After a new and challenging budget negotiation process, the Federal Government has recently reached an agreement on the federal budget plan for 2013. In this respect, amongst others the following two fiscal measures were announced.
Firstly, the Federal Government has decided to apply a uniform (withholding) tax rate to liquidation bonuses as from 1 October 2014. Indeed, as from that date, the proceeds from a partial or full liquidation of a Belgian or foreign company (liquidation bonus) will be subject to a 25% instead of the current 10% (withholding) tax rate.
The taxable amount of a liquidation bonus (which is classified as a dividend for Belgian income tax purposes) will still be the difference between the cash distribution to the shareholders and the capital actually paid up. Until the aforementioned date, a transition period will be available during which shareholders can continue benefiting from taxation at a 10% (withholding) tax rate.
Moreover, in the case of a capital increase by way of incorporation of taxed reserves, the 10% withholding tax rate can also be applied until 1 October 2014. In the case of a future decrease of capital, the incorporated reserves will be taxed regressively. After 5 years, no further taxes will be due.
Furthermore, the Government has decided to gradually reduce the moveable withholding tax on dividends related to shares of SMEs (Small and Medium sized Entities) from 25% to 15% over a 4-year period. This means that whoever establishes a new SME or invests in an SME (via a contribution in cash) will have to pay 25% withholding tax on the dividends received during the first two years. As from the third year of investment, the shareholder can benefit from a reduced tax rate of 20%. Finally, as from the fourth year, only a 15% withholding tax must be paid on the amount of dividend distribution.
Please note that it remains to be seen to what extent these measures will be implemented as, currently, no draft legislation is pending before Parliament in this respect.