Tax

The new Belgian bank tax, adopted in July 2015 and applicable per tax year 2016, has yet been increased and with effect as from tax year 2016.

The Belgian government has adopted a bank tax on 24 July 2015 applicable to credit institutions and insurance companies (the Bank tax). The Bank tax takes the form of a limitation in the use of available carried forward tax losses, dividends received deduction and notional interest deduction in their CIT return. For credit institutions, the amount of the limitation is calculated by multiplying the amount of debt towards customers first by the bank tax rate and subsequently by the rate of the notional interest deduction applicable for the given tax year.

The bank tax rate for tax year 2016, which was initially set at 2.37% for credit institutions and 1.88% for insurance companies, has in the meantime been increased to respectively 3.39% and 2.69%. The rates applicable to tax year 2017 (financial year 2016) have been set at 4.88% and 3.88% respectively.

The abovementioned tax increase is the latest initiative in a chain of budgetary measures increasing the overall tax burden of financial institutions adopted by the Belgian government in the past years (whether in the form of measures increasing the corporate income tax base or introducing / increasing separate taxes and duties). This upwards evolution has unsurprisingly led to lots of criticism from the financial sector in the past months claiming that their overall tax burden is unreasonably high and has attained its limit.