Belgian Tax reform – Entities – Companies
Latest update: 6 April 2021
New tax support measures adopted by the Chamber
On 1 April 2021, the Chamber adopted the draft law on temporary support measures in the light of the Covid-19 pandemic. Existing measures are extended until the end of June 2021. Additional tax and economic support measures have been also approved notably in favor of companies and workers.
- Waiver of rent :
- Tax reduction of 30% for lessors who waive the rent and rental benefits of tenants who were forced to close their business due to the corona measures. The system is available if the tenant is an individual self-employed, a small company according to art. 1:24, §§1 to 6 of the Company & Association Code or a small association. The tax reduction is subject to a number of conditions.
- The measure is valid for the rent of the months March, April and May 2021.
- The tax reduction is equal to 30% of the amount of the rent and rental benefits that have been waived. A maximum of EUR 5 000 per month per lease can qualify for the tax reduction, and a maximum of EUR 45 000 per month per lessor.
- For corporate tax purposes, the benefit is granted in the form of a non-refundable tax credit
- VAT, customs and excise duty:
- lower interest rates for late payment (only for Q2 2021)
- The law aligns the rates for late payment and moratorium interest in VAT and customs and excise duties with those in income taxes. This means that the rate will drop drastically from 9,6% to 4% and 2% respectively.
- The interest rate adjustment will only apply to the second quarter of 2021.
- Definite abolition of the December advance payment for VAT (extension 2020) and for wage withholding tax (new).
- Reactivation of the tax shelter SME: in order to strengthen the equity capital of companies and to encourage taxpayers to subscribe to capital increases of companies facing a significant negative impact on their turnover, this measure is reactivated until 31 August 2021. This offers subscribers a temporary tax reduction of 20%. Companies facing a loss of turnover of more than 30% in the period from 2 November 2020 to 31 December 2020 are eligible.
- Exemption of regional corona premiums (allowances granted by the regions, communities, provinces or communes in relation to the Covid-19 pandemic) until the end of 31.12.2021.
- Exemption for overtime: The tax exemption for remuneration of overtime in the critical sectors (including the care sector) is extended until the second quarter of 2021. The number of exempted voluntary overtime hours is kept at 120 hours for the first and second quarter of 2021 together.
- Extension until 30.6.2021 of measures already extended until 31.3.2021 at the end of last year:
- the non-inclusion of remuneration for student work in the care and education sectors for the calculation of the resources (“bestaansmiddelen”/”ressources”);
- the arrangement whereby no wage withholding tax is deducted from the salaries for student work in the care and education sectors is extended to the salaries for services in the second quarter in these sectors;
- the reduction of the VAT rate to 6% for mouth masks and hand gels;
- the exemption for notarial powers of attorney.
Entry into force: 1 April 2021
Law of 17 February 2021 introducing a new annual tax on securities accounts (Official Gazette 25 February 2021)
On 11 February 2021, the Chamber adopted the draft bill introducing a new annual tax on securities accounts in the Code of Various Duties and Taxes (CVDT).
In a nutshell, the tax is an annual tax on the holding of a securities account, levied at the rate of 0.15% on the average value of the account in excess of EUR 1.000.000.
Scope of Application
The tax applies to securities accounts as such and therefore in principle concerns all securities accounts, whomever the account holder is – natural person, company, legal entity, “legal arrangement” in the meaning of the Cayman Tax or de facto association – whatever its tax residency status – resident or non-resident – and its legal rights on the account (full ownership, bare ownership, usufruct).
However, the tax is not due on securities accounts held by specific types of financial institutions in the course of their own business activities, i.e. (sic) “exclusively for their own account”.
Residents (including Belgian permanent establishments of foreign companies provided the double tax treaty concluded with its country of residence allows such wealth taxation) are taxable on securities accounts held in Belgium or abroad. Non-residents are taxable on securities accounts held in Belgium only (and provided the double tax treaty concluded with its country of residence allows such wealth taxation).
The tax is levied on securities accounts with an average value of taxable financial instruments in excess of EUR 1 million.
The nature of the financial instruments held on the securities account is irrelevant, only the total value of the securities account is.
To compute the “average value” of the securities account, the reference period is a period of twelve successive months beginning on 1st October and ending on 30th September of the following year. The tax is due on the first day following the end of the reference period. Specific rules apply for securities account closure, tax residency changes, if the securities account is no longer part of the assets of a permanent establishment of a foreign company or if it no longer meets the definition of securities account within the meaning of the Law.
Transitional measures provide that the first reference period begins on the day of the entry into force of the Law (i.e. the day following its publication in the Official Gazette) and will end on 30 September 2021.
Tax Rate and Ceiling
The tax rate would be set at 0.15 p.c.
Where applicable, the amount of the tax is limited to 10 p.c. of the difference between the tax base and the threshold of EUR 1,000,000. In this way, the government wishes to prevent the collection of the tax from causing the assets to fall below the threshold of EUR 1,000,000.
Declaration and Payment
The tax is collected indirectly, i.e. through a financial intermediary (i.e. any intermediary which offers securities accounts: credit institutions, brokerage firms, investment firms).
- Belgian intermediaries must levy the tax, i.e. intermediaries constituted in accordance with Belgian law, intermediaries established in Belgium, and intermediaries not established in Belgium which have appointed a responsible representative. Belgian intermediaries shall file a declaration with the competent office, and shall pay the tax, no later than the 20th day of the 3rd month following the end of the reference period.
- If the intermediary does not declare and collect the tax, this obligation falls back on the account holder. In the cases where the holder is liable, the latter shall file an electronic declaration via the electronic platform MyMinfin, no later than the last day provided for the submission of the personal income tax return. The tax shall be paid no later than 31stAugust of the year following the end of the reference period. A paper filing can be accepted in specific cases.
If a securities account is held by several holders, each holder is jointly and severally liable for the declaration and payment of the tax.
Lack of declaration, late, inaccurate or incomplete declaration as well as non-payment or late payment are punishable by a fine which is established according to the nature and seriousness of the offence, according to a scale ranging from 10 p.c. to 200 p.c. of the tax due.
Specific anti-abuse rules
As regards the new tax on securities accounts, two situations are covered by specific anti-abuse rules, based on irrebuttable presumptions of abuse:
- 1° the split of a securities account into several securities accounts held with the same intermediary.
However, in the event of separation or death resulting in the termination of the forced indivision of a securities account, the irrebuttable presumption will not apply. The same goes if, for example, an account of EUR 50.000 is divided into two accounts of EUR 25.000.
- 2° the conversion of taxable financial instruments, held in a securities account, into registered financial instruments.
General anti-abuse rule
A general anti-abuse rule (GAAR) is introduced in the CVDT, the wording of which is similar to the GAAR existing in other tax codes. The GAAR is not limited to the application of the new tax on securities accounts, but applies to all other duties and taxes of the CVDT.
With regard to the tax on the securities accounts, the anti-abuse rule applies retroactively as from 30th October 2020 (see publication in this respect in the Belgian Official Gazette of 4 November 2020).
The explanatory statement of the Act lists eight situations (a priori non-exhaustive list) which may a priori constitute tax abuse (the first five situations were already mentioned in the Notice on the introduction of an annual tax on securities accounts, Belgian official journal, 4 November 2020, sec. ed., pp. 79255-79256):
- the split of securities accounts by which securities are moved between securities accounts with the same financial intermediary or to securities accounts with another financial intermediary in order to prevent the total value of the securities on an account from exceeding the threshold of EUR 1.000.000;
- the opening of securities accounts by which securities are distributed between accounts with the same financial intermediary or with another financial intermediary in order to prevent the total value of the securities in an account from exceeding the threshold of EUR 1.000.000;
- the conversion of shares, bonds or other financial instruments into registered securities so that they are no longer held on a securities account.
This is, for example, the case when the conversion takes place in situations where it is customary for the securities to be held in a dematerialised manner and where the conversion does not concern (often large) equity holdings in (mainly) family companies held as a long-term investment and/or for control purposes, which are moreover outside the normal framework of an investment portfolio;
- the placement of a securities account subject to tax in a foreign legal person which transfers the securities to a foreign securities account;
- the placement of a securities account subject to tax in a fund in which the units are registered;
- the transfer of an existing securities account or a unit-linked life insurance contract to a unit-linked life insurance contract concluded with an insurance undertaking established outside Belgium;
- the transfer of a securities account when the securities are transferred abroad to the same financial intermediary or to accounts with another financial intermediary;
- the holding of a securities account in which all securities have been sold or transferred in order to create zero values at reference points in order to reduce the average value of taxable financial instruments during the reference period.
A refund procedure is foreseen in case of overpayment.
Entry into force: the day following its publication in the Official Gazette (except the provisions related to the anti-abuse rule – see above).
Law of 20 December 2020 laying down urgent provisions in tax matters and the fight against fraud (Official Gazette of 30 December 2020)
The draft law has been adopted by the Chamber on 17 December 2020 and has been published in the Official Gazette on 30 December 2020. It includes a.o. the following measures:
- adaptation of some provisions regarding the interest limitation deduction (the so-called “EBITDA-rule”), notably according to the comments of the European Commission;
- introduction of tax defensives measures vis-à-vis the non-cooperative jurisdictions which are part of the EU list (last updated list published in the Official Journal of 7 October 2020):
- Cayman tax : the draft law introduces a presumption that an entity meets the definition of “legal construction” covered by the Cayman tax if this entity is established in a jurisdiction included on the EU list. The scope of legal constructions covered by the Cayman tax is therefore extended to entities established, at the end of the taxable period, in a jurisdiction included in the EU list of non-cooperative jurisdictions. Entry into force: taxable periods closed as from 31.12.2020.
- non-deductibility of costs : extension of the reporting obligation to payments made to tax havens included in the EU list (if resident at the time of payment). Entry into force: payments made from 1.1.2021.
- CFC rules: taxation of undistributed profits of the taxpayer if they are received by a foreign company established in a jurisdiction which, at the end of the taxable period, is included in the EU list, whether or not the holding condition or the condition for taxation is met. Entry into force: taxable periods closed as from 31.12.2020.
- DRD: dividends distributed by a company resident in a jurisdiction which, at the end of the taxable period, is included in the EU list, are excluded from the DRD deduction. Entry into force: dividends allocated or attributed from 1.1.2021
- restore the provisions regarding the sharing economy and make some changes to it;
- provide a legal basis in respect of the exemption from payment of withholding tax for researchers holding a bachelor’s degree.
Program Law of 20 December 2020 (Official Gazette of 30 December 2020)
The most important tax measures introduced from a corporate tax perspective are the following.
Increased investment deduction
With the increased investment deduction, the Belgian government clearly intends to further encourage certain investments by small and medium sized enterprises. Under the normal investment deduction regime, small and medium sized enterprises can deduct 8% of their investment from their taxable income. Due to the COVID-19 crisis, this basic percentage has been increased to 25% for investments done in the period between 12 March 2020 and 31 December 2020. The program law now extends this measure to investments carried out until 31 December 2022.
Support for training of employees
The government wants to emphasize and encourage lifelong learning for employees. Therefore, employers are able to receive financial support if they organise at least 10 additional days of training for each employee (on top of what is legally required). More specifically, if all conditions are met, employers are able to benefit from a partial exemption for transfering Belgian wage withholding taxes. As a result, employers are entitled to a subsidy of 11,75% calculated on a part of the salary in the month during which the training took place. Note that the employee must work for at least 6 months for the employer and that not all training will qualify for this measure.
Law of 19 November 2020 regarding the reconstitution reserve published (Official Gazette of 1 December 2020)
On 12 November 2020, the Chamber adopted the draft law regarding the reconstitution reserve. It has been published in the Official Gazette of 1 December 2020.
In May 2020, the government introduced a mid-term measure that aims to enable companies to gradually restore their solvency position going forward.
To that end, a tax-exempt reserve can be recognized by a company at the end of the taxable period relating to the assessment years 2022, 2023 and 2024.
The exemption will be granted up to a maximum amount equal to the Belgian accounting operating loss over the financial year 2020, capped at 20 million EUR. For each assessment year, the amount of the exemption that can be claimed will be limited to the increase of taxable reserves in the financial year without considering the impact of the booking of the ” reconstitution reserve” in application of this specific tax measure, up until the cap is reached.
Specific rules will apply for companies with a year-end closing between 1 January 2020 and 31 July 2020.
The scheme will hence only be available, depending on the financial year’s closing date, for companies that realize an operating loss for Belgian accounting purposes during either financial year 2020 (or financial year 2021, in specific circumstances).
The exemption will be subject to two conditions. The reserve will have to be recorded on one or more separate liabilities accounts and will be subject to the so-called intangibility condition. Moreover, it will not be available for companies with a shareholding in a company located in a tax haven country and companies that have made payments to tax haven companies unless these payments can be justified based on specific grounds (period between the 12 March 2020 and the end of the taxable period during which it benefits from the reconstitution reserve).
The “reconstitution reserve” will become partially or fully taxable in a given year to the extent the company will distribute dividends, execute share buy backs or make capital reductions or will in such year record material lower (“62 account”) salary, social liabilities and pension expenditures compared to the last financial year prior to the COVID-19 period (exceptions apply).
As for the loss carry back measure, similar companies are excluded from this measure. Companies that execute between 12 March 2020 and the date of filing of the tax return related to the financial year during which the reconstitution reserve is created a capital decrease, share buy back or dividend distribution are also not entitled to this measure.
Certain formalities will need to be applied to benefit from this measure.
Entry into force: ten days after the publication in the Official Gazette.
Belgian tax reform: new measures announced
On 30 September, 7 political parties reached an agreement on the formation of a new Belgian government (the so-called Vivaldi government). The agreement mentions the intention for a relance and investment plan of 4.7 bln EUR including measures with important social accents. To provide the necessary budgetary room for this plan, some important tax measures have been announced:
- an important measure relates to the taxation of digitalised companies and the introduction of a minimum tax for businesses. Belgium will constructively support the international initiatives at EU and OECD level in respect of the Pillars and taxation of the digital economy. International agreement is preferred but if no action is taken at international level by 2023, the intention is to proceed with the necessary measures unilaterally.
- During the term of the government, a significant tax reform (with a particular focus on the personal income tax side) would be prepared which should be realised in 2024. In combination, the fiscal amnesty procedure would be terminated by the end of 2023.
- The tax reform does not seem to include a capital gain tax or securities tax but include a fair share of contribution from the wealthiest – with respect for entrepreneurship. We learned that this refers to a potential securities tax for securities held in excess of 1 mio EUR.
- Organisational measures would be taken to combat social and tax fraud, such as the creation of multidisciplinary investigation teams, and an action plan against tax fraud would be put in place;
- measures would also be taken to reduce the VAT gap, including the introduction of e-invoicing systems;
- transparency and preventive measures would be taken, therefore the saldo of Belgian bank accounts will be shared to the PCC, combined with rules when the PCC can be consulted ;
- introduction of a tax charter and code of conduct in the framework of tax audits;
- all new company cars should be carbon-neutral by 2026 ; tax rules dealing with company cars would be impacted;
- the government would put in place a framework allowing workers who do not have company cars to receive a mobility budget from their employer. This would stimulate sustainable mobility alternatives (public transport, cycling, carbon-neutral cars, etc.) and the willingness to live or move close to the workplace.
- In the framework of the recovery and transition plan, the introduction of the reconstitution reserve would be provided.
- In order to stimulate productive investment, the increased investment deduction would be extended by two years. The current investment criteria would be evaluated and, if necessary, adjusted.
- As part of the social housing policy, the reduced VAT rate of 6% for the demolition and reconstruction of buildings would be extended to the entire Belgian territory.
- The government would also draw up tax benefits for companies which grant their employees more hours of training than is provided for in the regulations, while avoiding deadweight effects as far as possible. The aim is to support those companies which currently do not offer sufficient training.
Further details will come in the next weeks and months. The announced measures are, of course, subject to change.
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Impact of COVID-19 : Belgian federal measures to support the economy
For the latest news regarding the tax measures taken by the Belgian government in the framework of the Covid-19 crisis, please visit our websites :
- the PwC report including tax measures from 108 countries : Navigate Tax, Legal and Economic measures in response to COVID-19 and select Belgium
- PwC Belgium Covid-19 website : Helping firms mitigate the potential impact of COVID-19