Draft bill – various tax and financial provisions

Written by Nicolas de Limbourg 5 November 2012


As indicated in our headlines of 26 September and 23 July 2012, the federal government of Belgium has introduced a draft bill laying down various tax and financial provisions in the Chamber of Representatives. The bill is awaiting possible debate and approval.

The greater part of the changes in tax law concerns a simplification of the Belgian personal income tax system. In general, most of the ‘deductible expenses’ (deductible at the marginal tax rate of maximum 50%) are converted into ‘tax reductions’ (of 45% for child care expenses and gifts and 30% for the other qualifying expenses).

Alimony payments and payments for the financing of the purchase of the own and only dwelling-place are, however, not converted into tax reductions. These two items will remain deductible expenses, resulting in a tax deduction at the applicable marginal tax rate of maximum 50%.

Moreover, the existing tax reduction for payments within the framework of long-term savings (such as certain life insurance and pension savings contributions) will result in a fixed tax reduction of 30%. The proposed changes would come into effect as from tax year 2013 (income 2012).

Also, with respect to interest and dividend income, the draft bill clearly stipulates that no municipal taxes will be levied on this moveable income, irrespective of the (domestic or foreign) origin of the interest and dividend income.

The proposed measures also include various elements that may impact the taxation of non-resident taxpayers in Belgium in some rather exceptional situations.

Finally, various technical changes to the Belgian income tax law provisions are proposed.