Belgian tax reform: new chapter

Written by Nicolas de Limbourg 4 August 2017


On 26 July 2017, the federal government reached a ‘summer agreement’ on an important tax, economic and social reform package.

The tax reform is built around three pillars: budget neutrality, simplification and fair taxation. On top of the tax reform, several additional measures will be taken to boost job creation, with corresponding investments in the active Belgian economy.

Details on the announced measures, including draft legislation and implementation dates are expected to follow in September. For a more comprehensive overview, please visit our tax reform website.

From a personal tax point of view, the following measures (to be implemented gradually over the next few years, beginning as from 1 January 2018) were announced:

  • A new possibility will be introduced for employees to participate in the profit of the company via a specific “premium”.  It will become accessible for all employees within a company (excluding self-employed company directors), without having to participate in the capital of the company. The employee will have to pay a social-security contribution of 13,07% on the premium. Moreover, a tax rate of 7% will be applicable in the hands of the employee. The implementation of this measure will not be imposed to employers and will thus not be mandatory. For those employers who are willing to make use of it, a non-complex procedure will be foreseen for implementing the profit participation premium. No shift will be allowed towards a profit participation premium in disadvantage of the traditional remuneration package.  At the level of the employer, the premium may not exceed 30% of the salary mass. Finally, the profit participation premium will not be taken into account for the calculation of the wage norm (which determines the maximum margin of increase in wage costs in the private sector and in certain state-owned enterprises).
  • Tax (and social security) exemption up to EUR 500 per month (EUR 6.000 per year) for income resulting from spare time work and specific functions in the non-profit sector. It is anticipated that this measure will also be applicable for services rendered between individuals. However, the new exemption would be only applicable for those who work at least 4/5 (in their main professional activity) and for retired individuals.
  • Harmonisation of lump-sum professional expenses for the benefit of self-employed individuals taking into account the example of the calculation method for employees.
  • Much debated was the new annual tax on securities accounts. The government now reached an agreement to tax portfolios of EUR 500.000 or more at a rate of 0,15% on the full amount on the account. The scope of application will not be limited to Belgian accounts only. The assets in scope consist of quoted shares, bonds and investment funds. Pension saving accounts and life insurance are excluded. The tax would be collected by the banks who would also determine the value of the accounts concerned. It may be that anti-abuse measures would be introduced in respect of this new tax to avoid tax evasion.
  • The annual threshold for the traditional exemption of withholding tax on interest received on savings deposits would be decreased from EUR 1.880 to EUR 940.
  • To stimulate investment in shares, a new withholding tax exemption will be introduced, notably for dividends up to a threshold of EUR 627 per year.
  • Pension savings: the existing system of pension savings foresees a tax reduction of 30% calculated on a maximum amount of EUR 940 per year.  Going forward, a second system will be introduced which will allow taxpayers to get a tax reduction of 25% (instead of the current 30%) on a maximum savings amount of EUR 1.200 (instead of the current EUR 940).  As a result, the current maximum tax reduction of EUR 282 can thus increase up to EUR 300 per year if the taxpayer makes an additional pension savings contribution of EUR 260. Taxpayers will be able to choose between both systems.
  • The rates of the stock exchange transactions tax will increase from 0.27% to 0,35% for the selling and purchasing of shares and from 0,09% to 0,12% for the selling and purchasing of bonds.
  • Certain loopholes relating to the Cayman tax would be closed.

In case of any questions, please don’t hesitate to contact us.