If your company has surplus cash reserves that it will not need in the medium to long term, various investment solutions are available to you. First and foremost, however, make sure you get the right information on the risks posed by the investments and determine your risk profile in discussion with your bank.
Time deposit accounts
If your company has funds that it does not need for several months or years, it is very much in your interest to opt for a time deposit account. A time deposit account is a relatively secure investment (unless the bank where it is held goes into insolvency). The amount invested is paid out in full at maturity. Plus, apart from certain special accounts, the interest rate will not change over the product’s term.
You should be aware, however, that these surplus assets cannot be withdrawn in the course of that period, i.e. before final maturity. Prior withdrawal is still possible, but carries a penalty.
Your time deposit account should therefore be chosen based on the length of time for which you can go without these funds: whether it’s short or perhaps somewhat longer. In other words, if you opt for a short term, you will not have to do without your money for a prolonged period, but the interest that is generated will obviously be less than that on a longer-term investment. It’s important, therefore, to give careful consideration to your needs.
Belgian investment withholding tax (currently 30%) is still charged
on all interest earned on these accounts. However, some investors may
qualify for an exemption under certain circumstances.
If your company has surplus liquidities that it can go without in the long term and you want to invest the funds without having to manage them yourself, investment funds could be an attractive solution, where a fund manager decides what investments will be made.
An investment fund gathers together the savings of a number of investors and invests them in assets that are diversified to a greater or lesser extent depending on the pre-set investment objectives. Among other factors, how the fund manager diversifies the assets (say, between shares and bonds) will determined the risk posed by the fund. For example, a fund with a lot of shares and few bonds will generally pose a higher risk, whereas a fund that favours bonds much more than shares will generally present less risk, though its potential return will also be smaller.
The commonest types of investment fund are:
- equity funds,
- bond funds,
- mixed funds (equities, bonds and liquidities),
- other types (such as money market funds).
Caution above all! Regardless of their risk type and altough funds exist that have capital protection, investment funds generally do not offer capital protection or guarantees or a guaranteed return. If you would advice in this regard, you need a risk profile. You can have this determined at KBC Brussels: just make an appointment.
Put your assets to work
If you know your way in investments and are aware of the risks, it’s naturally possible to put your assets to work yourself. Mostly, you can even do so using apps that operate on your computer or mobile devices.
But, in the event of doubt, it’s best to ask for the help of
specialists. You can call those at KBC Brussels any time: what's more,
their investment know-how will allow you to benefit of their extensive
knowledge of Brussels taxation.
What type of investor are you?
If your company has surplus cash reserves and you’re interested in
some form of investment, get in touch with one of our specialists,
who will do an extensive analysis of the best options open to you.
Got questions on corporate investments?
How do I turn my company's cash reserves to profit?
In the last ten years, inflation has risen faster than the value of money. That means that, if you deposited 100 euros in a savings account ten years ago, you would now be able to withdraw 108 euros. However, 100 euros in 2008 is currently worth 119 euros. That means you'd be losing money!
How do I remedy that? Give a preference to investment
If you'd invested your 100 euros in a defensive portfolio in 2008, it'd now be worth 146 euros.
Interested in investing through your company? Our experts in business assets are at your disposal at KBC Brussels Live. You should nevertheless bear in mind the fact that past performance is no guarantee of future returns.
What tax treatment do corporate investments attract?
Unless clearly stipulated to the contrary in your articles of association, you can invest any proportion of your company's funds that you want. However, you should pay attention to certain parameters such as your risk profile, your individual situation and the tax treatment of such investments, such as maintaining the reduced tax rate and the notional interest deduction. These are all aspects that you can raise with one of our corporate assets experts.
Returns earned on your investments are fundamentally subject to corporation tax. Subject to specific requirements, some forms of equity investment do nonetheless qualify for a special allowance in terms of the dividends-received deduction (definitively taxed income).
Need further info regarding the tax treatment of your corporate investments? Contact the corporate experts at KBC Brussels Live.