‘Arizona’ coalition agreement: anti-abuse provisions for the annual tax on custody accounts (JTER)
Introduced in 2021, the annual tax on custody accounts (JTER) is a 0.15% tax on custody accounts with an average value of more than 1 million euros. Originally, the legislator had drawn up a number of specific anti-abuse provisions in this regard, whereby in some cases splitting a custody account into multiple accounts or converting securities into registered form could not be rebutted with the tax authorities. Specifically, this meant that the JTER was calculated as though the split or conversion* had not taken place.
The Constitutional Court overturned those specific anti-abuse provisions on 27 October 2022, meaning they could no longer be taken into account when calculating the tax. Following a report from the State Audit Office, the new ‘Arizona’ government has proposed the reintroduction of a number of specific anti-abuse provisions.
These concern:
- The conversion of securities into registered form that are held on a custody account and whose value exceeds 1 million euros
- The transfer of some of the securities that are held on a custody account and whose value exceeds 1 million euros, to one or more other custody accounts held solely or jointly by the same customer
The legislator therefore presumes that such acts have been carried out with the sole or primary aim of avoiding tax. Unlike the original specific anti-abuse provisions, this presumption can be rebutted by the account holder. In other words, if they can demonstrate that the conversion or transfer of securities was done for valid reasons other than tax avoidance, those securities will not be taken into account when calculating the JTER on the original custody account. If the holder fails to rebut this presumption, the tax will be calculated as if those actions had not taken place and an additional declaration and payment may have to be made.
The legislator stipulates that the tax authorities must be notified by the bank where the account is held, so that they can check everything. When the tax authorities are informed of the actions carried out, they may ask for more information from the account holder. As regards accounts held abroad, the holder must personally notify the tax authorities.
Example
John holds custody account A in which different types of securities are registered. Its worth 1.6 million euros on 2 May 2026. On 3 May 2026, he decides to transfer 800 000 euros’ worth of securities to new custody account B, which he opened in his own name at his bank.
To calculate the JTER, the average value of the custody account is looked at on 30 September 2026. In this example, the average value of custody account A on that date was 950 000 euros. Since the value has not reached the threshold of 1 million euros, his bank will not deduct JTER from custody account A. The average value of custody account B amounts to 800 000 euros on 30 September 2026. Again, the bank will not deduct JTER.
Due to the new anti-abuse provision, however, his bank will notify the tax authorities of this 800-000-euro transfer and they can then question John about it.
If John cannot demonstrate that this transfer was prompted by reasons other than avoiding the JTER, he will have to make an additional declaration and pay the JTER as if this transfer had not taken place. Suppose the average value of custody account A was 1.6 million euros on 30 September 2026 if the transfer had not taken place, John would have to pay 2 400 euros in tax.
Some examples of valid reasons
- A gift to the holder’s children where a portion of the securities is transferred to another account for which the children are joint holders with the donor, This can be done, for example, when creating a partnership that allows the donor to retain control of the gifted securities.
- The transfer of securities from a custody account in the event of divorce.
*Converting securities into registered form means that the securities are no longer held in a custody account, but are registered instead in the name of the owner and recorded in the register of securities holders.
This newsflash may not be construed as an investment recommendation or advice.
