On March 29, 2013, the government has reached an agreement in the framework of the Budget Control 2013. Several new tax measures are announced in order to “award the loyalty of investors”, to “encourage the contribution to the capital of the companies” and to “increase their solvability towards the banks”.
Please note that neither final text, nor draft bill are available at this stage. The following comments should therefore be read with the greatest caution.
New withholding tax rate on liquidation bonus
The current advantageous withholding tax rate of 10% on liquidation bonus will be increased to 25% (general withholding tax rate) as from 1 October 2014.
However, it is possible to anticipate this increase by incorporating reserves (e.g. reserved profits) in the capital of the company before 1 October 2014 (withholding tax of 10% will be applicable). In case of subsequent capital decrease, those incorporated reserves will be taxed at a degressive rate: 15%, 10% (the 3rd year), 5% (the 4th year) and 0% (the 5th year).
New withholding tax rate on certain dividends
The current withholding tax rate of 25% on dividends will be decreased where those dividends relate to new issued shares in SME’s.
The withholding tax rate on such dividends (currently fixed at 25%) will be decreased to 20% as from the 3rd year of “loyalty” and to 15% as from the 4th year.
This new regime is only applicable where the new shares are issued in exchange of cash contributions and where those shares have been held for an uninterrupted period.
This withholding tax reduction is definitive even if the company is liquidated or if the company is growing (i.e. not being a SME anymore when the dividend distribution is made).
Modification to the notional interest deduction regime
Announced as an anti-abuse measure, the modification provides that the companies will not be able to simultaneously benefit from the dividend received deduction regime and the notional interest deduction regime on shareholdings representing a participation of more than EUR 2.5 millions and held for more than one year when those are booked under ‘investments’ (by opposition to “financial fixed assets”).
As from tax year 2014, the dividend received deduction will have priority meaning that those important shareholdings will only be taken into account for the computation of the notional interest deduction in case they do not meet the conditions to benefit from the dividend received deduction.
New registration duties on the constitution of long-lease rights and building rights
It is also foreseen to increase to 2% the registrations duties on the constitution of long-lease rights and building rights, currently fixed at 0.2% (from 0.2 to 0.5% for non-lucrative associations).
Finally please note that the fixed registration duties for a notary deed will be increased from EUR 25 to EUR 50.