On 10 August 2015, the Belgian Federal Parliament adopted a Programme Act (the “2015 Programme Act”) implementing 10 major tax measures to support SMEs, which play a decisive role in creating jobs and contributing to economic dynamics while often struggling to find the necessary capital for the financing of their business model.
A few of these measures are intended to help SMEs mobilize private capital as SMEs often experience difficulties in raising capital or loans, even if their business model is valuable and the company has growth prospects. The enormous gap in funding facilities between SMEs and established companies is referred to as the “funding gap”.
To minimize this funding gap, the 2015 Programme Act implements the following measures:
1. Tax shelter for start-ups
This measure entails a tax reduction for private persons who acquire shares of a start-up after 1 July 2015. To obtain this so-called “tax shelter”, several conditions have to be met, in particular regarding the share acquisition and the company itself.
The essential conditions are as follows:
- The SME:
- must be a small company according to article 15 of the Belgian Company Code;
- must not have been incorporated before 1 January 2013;
- must not be established in the context of a merger or a split of companies;
- must not be an investment, financing or treasury company;
- must not have a corporate purpose which is related to real estate;
- must not be publicly listed.
- The acquisition of shares:
- must take place via a qualified crowdfunding platform or a certified "Starter Fund” with a fixed number of securities certified by the FSMA (Financial Services and Markets Authority);
- must take place by a contribution in cash.
Once these and all other conditions comprised in the 2015 Programme Act are met, a tax reduction applies of 30% of the amount invested in an SME or even 45% if an investment is made in a so-called micro SME.
Every private person is entitled to this reduction up to a maximum of €100,000.00 per year. The SMEs themselves may only use this measure to obtain a maximum funding of €250,000.00.
2. Exemption of professional withholding tax (“bedrijfsvoorheffing/précompte professionnel”) for start-ups
To further minimize the funding gap and to stimulate and support young entrepreneurs, SMEs are exempted from professional withholding tax (“bedrijfsvoorheffing/précompte professionnel”).
To be eligible for exemption, SMEs must fall within the definition of article 15 of the Belgian Company Code and must not be registered for more than 48 months at the Crossroads Bank for Enterprises.
The exemption equals 10% (or 20% for micro SMEs) of the professional withholding tax on all remuneration payed as from 1 August 2015. A Royal Decree to be adopted later this year will govern the formalities SMEs must comply with to benefit from this measure.
3. Tax exemption on the interest on loans
This measure was adopted to encourage crowdfunding: interest on loans issued for crowdfunding is exempted from tax under certain conditions.
As of 1 August 2015, the interest over four years on the first tranche of €15,000.00 lent by a taxpayer in the form of a new loan is exempted if the loan is agreed via a crowdfunding platform between a private person managing its private assets and a company financing its economic projects.
To obtain the tax exemption, the following conditions must be met:
- The borrower is an SME according to article 15 of the Belgian Company Code or a private person who meets by way of analogy the criteria of the aforementioned article;
- The borrower has not been registered for more than 48 months at the Crossroads Bank for Enterprises or a similar register of another member state of the European Economic Area;
- The loan is agreed for a period of at least four years;
- The loan does not qualify as a refinancing loan;
- The crowdfunding platform must be approved by the FSMA or a similar authority in another member state of the European Economic Area.
This tax exemption applies without prejudice to the aforementioned "Tax shelter for start-ups”.