On Friday, 11 April, the Council of Ministers approved a draft program bill named the “Easter agreement.” This bill includes among others the first wave of tax measures that will be effective in the assessment year 2026 or from 1 July 2025.
Gradually, the decisions become clear and the key tax changes are the following:
Corporate income tax
- Participation exemption regime (so called ‘DRD – dividends received deduction’): for companies claiming the participation exemption on the basis of an investment of 2.5 mio EUR (for example because the participation does not reach 10%), there is an additional requirement introduced to benefit from the participation exemption: the participation needs to qualify as a financial fixed asset for the investor. There is one exception, for investments in small enterprises, this additional condition would not apply.
- Sicav RDT/DBI Bevek:
– Introduction of a 5% tax on the full amount of the exempt capital gains (corresponding to article 192 BITC) realised on these funds by the investor.
– The withholding tax credit on dividends received by the investor would depend on the condition that a minimum remuneration is allocated to the director of the investor in the income year of the receipt of the dividend that entitles the investor to the withholding tax credit.
- Intra-group transfer: measure to ensure that companies receiving (tax exempt) dividends can still participate in the intra-group transfer regime as if no dividend was received.
- Investment deduction:
– Non-utilized deduction would be carried forward indefinitely
– Prohibition on combining state aid for regional purposes would be removed
– Rates for increased thematic investment deductions (energy, mobility, environment) would be harmonized at 40%, applicable to both small and large companies.
– The draft law specifies that the 10-point increase for digital assets is intended exclusively for small companies (cfr. Law of 12 May 2024).
- Tax on securities account: a new anti-abuse measure aiming to prevent taxpayers from circumventing the tax through artificial conversions or transfers of financial Instruments would be introduced (with a rebuttable presumption of abuse for conversion or transfer that surpasses a certain threshold)
- Liquidation reserves and VVPRbis regime: alignment of both regimes with, for the liquidation reserve, a reduced waiting period from 5 to 3 years and a new rate at 6,5%. The draft law would provide for a regime depending on the date of creation of the reserve and the date of distribution. For the VVPRbis regime, the rate of 20% applicable to dividends allocated or distributed during the second financial year after the cash contribution would gradually phase out.
- Exit tax: this new tax would introduce the concept of a “deemed dividend” (representing the latent capital gains) for shareholders when a company emigrates or restructures in a way that transfers assets abroad. Shareholders would be taxed on this deemed dividend as if they received an actual dividend, subject to applicable personal or corporate income tax rates. A tax credit mechanism would be available to prevent double taxation when these gains are eventually realized and distributed.
- Corporate Income tax simplification: certain exemptions would be abolished (such as capital gains on company vehicles, social liabilities).
From an employer perspective:
Carried Interest:
- The draft law would introduce a new regime for individuals or related persons receiving carried interest from Belgian/foreign AIFs (alternative investment funds)
- The income would be treated as investment income, taxed at a flat 25% rate (via withholding & income tax)
- This measure would apply to carried interests paid or attributed as from the date of enactment of the law
Hybrid company cars
- Hybrid car tax deductibility would be improved, temporarily up to 75% (based on CO2 emissions) or higher for cars with maximum 50 gr CO2 emission
- Fuel deductibility adapted (50% until 2027), electricity fully deductible
Expat regime
- Would be more attractive as of income year 2025: Exempted amount limited to 35% (instead of 30%) of the gross remuneration (uncapped). The minimum remuneration required to qualify for the regime is decreased from 75.000 EUR to 70.000 EUR, .
From a general personal income tax perspective:
- Flexi-jobs: exemption would be increased (from €12.000 to €18,000 as of income year 2025), indexed annually.
- Student work: the system would be improved by including a doubling of the exempt amount, and an increased net subsistence income (€12,000).
- Loan interest deduction (secondary residence): would be abolished as from fiscal year 2026 (hence as of January 1st, 2025) .
- Alimony payments: Deductibility gradually reduced (70% in 2025, 60% in 2026 and 50% by 2027). Payments outside EEA would be non-deductible.
- Several amounts related to tax reductions or deductions would be frozen from 2025 until tax year 2030.
- Tax simplification: several tax deductions and tax reductions would be abolished such as the tax reduction for the salaries of a domestic employee, the tax reduction for adoption expenses, tax reduction for premiums for legal protection insurance, etc. The tax reduction for gifts would be reduced from 45% to 30%.
Indirect taxes & other taxes or tax measures
- The reduced VAT rate on demolition-reconstruction projects of homes would be reinstated and extended. Real estate developers will be able to apply the 6% VAT rate for demolition-reconstruction projects on the sale of homes. This would apply to sales to private individuals living in the home (unique), and to investors renting the home to private individuals living in the home. In those cases, the surface of the home should not exceed 175m². This would be a significant improvement compared to the old rules.
- VAT on the installation of fossil fuel boilers would increase to 21%.
- The airplane tax would be increased from 2 to 5 euros for flights of more than 500 km in the EEA from 1.7.2025
Tax procedure
- The 10% tax increase for a first-time offense committed in good faith would be waived. The good faith is presumed, except in case of an ex officio assessment.
- Investigation and assessment periods would be reduced to 3 years for standard tax returns, 4 years for complex tax returns which will be exhaustively detailed in the draft law and 7 years in the case of fraud. The latter would apply for both income tax and VAT. These changes essentially partially reverse and simplify the procedural reforms introduced in 2022.
- A new tax amnesty regime would be introduced.
