office is in and will evolve over time.

Typical roles in a single family office include the following:

• Leadership:
• • chief executive officer (CEO);
  • managing director; and
  • chief operating officer.
• Accounting and finance:
• • chief financial officer;
  • controller; and
  • accountant.
• Operations:
• • HR staff;
  • IT staff; and
  • administrative staff (eg, office manager, executive assistants, personal assistants).
• Investments:
• • chief investment officer;
  • investment manager; and
  • investment analyst.
• Legal and tax advisers (including compliance).
• Real estate: Property manager.
• Philanthropy, ESG and communication advisers.

External service providers often play a role in the delivery of other services such as:

• legal services;
• advice on family governance; and
• succession planning.

Hiring and retaining talent in a family office setting presents unique challenges.

Family offices are difficult to compare to traditional corporate work environments. They have similar characteristics to family businesses (eg, family dynamics and long-term stability), but are generally smaller and generally operate in a more discrete and less visible manner (no outspoken employer branding). Career opportunities may therefore seem less clear.

In response, family offices could:

• focus on competitive compensation, including:
• • (short and long-term) incentive plans;
  • co-investment opportunities; and
  • carried interest schemes; and
• highlight their unique work environment and the non-financial benefits of that such as:
• • flexibility;
  • work-life balance; and
  • access to exclusive networks.

The purpose of the family office and the value-based and impact-driven approach are additional convincing arguments.

Given the specific setting of family offices, it is essential to check and double-check the (cultural) fit with the potential candidate, including:

• alignment with the family values; and
• the handling of confidentiality.

Yes, family members (and at least the family principal) often assume official positions (eg, on the board of directors) and executive leadership roles (eg, CEO) in Belgian single family offices.

Family involvement can have positive effects (eg, ensuring alignment with the family values), but should be balanced with professional management.

Ideally, family members’ involvement should be:

• embedded in clear family governance rules; and
• aligned with:
• • the family member’s expertise and experience (merit-based criteria); and
  • the complexity of the family office’s operations.

Involvement based solely on family member status could create inefficiencies and jeopardise the good functioning of the family office.

It is further important to avoid or at least manage potential conflicts of interest – among other things, by providing mechanisms for checks and balances.

The hiring of staff triggers tax and legal obligations, both for the employer and for the employee.

Unless hired as an independent worker (consultant), both parties should enter into an employment contract in accordance with Belgian employment law.

Working in Belgium further generally triggers:

• social security consequences, such as paying contributions (both the employer and the employee); and
• tax obligations (including a withholding tax obligation on salaries for the employer).

The remuneration package of employees often includes a series of benefits in kind (eg, company car, lunch vouchers, pension plan), some of which benefit from favourable tax treatment.

If the employee moves to Belgium for the job, immigration and work permit rules should be taken into consideration. These can be burdensome, especially for non-EU individuals, and require prior action.

Family disputes are settled:

• in court;
• through mediation; or
• through arbitration.

The nature of the dispute (eg, divorce, inheritance, incapacity, child custody, alimony) will determine the competent court (eg, the Family Court), and the Judicial Code’s rules will apply to the proceedings.

Court proceedings in family matters often lead to an even bigger breakdown in family relationships.

Mediation is seen as a more constructive and peaceful alternative. Belgian law contains specific rules on mediation in family (or other) matters. It is generally more time and cost efficient. The parties to an agreement can commit to first resort to mediation for any disputes relating to the validity, realisation, interpretation, implementation or cancellation of the agreement, before going to court.

Further, the parties may agree to resolve their dispute by arbitration. Families may choose to adopt customised rules on arbitration proceedings, but it is also recommended to provide for ‘back-up’ rules, such as (in a Belgian context) the rules of the Belgian Centre for Arbitration and Mediation.

Court proceedings in Belgium are in principle public and may be very lengthy and hence also costly. Inheritance disputes that take more than 10 or even 20 years are not uncommon.

In particular, the Belgian forced heirship rules in favour of the deceased’s children or spouse should be taken into consideration. These rules are generally seen as quite strict and cause a great deal of disputes, often in combination with the statute of limitations, which can extend up to 30 years.

For all these reasons, it is preferable to agree on alternative dispute resolution methods, such as mediation and arbitration. This requires the insertion of clauses to this effect in all relevant documents and agreements.

Private international law rules (including EU regulations) must be taken into consideration to analyse:

• which jurisdiction will be competent to hear the matter at hand; and
• what will be the applicable law (including constraints regarding choice of law).

The recognition and enforceability of court decisions may also be relevant issues.

Obviously, a family dispute (eg, over a succession) could trigger the winding up (or at least the splitting up) of the family office.

Preventing such family disputes, or at least contributing to such prevention, should be one of the primary goals of the family office – among other things, by ensuring:

• transparent communication;
• flow of information; and
• next-gen education and involvement.

Family dispute resolutions rules can help the family to settle the conflict in a way that takes into consideration the family’s privacy and cost efficiency, among other things.

Family members can also peacefully decide to go their own way and split up the family office – for example:

• in case of a difference in vision and strategy; or
• due to international migration and its (tax) consequences.

In such circumstances, it is recommended to have an ‘exit plan’ setting out the process for such a split, including communication and confidentiality throughout the process.

Other reasons for the cessation of activities might include:

• financial distress (which can have many reasons, such as economic or geopolitical), in combination with the high (running) costs of the family office; or
• structural underperformance of the family office or specific officers, which might prompt the family to throw in the towel.

See also question 1.1.

The number of single family offices in Belgium is increasing. Some well-known entrepreneurial families have set the trend in this regard.

The evolution of the Belgian family office landscape is influenced by global developments, such as an increasing focus on:

• private equity (and, in general, on more sophisticated investment solutions);
• sustainability (impact investing); and
• technological innovations (eg, artificial intelligence).

Belgian families and their family offices are also increasingly aware that good preparation is key for a successful generational wealth transfer. Today more than ever, the importance of a good family governance (often embedded in a family charter) is recognised.

Recently, the new Belgian government announced tax reforms that would include:

• the introduction of a 10% tax on capital gains on financial assets (eg, stocks and bonds); and
• changes for corporations regarding the taxation of investments and investment income.

These may impact Belgian-based family offices and encourage them to review their investments portfolios or even their corporate structure.

The success of a family office is determined by numerous factors, many of which are subjective and specific to the individual family.

Two vital factors, however, are:

• the purpose of the family office, as defined and possibly subsequently finetuned by the family; and
• a continued striving for improvement at all levels.

The following tips should help to facilitate the smooth operation of a family office in Belgium:

• Carefully choose and plan the optimal (legal) structure.
• Implement strong good governance rules (eg, roles, responsibilities and accountability, decision-making, transparent communication processes, next-gen education and succession mechanisms) – a family charter can be useful in this regard.
• Remain compliant with all legal, regulatory and tax obligations, while keeping an eye on tax efficiency.
• Address and manage all risks, including:
• • financial and economic (investment related);
  • confidentiality and privacy;
  • (internal) conflicts;
  • cybersecurity;
  • reputational;
  • kidnapping; and
  • compliance.
• Strive for operational excellence (including technological support).
• Engage the best experts to advise and assist from the outside; and recruit, hire and retain talent for expertise needed in-house.
• Above all, be flexible to adapt all of the above when necessary or useful for the realisation of the purpose.

Potential sticking points include the following

• Family conflicts are a major issue. Disrupted family dynamics and a lack of alignment can cause serious dysfunctions for the family office. This underlines the importance of establishing (customised) governance and dispute resolution rules to prevent the family office from becoming paralysed, among other things.
• The potential impact of conflicts of interest between the family, the family office and individual family officers is often underestimated. (Internal) checks and balances are critical.
• Tax rules require particular attention. Belgium’s so-called ‘Cayman tax’ legislation:
• • targets foreign non or low-taxed entities; and
  • discourages, for example, the use of foreign foundations or trusts.
• It can also impact the tax treatment of some of the family office’s investments. Recently, the Belgian government announced the introduction of a capital gain tax for Belgian tax residents, together with a series of other measures which may impact Belgian families and their family offices.