Have you considered the impact of the new 30% EBITDA-rule?
Belgian companies (and non-resident companies with a Belgian establishment) have the yearly obligation to file a Belgian (non-resident) corporate income tax return within the statutory deadline.
In principle -in case of a financial year that ended per 31 December 2019- this tax return (linked to assessment year 2020) should be filed within one month after the date the financial statements are approved by the statutory general meeting of shareholders but no later than six months after the end of the financial year (i.e. 30 June 2020). In line with previous years, the Belgian tax authorities however foresee a general extension until 24 September 2020 for corporate taxpayers with a financial year ended per 31 December 2019.
If it is not possible to meet this deadline, it could be considered to ask an individual delay directly to the Belgian tax authorities. Practice however shows that such individual delays are very rarely granted, being only in case of extraordinary events qualifying as ‘force majeure’.
It should be assessed whether such individual delay could be requested in the context of the current situation of the COVID-19 pandemia. Further to this pandemia, the management board may decide to postpone any general meeting to a later date of its choice, for up to 10 weeks after the deadline as provided by law. As a consequence, an extension of the statutory general meeting of shareholders may have an impact on the filing of the Belgian corporate income tax return within the foreseen due date of 24 September 2020.
In line with prior years, the transfer pricing local form ‘275 LF’ should also be filed within the same due date as the Belgian (non-resident) corporate income tax return in case of Belgian companies and branches that exceed certain criteria.
As from assessment year 2020, the second phase of the tax reform also comes into play. In this respect, we suggest to assess the impact thereof as soon as possible. Measures such as the application of the social passive exemption and the tax consolidation regime could lead to tax cash saving opportunities.
Next to the potential opportunities, the impact of the new interest limitation rule (the so-called “30% EBITDA-rule”) should also be analysed as Belgian entities need to comply with this rule as from assessment year 2020. The application of this new rule has already proven to be very complex and time consuming in practice. In case part of a “group”, the threshold should be determined on a (Belgian) consolidated level. Even if the net exceeding borrowing cost (on a consolidated or stand-alone level) is below the EUR 3 million threshold, additional formalities may be required. Additional documentation (to be annexed to the tax return) should also be provided if certain loans are grandfathered from the EBITDA-rule. Needless to say that action should be taken now by making the full assessment including the computations (if needed) and by understanding which additional formalities may be required as failing to comply with the 30% EBITDA-rule could potentially lead to an unexpected tax cash out.
If you would like our assistance with the preparation and/or review of the tax return or the form 275 LF and/or with analysing the impact of the second phase of the tax reform (including the 30% EBITDA-rule), PwC tax experts are happy to assist. Do not hesitate to contact your engagement team in case of any further questions.
We also take the opportunity to remind you that the fee forms 281.50 relating to calendar year 2019 should be filed on 29 June 2020 at the latest.