KBC Groep : provides transparency regarding tax rulings

Statement - update

Brussels, 4 May 2017 (update from statement of 18 February 2016)

1. KBC Tax Rulings in Belgium

   KBC Asset Management obtained a number of tax rulings providing clarity and certainty on the tax qualification of investment products it issued.

   KBC Bank and KBC Group have also received several tax rulings.

   During the financial crisis, KBC Bank was obliged to grant a debt waiver to KBC Investments Ltd. In a decision taken in April 2010, the Ruling Commission agreed to this debt waiver being deducted from taxes.

   KBC Bank and KBC Group also received several tax rulings on the tax treatment of hybrid financial instruments they issued (qualifying as equity for regulatory purposes):

   • In a ruling in January 2013, KBC Bank received confirmation that the interest payments on its contingent capital securities (CoCo) were tax deductible.

   • In a ruling in March 2014, the Ruling Commission confirmed that the payments on the Additional Tier-1 notes issued by KBC Group and the payments on the mirroring Additional Tier-1 loan between KBC Group and KBC Bank, should be treated as tax deductible interest. In response to media coverage on this ruling, KBC published a statement on its website (www.kbc.com) on 27 March 2014 clarifying the nature of this ruling request. In its application, KBC asked for similar tax treatment to that decided on by the local tax authorities in many other European countries following publication of the stricter requirements for Basel III instruments. This treatment has already been formally approved by the local authorities in the UK, France and Spain for the financial institutions established in those countries. Based on those local rules, other European banks have already issued Additional Tier-1 instruments. All KBC has done in Belgium is request similar treatment to avoid a competitive disadvantage relative to foreign players operating in Belgium.

   • In October 2015, KBC Bank NV obtained a ruling confirming tax treatment of the liquidation loss it suffered upon closing its US subsidiary KBC Financial Holding Inc.

2. KBC Tax Rulings in the UK

   In November 2010, KBC Investments Ltd entered into an agreement with the UK tax authorities (HMRC) on the debt waiver granted by KBC Bank NV in April 2010 (see item 1 above 'KBC tax rulings in Belgium')

3. KBC Tax Rulings in Hungary

   In Hungary, a number of rulings were concluded in order to agree on the tax treatment of corporate restructurings, especially mergers.

   Besides these rulings, K&H also received two rulings that relate to VAT.

4. Other countries

There are no rulings with the Luxemburg, Czech, Slovak, US or Irish tax authorities. Bulgarian tax legislation does not contain a rulings procedure.

For more information, please contact:

Wim Allegaert, General Manager, Investor Relations, KBC Group Tel +32 2 429 50 51 - E-mail: wim.allegaert@kbc.be

Viviane Huybrecht, General Manager, Corporate Communication/Spokesperson, KBC Group Tel +32 2 429 85 45 - E-mail: pressofficekbc@kbc.be