October 10, 2014
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Karen Van de Sande
Baker & McKenzie CVBA/SCRL
Louizalaan 149 Avenue Louise
Tax measures of new Belgian government
Yesterday, the political parties forming a new Belgian government have
published their Coalition Agreement, in which, amongst others, a series of tax
measures are announced.
The following provides you with an overview of the headlines of these
measures as described in the Agreement. Note that this Agreement is, on
certain measures, quite general and that not all relevant details are already
1. Corporate income tax measures
(i) Notional interest deduction
Although not mentioned in the Coalition Agreement, it is envisaged to limit the
current NID-regime for financial institutions and insurance companies. More
specifically, the net equity that is required pursuant to the Basel III minima
(Tier 1) would not longer qualify for NID.
(ii) Amended secret commission tax
Under the current rules, a company which has not properly reported salaries,
commission fees, advantages in kind, etc. on fiscal vouchers, may be subject
to the so-called "secret commission tax" at a rate of 309% on the not duly
reported amounts. It is announced that this secret commission tax will be
amended and that the rate will be reduced.
(iii) Beneficial tax regime for liquidation proceeds of SME's
As of October 1, 2014, the withholding tax rate for liquidation proceeds was
increased from 10% to 25%. The beneficial rate of 10% will, however, be
reinstored for SME's.
More specifically, SME's would each year be able to transfer part of their
taxed reserves on a separate equity account, at which time a 10%
(withholding) tax would become due on these amounts. This 10% tax would
become final in case the company is liquidated later on. In case the reserves
are, however, distributed as dividends prior to the liquidation of the company,
additional withholding tax will still apply, i.e.
- at a rate of 15% in case of a distribution within a period of five years
following the transfer;
- at a rate of 5% in case of a distribution after five years.
(iv) Other corporate income tax measures
- Limitation of the scope of application of the so-called "catch-all
provision" for non-residents (i.e. a 16.5% withholding tax on the
payment of remuneration for services to certain non-resident
- Entering into a "tax pact" to eliminate legal uncertainty.
- Simplification of the regime for disallowed expenses, pursuant to
which three categories of disallowed expenses would be introduced,
i.e. penalties and taxes, advantages which cannot be individualized
2. Personal income tax measures
(i) Tax transparancy for legal arrangements
The Coalition Agreement envisages the introduction of a "see-through tax", as
a result of which the income of so-called legal arrangements (i.e. trusts,
foundations, certain tax haven companies etc.) will be taxed directly in the
hands of the Belgian resident founder or beneficiary.
With reference to our previous tax alert of December 2013, the possible tax
transparency of legal arrangements has already been discussed by the
Belgian government last year in order to further discourage the use of such
legal arrangements (following the introduction of the reporting obligation for
legal arrangements as of assessment year 2014).
(ii) Other personal income tax measures
- The tax on extra-legal pensions would be lowered from 10% to 8%
but would be withheld upfront and spread over time.
- The lump sum deduction for business expenses will be increased.
- The automatic indexation of certain tax (re)deductions (not affecting
professional income) would be limited.
- Possible abolishment of the minimum taxable benefit in kind for ecofriendly
3. Miscellaneous tax measures
- The reduced 6% rate for renovation works with respect to private
dwellings will only be applicable after 10 years (rather than 5 years).
- System of penalties and late payment interest would be amended.
- Possible increase of the threshold for the VAT exemption for small
- Abolishment of the VAT exemption for esthetic surgery and treatment.
- Modernization of the VAT return.
(ii) Financial transaction tax - stock exchange tax
Gradual introduction of a financial transaction tax, which should focus on
transactions in shares and derivates with a speculative nature. The current
regime of the stock exchange tax would in this respect be revised, but it is in
the meantime expected that the rates will increase and that the caps will be
abolished. The latter is, however, not referred to in the Coalition Agreement.
The relationship between tax authorities and taxpayers should be
strenghtened (i.e. the so-called "tax-cification") by a.o.:
- Evaluation of the general anti-abuse provision and confirmation of the
possibility for the Ruling Commission to rule on the application of such
- Coordination of a Federal Tax Code with updated comments of the
- Harmonisation of tax procedures, with a focus on efficient dispute
settlement in the pre-taxation phase.
- Further digitalization of the communication between tax authorities
- Modernization of tax audits, with a focus on collaboration between the
tax authorities and taxpayers on the one hand and between tax
authorities and other Belgian or foreign administrations on the other
- Modernization (simplification) of the court registrar duties.
- Focus on more efficient customs authorities.
(v) Combatting fraud
- Further battle against tax fraud, money-laundering and the financing
- Clarification of the notion "serious tax fraud".
(vi) Excise duties
- The excise duties on tobacco and diesel will be increased.
- Certain excise duties would become subject to annual indexation.
The current eco-tax on e.g. disposable bags and cutlery would be abolished.
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