Consolidation of Joint Ventures not always required for the 30% EBITDA rule
As from assessment year 2020 (FY starting as from 1 January 2019) a 30% EBITDA rule limits the maximum amount of interest relief, whereby ‘exceeding borrowing costs’ are only tax deductible up to the higher of 30% of the tax-adjusted EBITDA or €3m. This de minimis rule should be calculated at Belgian group level. Based
COVID-19 #17 Carry-back of tax losses approved by Chamber, cash savings for companies with COVID-19 losses
In the beginning of the COVID-19 health crisis some measures were undertaken with an immediate short-term cash effect, such as the extension of the deadline for tax payments and filings. Recently, as the COVID-19 health crisis appears to be under control, the attention of the Belgian government has been shifting towards measures aimed to cope
COVID-19 #16 Change of control – impact on tax attributes
A staggering US$2,500bn. That’s the estimated ‘dry powder’ currently held by private equity firms at a global level. Although a lot of that money is likely to be invested in businesses that are coping (reasonably) well with the ongoing crisis, troubled sectors may nonetheless see a greater deal of activity as they may present opportunities
COVID-19 #15 Management Participation Schemes under water
The fact that Governments are gradually defining their exit strategy, does unfortunately not imply that managers are already seeing the exit horizon they were hoping for when they invested in the group. As we may have left the path of a buoyant M&A market, a lot of managers may be in dire straits as their
COVID-19 #14 Impact of decreasing EBITDA on interest deductibility
You don’t need a crystal ball to predict that a lot of companies will be confronted with a lower EBITDA than projected. Especially for highly leveraged businesses, this may bring some additional challenges. Indeed, by transposing the interest limitation rules embedded in the EU Anti-Tax Avoidance Directive (‘ATAD I’) in national law, Belgian taxpayers may
COVID-19 #13 Liquidation of negative net equity companies
In many groups, the current year financial performance will not meet the budget set at the start of the financial year. The current crisis is immeasurably affecting the economic landscape. When companies are no longer capable of funding their own operations, shareholders may be called to provide financial support. In circumstances like these, it is
COVID-19 #12 Corporate simplification: transitioning into a cost-efficient, substance-based and sustainable corporate structure
The current economic context highlights the need for multinational groups to realise savings, optimise cash movements within the group, rationalise management structures and/or reorganise their supply chain. Globalisation and also single sourcing of products (often only from China) made companies vulnerable for a disruption of their supply chain as has happened with many by this
COVID-19 #11 Group contribution for companies in temporary financial distress
As the effects of the current crisis reverberate throughout the global economy, it is obvious that not every business or geography has been hit equally. The same holds true for companies within a group – and even for business units within a company. Absent a tax loss carry-back system in Belgian tax law (except for
