On 29 May 2024, the law of 12 May 2024 containing various tax provisions was published in the Belgian Official Gazette. This law implements several changes to the regime of the investment deduction and the innovation income deduction (IID).
Key features of the new legislation are summarized below. For more information, we refer to our previous newsflashes of 14 November 2023 and 2 April 2024.
- The new regime is organised around three “tracks”:
- The general track: ordinary investment deduction (10% or 20% (qualifying digital investments, Royal Decree still to be published))
- The targeted track: an increased “thematic” investment deduction (replacing the specific categories of qualifying investments) (40% or 30% (non-SME)). A list of eligible investments for this investment deduction will be published by Royal Decree (and will be reviewed / updated periodically). The increased thematic deduction will only be applicable to fixed assets for which no regional aid is requested (exceptions to be determined by the King).
- The technology track: the so-called “technology” deduction applies in relation to qualifying investments in patents and fixed assets which are used to support research and development of new products and future-oriented technologies that have no impact on the environment or that aim to minimise the negative impact on the environment of existing products and technologies (13,5% (one-off) or 20,5% (spread, not applicable to patents)). Taxpayers could opt to apply a tax credit for this category of investments.
- The law provides for fixed investment deduction rates and will no longer be subject to the yearly indexation mechanism.
- A taxpayer can only choose one of the above-mentioned types of investment deduction per fixed asset.
- The general conditions to benefit from the investment deduction remain the same.
- The new regime as well as the correction related to the (partial) professional withholding tax exemption regime to determine the investment deduction basis will be applicable for investments made as of 1 January 2025.
- As of assessment year 2025, taxpayers will have the option not to offset part or the full amount of IID against the taxable basis but to convert it into a non-refundable tax credit for innovation income.
- The tax credit for innovation income can be carried forward and offset against corporate income tax of (one of) the following taxable periods. Taxpayers will have the choice for each taxable period whether or not to apply this tax credit. From 2026 onwards, the effect of the tax credit for innovation income will be evaluated on a yearly basis, paying special attention to the budgetary cost of the measure and Belgium’s competitive position compared to neighboring countries.
Any further questions? Don’t hesitate to reach out to Evi Geerts, Pieter Deré, Tom Wallyn or your regular PwC tax contact.
