Entities & Companies

Belgian Tax reform – Entities – Companies

Latest update : 3 February 2025

On 31 January 2025, a new Belgian Federal government agreement was announced, bringing with it expected significant changes in tax policy during the next government period.

From a corporate income tax (and a legal entity income tax) perspective, the most important announced measures would be the following:

DRD regime:
- the deduction would become an exemption
- participation condition:
  - the participation condition of €2,5 million is increased up to €4 million together with the additional requirement that the investment has to qualify as a financial fixed asset ; these conditions don’t apply to SMEs (as defined in Article 2, §1, 4°/1 ITC) but only to large companies and to transactions between them
  - 10% participation condition remains unchanged
The “SICAV RDT/DBI” regime would remain applicable but a 5% tax would be applied on the capital gain upon redemption and it would have to allocate a minimum remuneration to its company director to be able to offset the withholding tax
The conditions of the intra-group transfer regime would be softened:
- direct and indirect shareholdings would be allowed
- new companies no longer excluded
- DRD would be deductible of the group contribution
The wage costs for low and medium salaries would be reduced
The bank contribution would remain at the same level as in 2025
Regarding, the tax on securities account, the government will examine how, in accordance with the recommendations of the Court of Auditors, to combat the evasion of this annual tax
A solidarity contribution would be introduced on capital gains on financial assets (including investments in cryptocurrencies) at a rate of 10%:
- Basic exemption up to €10,000 (annually indexed)
- No retroactivity and with an exemption for historical capital gains from the entry into force of the tax
- Deductibility of capital losses from income of the same category in the same year, but without the possibility of carryforward
- For taxpayers with a substantial participation (more than 20%):
  - Capital gain <€1M: 0%
  - Capital gain €1 M – €2,5 M: 1,25%
  - Capital gain €2,5 M – €5 M: 2,5%
  - Capital gain €5 M – 10 M: 5%
  - Capital gain >€10M: 10%
The private pricaf/privak would be amended in a more attractive manner: problems related to limited duration, number of shareholders, the filing deadline, authorized investments would be abolished
The disallowed expenses regime would be reviewed to evaluate if it would be possible to introduce an optional system replacing the current complex calculations
The investment deduction would be carry-forward without any limit and it would be simplified or improved for green, R&D and thematic investments (less formalities, rate, …)
Accelerated depreciation would again be possible for certain investments/assets such as investments in R&D, defense and energy transition:
The liquidation reserve would be harmonised as much as possible with the VVPRbis regime: therefore, the waiting period would be reduced from 5 to 3 years but the withholding tax rate would increase from 5% to 6,5% in case of distribution after 3 years and up to 30% in case of distribution within 3 years
A new system to encourage (sustainable) investments would be introduced
Share deals: the government would help Regions (if requested) to fight against share deals concerning real estate companies
Measures against the abuse of use of private foundations and of non-profit organisations would be implemented
An exit tax for legal entities that emigrate would be introduced: the emigration would be treated for tax purposes as a fictitious liquidation of the legal entity, with the application of withholding tax

These measures are of course subject to change. They are not yet included in a draft law and, afterwards, still have to be enshrined in a law after having followed the legislative process.

For more details, don’t hesitate to contact your PwC contact.

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.