Entities & Companies

Belgian Tax reform – Entities – Companies

Latest update : 24 April 2025

Draft Program Law

On Friday, 11 April, the Council of Ministers approved a draft program bill named the “Easter agreement.” This bill includes among others the first wave of tax measures that will be effective in the assessment year 2026 or from 1 July 2025.

Gradually, the decisions become clear and the key tax changes are the following from a corporate income tax perspective:

Participation exemption regime (so called ‘DRD – dividends received deduction’)

For companies claiming the participation exemption on the basis of an investment of 2.5 mio EUR (for example because the participation does not reach 10%), there is an additional requirement introduced to benefit from the participation exemption: the participation needs to qualify as a financial fixed asset for the investor, except if the investor is a small company.

Sicav RDT/DBI Bevek

Introduction of a 5% tax on the full amount of the exempt capital gains (corresponding to article 192 BITC) realised on these funds by the investor.
The withholding tax credit on dividends received by the investor would depend on the condition that a minimum remuneration is allocated to the director of the investor in the income year of the receipt of the dividend that entitles the investor to the withholding tax credit.

Intra-group transfer

measure to ensure that companies receiving (tax exempt) dividends can still participate in the intra-group transfer regime as if no dividend was received.

Investment deduction

Non-utilized deduction would be carried forward indefinitely
Prohibition on combining state aid for regional purposes would be removed
Rates for increased thematic investment deductions (energy, mobility, environment) would be harmonized at 40%, applicable to both small and large companies.
The draft law specifies that the 10-point increase for digital assets is intended exclusively for small companies (cfr. Law of 12 May 2024).

Tax on securities account

A new anti-abuse measure aiming to prevent taxpayers from circumventing the tax through artificial conversions or transfers of financial Instruments would be introduced (with a rebuttable presumption of abuse for conversion or transfer that surpasses a certain threshold)

Liquidation reserves and VVPRbis regime

Alignment of both regimes with, for the liquidation reserve, a reduced waiting period from 5 to 3 years and a new rate at 6,5%. The draft law would provide for a regime depending on the date of creation of the reserve and the date of distribution. For the VVPRbis regime, the rate of 20% applicable to dividends allocated or distributed during the second financial year after the cash contribution would gradually phase out.

Exit tax

this new tax would introduce the concept of a “deemed dividend” (representing the latent capital gains) for shareholders when a company emigrates or restructures in a way that transfers assets abroad. Shareholders would be taxed on this deemed dividend as if they received an actual dividend, subject to applicable personal or corporate income tax rates. A tax credit mechanism would be available to prevent double taxation when these gains are eventually realized and distributed.

Corporate Income tax simplification

Certain exemptions would be abolished (such as capital gains on company vehicles, social liabilities).

These measures are of course subject to change as they have to follow the legislative process.

Update: 31 January 2025

Over the recent years, there have been various European and international developments. Given that Belgium closely follows said international initiatives, there have again been a number of changes in the Belgian tax system this year that are the direct result of these international developments. We will briefly discuss the most important developments here.

1. Pillar 2 – Minimum taxation for multinational enterprises and large domestic groups

At the end of 2023, the law on minimum tax for multinational companies and large groups was approved in Belgium. This law transposes the EU Council Directive 2022/2523 of 15 December 2022 ensuring a global minimum level of taxation for multinational enterprise and large-scale domestic groups in the Union (also known as Pillar 2) into Belgian tax legislation. For a more extensive discussion of this introduction, please refer to our contribution from last year.

In the meantime, the Organisation for Economic Co-operation and Development (‘OECD’) has published numerous additional Administrative Guidance that further adapts and supplements the Pillar 2 rules. In order to implement these additional guidelines into Belgian legislation, several changes were made in 2024 to the Pillar 2 legislation (which was introduced in 2023). Given that further guidance is published on a regular basis by the OECD, further monitoring is required to determine whether the most recent (and possible future) changes to the OECD guidelines may also affect the Belgian Pillar 2 application.

More specifically, in the context of the Belgian implementation of Pillar 2 in 2024, two Royal Decrees (‘RDs’) were published: one regarding the Belgian Pillar 2 notification and one regarding the practical implementation of advance payments if a company is liable for Belgian top-up tax. These modalities were published in the Belgian Official Gazette on 29 May 2024 and 16 July 2024 respectively (see below). The law containing various provisions of 12 May 2024 already partially incorporated the additional guidelines published by the OECD, including the introduction of some permanent safe havens.

Background: What is Pillar 2?

Pillar 2 consists of a coordinated system of rules that must ensure that large (domestic and multinational) groups with a consolidated turnover of more than EUR 750 million during at least 2 of the 4 preceding financial years are subject to a minimum (and effective) tax of 15%. These rules apply – at least in Belgium, but also in most other jurisdictions – as from financial years starting on or after 31 December 2023.

For groups within the scope of Pillar 2 (and assuming that the financial year aligns with the calendar year), this means that financial year 2024 will be the first year in which said groups are subject to the Pillar 2 rules. Note that certain reporting obligations were already applicable for financial year 2023.

Given the complexity of the Pillar 2 legislation (and the associated assessment of whether the 15% minimum tax rate has been met), the so-called “Transitional CbCR Safe Harbour rules” were introduced to exempt groups from making the detailed Pillar 2 calculations, provided that the Qualifying Country-by-Country Report and Qualifying Financial Reporting show that no additional tax is likely to be due.

However, if the temporary safe harbour rules are not met for one or more jurisdictions, the detailed Pillar 2 calculations will need to be made for these jurisdictions (and consequently it might be possible that top-up tax would be due).

The assessment/calculation is always done at jurisdiction level, which means that all (qualifying) entities located in the same jurisdiction must be aggregated.

Note that a detailed explanation of the (complex) Pillar 2 rules is beyond the scope of this contribution.

Changes in 2024

Notification requirement

In the context of the Belgian Pillar 2 implementation, a Royal Decree was published in the Belgian Official Gazette on 29 May 2024 regarding the Belgian Pillar 2 notification. As a result, Belgium can be considered as the (or at least one of the) very first country (countries) who introduced such a notification requirement. More specifically, qualifying groups must (had to) register with the Crossroads Bank for Enterprises (‘CBE’) by submitting a Pillar 2 notification form (‘P2-CBE-NOT’) via the MyMinfin platform. Upon valid registration, these groups receive (received) a Pillar 2 CBE number for Pillar 2 purposes.

As a general rule, the notification form must be submitted no later than 30 days after the start of the reporting year for which a group falls within the scope of Pillar 2. A transitional arrangement was provided whereby the submission had to be made no later than 45 days after the publication of the aforementioned Royal Decree (i.e. 15 July 2024). A tolerance until September 16, 2024, applied to groups that would not make advance payments under Pillar 2 in 2024.

Obtaining this CBE number is essential to be able to meet the Pillar 2 compliance requirements in a timely manner (see further).

Advance payments

In addition, a Royal Decree was published in the Belgian Official Gazette on 16 July 2024 regarding the practical implementation of advance payments if a company is liable for Belgian top-up tax.

Although a similar mechanism applies as for advance payments that should be paid in view of the Belgian corporate income tax due (note that for 2024 a special tolerance still applied, allowing advance payments to be made until 20 December 2024), these Pillar 2 advance payments are in principle distinguishable from the advance payments of corporate income tax. For 2024, the excess prepayments for corporate income tax purposes are only considered to offset the surcharge and are not considered as a ‘payment’ of Pillar 2 top-up tax.

Compliance requirements

As mentioned above, the introduction of the Pillar 2 legislation also provides for more extensive (additional) compliance requirements for qualifying groups. Indeed, and in addition to the existing corporate income tax return (which must be prepared and filed separately for each Belgian entity), a Belgian QDMTT (or ‘Qualified Domestic Minimum Top-up Tax’) return will have to be filed as of financial year 2024 onwards. This return must be filed within 11 months after the end of the financial year by one Belgian entity of the group (regardless of whether any additional Top-Up tax has to be paid). Although a first draft version of this return was published by the Belgian tax authorities on 18 October 2024, a final version is not yet available per today.

Furthermore, and again simplified, if the Ultimate Parent Entity of the group is established in Belgium as well, an additional (third) return must be filed (i.e. the so-called GloBE Information Return (‘GIR’)). For financial year 2024, said return must be filed within 18 months (i.e. 30 June 2026 if the financial year aligns with the calendar year). For any subsequent financial years, the filing has to be done within 15 months after the closing of the corresponding financial year.

2. Changes to the Belgian Transfer Pricing rules

General

The Programme Act of 1 July 2016 (as published in the Belgian Official Gazette of 4 July 2016) introduced additional reporting obligations in Belgium with respect to the Belgium transfer pricing legislation. More specifically, this Programme Act introduced the three-part documentation structure – as proposed by the OECD in the context of the BEPS (‘Base Erosion and Profit Shifting’) action plan – consisting of the Country-by-Country Report, the Master File and the Local File.

These reporting obligations apply – with effect as of financial year 2016 – to any Belgian entity that is part of a multinational group and exceeds the relevant thresholds (cf. art. 321/1 – 321/7 of the Income Tax Code 1992 (‘ITC 92’)).

The three Royal Decrees of 28 October 2016 outlined the format and content of the aforementioned documentation structure:

The Country-by-Country Report is filed via the so-called “Form 275 CbC” (where CbC stands for “Country-by-Country”). The content of Form 275 CbC is fully in line with the substantive requirements of the CbC Report under the OECD Guidelines (version 2.0). The Country-by-Country Report contains information regarding the global distribution of the group’s income and taxes as well as certain indicators of the economic activity within the group.
The Master File is filed via the “Form 275 MF” (where MF stands for “Master File”). The content of Form 275 MF is in line with the content requirements of the Master File under the OECD Guidelines (see, however, “Changes in 2025”). The Master File contains information relevant to all entities of the multinational group.
The Local File is filed via the ‘Form 275 LF” (where LF stands for “Local File”). The content of Form 275 LF deviates from the substantive requirements of the Local File under the OECD Guidelines (see, however, also “Changes in 2025”). The Local File mainly contains information about the specific local entity and is largely focused on collecting and presenting financial data relating to transactions of the Belgian entity with foreign entities of the multinational group.

Changes in 2025

The Royal Decree of 16 June 2024 replaces the above-mentioned Royal Decrees of 28 October 2016 and introduces changes to the relevant forms. Said changes will be applicable for financial years starting as of January 1, 2025.

With respect to the Local File, the following changes are – amongst others – applicable:

Transactions with foreign group entities (such as goods, services and financial transactions) should no longer be reported on an aggregated basis, but on a jurisdictional basis.
All relevant documentation (such as contracts, transfer pricing studies and advance rulings) must be submitted in a readable PDF file as an attachment to the form (whereas previously it only had to be indicated that this documentation was available).
Tax identification numbers of foreign permanent establishments and main competitors must be included in the form.

With respect to the Master File, the following additional elements must be included:

A detailed description of the value chain and a functional analysis of the multinational group, followed by an allocation of profit to the individual entities within the group and a comparison and reconciliation with the transfer pricing results.
A detailed description of the DEMPE functions related to the intangible assets (including hard-to-value intangibles).
A list of transferred hard-to-value intangibles.
More detailed information on the group’s general transfer pricing policy with respect to financing arrangements.

The new explanatory notes to Form 275 MF require information that goes (significantly) beyond the substantive requirements of the Master File under the OECD Guidelines.

The above-mentioned Royal Decree does not impact the information to be included in Form 275 CbC. However, regarding the form 275 CbC NOT, for financial years starting as of 1 January 2025, it will be mandatory to indicate whether the submitted form concerns a first notification, a modification of a previous notification, or a termination of the reporting obligation. This implies that, unlike before, submitting the form will be mandatory in the event of a termination of the reporting obligation.

3. Public Country-by-Country Reporting (‘Public CbCR’)

The Country-by-Country Report provides certain information regarding the allocation of income and taxes as well as certain information regarding the economic activities of the multinational group. To further encourage multinational companies to take care of their social responsibility, an EU Directive was already published in 2021 which obliges multinational groups to make such reporting public (i.e. the so-called EU Public CbCR). Although this EU Directive should in principle have been transposed into the local legislation of the various Member States (including Belgium) by June 2023 at the latest, the Belgian law was only submitted to the Chamber of Representatives in November 2023.

The law of 8 January 2024 (published in the Belgian Official Gazette on 26 January 2024) provides for the transposition of the EU Directive into Belgian national legislation. The Royal Decree of 18 April 2024 (published in the Belgian Official Gazette on 6 June 2024) determines the form and content of the Public CbCR obligations. The Belgian Public CbCR obligations already apply for financial years which started (or start) on or after 22 June 2024. This means that for financial years which do align with the calendar year, the deadline to comply with the Belgian Public CbCR obligations for financial year 2025 is 31 December 2026 (i.e. 12 months after the closing of the relevant financial year).

This new reporting obligation applies to groups and stand-alone entities operating within the EU, with a consolidated annual net turnover of EUR 750 million for the last two financial years, and which are subject to a tax regime in at least two jurisdictions. The Country-by-Country Report must in principle be filed by the ultimate parent entity.

Belgian entities are exempt from this reporting obligation if they qualify as a SME (‘Small and Medium Enterprise’), as defined in Article 1:24 of the Belgian Code on Companies and Associations (‘BCCA’), or if they qualify as a permanent establishment with a total turnover of less than 9 million euros in the last two consecutive financial years. If a Belgian entity is required to draw up a Public CbCR, they must make it available on their website and deliver it to the National Bank of Belgium.

In terms of content, the Public CbCR is largely comparable to the (original) OECD CbCR (three-tier documentation structure). Nevertheless, the Public CbCR requires less detailed information, for example:

there is no need make a distinction between turnover from related parties and turnover from third parties;
there is no obligation to report on the book value of tangible fixed assets or the paid-up capital;
The Public CbCR requires that the information is reported separately for each EU Member State. For non-EU tax jurisdictions, the information may be aggregated, unless it concerns: non-cooperative tax jurisdictions, tax jurisdictions included in the Belgian lists of tax havens (for example art. 73/4 quater RD/ITC 92 or art. 179 RD/ITC 92) or tax jurisdictions which are considered by the Global Forum on Transparency and Exchange of Information for Tax Purposes as not effectively or substantially applying the requested standard on the exchange of information. For all other jurisdictions, reporting one aggregated figure per information item is sufficient.