Here’s our overview of the tax measures agreed by the new Belgian federal Center-Right coalition.
This summary is based on the limited information currently available. All of the measures described will need to be implemented in Belgian law – most likely by the end of the year. The specific terms and conditions of these measures will then become clearer.
Corporate income tax
- Financial institutions and insurance companies will no longer be able to benefit from the deduction for capital at risk – the so-called ‘notional interest deduction’ (NID). Under the new measures, the NID will no longer be granted to entities that mandatorily need to have important capital buffers.
- From 1 January 2015, intercommunales (ie semi-public entities for, for example, the processing of waste and utilities) will be subject tocorporate income tax instead of the legal entities tax.
- The current transitional 10 per cent withholding tax regime for liquidation bonuses of Belgian companies (most likely only SMEs) will become permanent. Each year, SMEs will be allowed to transfer up to 50 per cent of their taxed reserves or taxed profits to a separate, unavailable account on the liabilities side of their balance sheet.This will be subject to a 10 per cent liquidation tax due at the time of transfer, but there would be no further taxation of the amount upon liquidation of the company. If these amounts are nevertheless distributed before the company is liquidated and within five years of the incorporation in the unavailable account, an additional 15 per cent withholding tax will be due. If distribution occurs after the first five years (but before liquidation), only an additional 5 per cent tax will be due.
- Reform of the 309 per cent secret commissions tax: the relevant criterion for applying the secret commissions tax will no longer be that no tax slips have been filed. Rather, it will be applied if the identity of the beneficiary of the commission is not disclosed. The secret commissions tax will also be reduced to 100 per cent (or 50 per cent if the beneficiary is a company subject to corporate income tax) and remain deductible as a business expense. The mere absence of (timely filed) tax slips will only be subject to administrative fines. This new regime will apply as from tax assessment year 2015, but will also be applied to all pending files (where an assessment, an administrative decision or even a court decision still has to intervene).
Stock exchange transaction tax
The temporarily increased taxes on secondary market transactions will be upheld definitively as of 1 January 2015 (0.09 per cent on bonds, 0.28 per cent on shares and 1.35 per cent on listed capitalising SICAVs and SICAFIs) and the currently existing caps per transaction (of €650, €740 and €1,500) will be abolished.
Bank tax shift – still uncertain
- The subscription tax (currently 19.29 per cent) and the credit institutions tax (4.35 per cent) might disappear to become a single tax of 13.23 per cent that will apply on outstanding amounts of deposit accounts.
- A new tax (percentage not known yet) might become applicable to off balance sheet transactions (that are not used for hedging), targeting the largest banks in particular.
Employers’ social security contributions will steadily decrease from 33 per cent to25 per cent.
Personal income tax
- Increase of the lump-sum deductions for business expenses.
- Some exempted amounts will no longer be indexed. This is the case, for example, for the exemptions for savings deposits and for dividends from recognised co-operative companies. Interest/dividends from companies with a social purpose and certain tax reductions will also no longer be indexed. This will be the case for instance for the reductions for replacement income, long-term savings, pension savings, employer’s shares.
- A so-called ‘transparency tax/look-through tax’ will be introduced: the Belgian shareholder or beneficiary from certain entities/vehicles, such as trusts or foundations (located in tax havens), will be taxed on the income received by that entity as if he directly received the income himself.
- The tax on extra-legal pension savings will be reduced from 10 per cent to 8 per cent and will partly be levied anticipatively: the amount of outstanding capital on 31 December 2014 will, for the next five years, be subject to a 1 per cent tax each year, with an additional 3 per cent levy at the age of 60.