In October, the Belgian Government reached an agreement on the federal budget. The draft program law including these measures has just been tabled in the Chamber of Representatives.
From a corporate income tax perspective, the relevant provisions of the draft law are:
Minimum tax
A temporary reinforced minimum tax would be applicable until the law transposing the proposed Directive on minimum taxation for multinational groups in the European Union has entered into force.
- The draft law provides for a one-time measure that reduces the use of tax assets in the current ‘basket system’ from 70% to 40% (above the EUR 1 million minimum threshold).
- If approved, this measure will enter into force on 1 January 2023 and will be applicable to tax year 2024 which relates to a taxable period which starts on 1 January 2023 at the earliest.
- An anti-abuse rule has been included to counter any changes made to the closing date of the accounting year from 11 October 2022 and which cannot be justified by the taxpayer for reasons other than tax avoidance.
- This measure would have a significant impact on companies which have a stock of tax assets (CF DRD, CF NID, CF losses, CF ID).
Notional interest deduction
The notional interest deduction regime would be abolished for all companies. This abolition will be applicable to taxable periods ending on or after 31 December 2023. The same anti-abuse rule as provided for the basket (minimum tax) would also be applicable to the notional interest deduction.
Foreign tax credit
The lump sum foreign tax credit on royalties of 15% would be changed to a credit based on the actual foreign withholding tax which should be limited to 15%. However, when the debtor of the income has borne the foreign withholding tax in discharge of the beneficiary, the denominator is equal to 100. These changes would apply to taxable periods ending on or after 31 December 2023.
Contribution of the financial sector
Banking tax and insurance tax for credit institutions, collective investment undertakings and insurance companies would no longer be fully tax-deductible; 80% of this tax would become a disallowed expense.
Reform of the copyrights regime
The draft law also provides for a reform of the copyrights regime. It aims to reduce the scope of this regime (definition of the copyrights) and will likely only apply in situations of direct commercialisation of copyrights (see our special news flash on this topic).
These provisions are subject to change in the course of the legislative process.
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