Consider direct tax requirements and opportunities at year-end

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As the year-end is now rapidly approaching, this newsflash lists some corporate tax compliance formalities and attention points still to be considered in the remaining weeks of  2021. 

20 December – Final call for advance tax payments for assessment year 2022

Companies with a year-end closing on 31 December 2021 can still make an advance tax payment for the fourth quarter of the year before 20 December 2021 to manage the tax surcharge for insufficient advance tax payments. For assessment year 2022, a general surcharge of 6,75% will be applied to the total amount of corporate income tax due, unless the company pays its Belgian corporate income tax through sufficient quarterly advance tax payments in the course of the financial year.
A fourth quarter advance tax payment will still entitle the company to a credit of 4,50% that can be offset against the surcharge.
Please be advised that any excess payments of advance tax payments can either be carried over by way of advance tax payment for the first quarter of the next assessment year or be recovered. Such modification can be achieved via MyMinfin no later than on the last day of the third month following the taxable period.

31 December – Upcoming due date for electronic filing of BEPS 13 related documents

Belgian entities that are part of an international group that exceeded at least one of the following criteria (to be assessed based on the statutory annual accounts) in the preceding financial year are required to submit a local form and a master file/form:

  •     operating and financial income (excluding non-recurring income) of EUR 50.000.000;
  •     balance sheet total of EUR 1.000.000.000;
  •     annual average headcount of 100 FTE’s.

The local form had to be submitted already by the same due date as the tax return while the master file/form has to be submitted within a period of 12 months after the closing of the financial year.

If the consolidated gross revenue of the group for the preceding financial year exceeds EUR 750.000.000 (or the foreign currency equivalent) also a Country-by-Country Report needs to be submitted. While this Country-by-Country Report generally has to be submitted by the ultimate parent entity of the multinational group, the Belgian entity can have either a notification requirement (via a form 275 CBC NOT) or a Country-by-Country Reporting (275 CBC) submission requirement in Belgium.

The form 275 MF (and master file) and form 275 CBC should be submitted no later than 12 months after the last day of the group’s reporting period, whereas the form 275 CBC NOT should be submitted no later than on the last day of the financial year concerned,  i.e. by 31 December 2021.

However please note that the form 275 CBC NOT will only have to be submitted in case the information to be reported differs from the information that was reported in respect of the previous reporting period. 

All BEPS 13 related forms, in principle, have to be filed electronically via the MyMinfin platform of the Belgian tax authorities in XML format.

Reconstitution reserve for financial year-ending 31 December 2021

If the company reported an operating loss for the financial year 2020 and anticipates a taxable profit for financial year 2021 it is definitely worthwhile looking into the conditions for and the possibility of a temporary tax-free reconstitution reserve for assessment year 2022. Here also timing is of essence since the reserve actually needs to be accounted for in a separate account in the company’s 2021 balance sheet.

Various conditions to qualify need to be met and limitations apply but in a best case scenario the 2021 taxable profit can be exempted up to the amount of the operating loss of the financial year 2020, with an absolute maximum of EUR 20 million. See our newsletter of 30 August 2021 for more information.

Conversion of certain exempted reserves still possible for financial year-ending 31 December 2021

If the company reported tax exempt reserves, one can still review if one qualifies for one of the measures of the last corporate tax reform consisting in the possibility for companies to convert certain exempted reserves (created before 2017) into taxed reserves at a reduced rate of 15% or 10% in assessment years 2021 and 2022 .
The lower 10% rate requires that the taxable release corresponds to investments made in certain tangible fixed assets and amortisable intangible fixed assets during the assessment year concerned, which are not intended to serve as reinvestment or allocation under certain specific capital gains regimes such as the deferred capital gains taxation regime.
The corresponding taxable basis constitutes a minimum taxable basis from which no tax attributes can be deducted and no withholding tax or tax credits can be offset against the separate tax which is also subject to the general surcharge mentioned above.

Withholding tax reporting

If interest or royalties will become payable/attributable by the end of December, it is highly recommended to prepare now for the withholding tax formalities and have the certificates documenting the applicable exemption preferably signed by the date of the payment or attribution of the income.

The withholding tax return needs to be filed no later than 15 days after the date of payment or attribution of the interest and royalties (or dividends), even if one is eligible for an exemption.

How we can assist you? 

PwC would be happy to assist you with setting up MyMinfin, computing the tax provision and optimising the final  advance tax payment, the filing of BEPS 13 related documents and/or withholding tax forms and assessing the feasibility of the specific corporate tax measures. 

Please reach out to your regular PwC advisor if you have any questions in this regard.  

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