Unless a company pays its Belgian corporate income taxes due by means of timely advance tax payments during the financial year concerned, a surcharge is due on the final amount of Belgian corporate income tax due upon assessment.
If advance tax payments are made, credits – which can be offset against the surcharge – are granted at fixed percentages, depending on the timing of payment: the sooner the advance tax payment is made, the higher the tax credit. If the surcharge is higher than the credit for a given assessment year, the balance will always be due.
For financial year 2023, the global surcharge is 6,75% (as was also the case for financial year 2022) and the first due date to make an advance tax payment for a financial year ending on 31 December 2023 is 11 April 2023 (since 10 April is a banking holiday). Already mark the next dates in your calendar: 10 July, 10 October and 20 December 2023.
Depending on the (forecasted) cash available within the company/group and the estimated taxable basis for assessment year 2024, it could be highly advisable to consider making an advance tax payment in the first quarter. Such a first quarter advance tax payment gives a credit of 9% which means that a company should make less advance tax payments as compared to paying in a later quarter (e.g. the fourth quarter only gives rise to a credit of 4,5% of the advance tax payment made) in order to avoid a surcharge.
When calculating a company’s forecasted taxable basis for assessment year 2024, one should take into account special transactions and exceptional events which may occur during the year, such as the further impact of the ongoing war in Ukraine and the high inflation. In addition, the impact of the Program law on corporate income tax budget measures (published on 26 December 2022) should be evaluated as well. In this context, we refer to (amongst others) the reduction of the threshold of the basket rule, the abolition of the notional interest deduction and the changes in foreign tax credit rules. These changes, summarized hereunder, apply to taxable periods ending on or after 31 December 2023:
- Minimum taxable income (‘basket rule’): Companies with a taxable income exceeding EUR 1.000.000 are limited in the use of (certain) tax attributes (i.e. 70% of the taxable income exceeding EUR 1.000.000). The program law provided for a ‘one-time’ measure (until the proposed Directive on minimum taxation for multinational groups in the European Union has entered into force), that reduces the use of tax assets in the current ‘basket system’ from 70% to 40% (above the EUR 1 million minimum threshold). This measure will have a significant impact on companies which have a stock of tax assets (CF DRD, CF NID, CF losses, CF ID).
- Abolition of the notional interest deduction: The notional interest deduction regime has been abolished for all companies. This abolishment will have a rather limited impact as – in practice – the notional interest deduction for large companies is 0%.
- Foreign tax credit: The lump sum foreign tax credit on royalties of 15% has been changed to a credit based on the actual foreign withholding tax which should be limited to 15%.
Next to the above and subject to conditions, one should amongst others also consider the application of the social passive exemption (which might be an opportunity in the framework of the amended basket rule), the potential non-deductibility of interest expenses following the EBITDA rule and the application of the reconstitution reserve when assessing the advance tax payment calculations for assessment year 2024.
Our experts remain available to assist with a computation including or finetuning the first quarter financials with a view of making a first advance tax payment by 11 April 2023.