Companies with a year-end closing on 31 December 2017 can still make an advance tax payment for the fourth quarter of the year before 20 December 2017 to avoid a tax surcharge.
For assessment year 2018, a global surcharge of 2,25% will be applied to the total amount of tax due (minus certain tax credits – e.g. withholding tax or foreign tax credit). This surcharge qualifies as an income tax and is as such not tax-deductible. This tax surcharge is not due if it is lower than 0,5% of the taxable amount on which basis it is calculated or lower than EUR 80,00.
On the other hand, if advance tax payments are made (for example in the fourth quarter), a credit is granted. The calculation of the credit depends on the timing of the advance tax payments made (i.e. in the first, second, third or fourth quarter). For assessment year 2018, the credits are calculated by multiplying the advance tax payments by 3,00%, 2,50%, 2,00% or 1,50% depending on the timing of payment.
It is now the time to consider whether your company needs to do a fourth quarter advance tax payment (by 20 December 2017) and obtain the tax credit of 1,50%.
For assessment year 2019, the global surcharge would increase to 6,75%. This surcharge would then always be due, even if it is lower than 0,5% of the taxable amount on which basis it is calculated or lower than EUR 80,00. This is one of the measures of the tax reform package announced this summer.
The applicable percentages for calculating the tax credits would also increase to 9% in the first quarter, 7,5% in the second, 6% in the third and 4,5% in the fourth quarter.
As regards the assessment year 2019 and following, your company will also need to take into account other announced measures of the tax reform (visit our Belgium tax reform website for more information). This includes for assessment year 2019, among others, the new sequence of deductions, the tax attributes limitation (“basket system”, which will lead to a minimum taxable basis if the latter amount exceeds 1 MEUR), the new calculation method of the notional interest deduction and dividend received deduction. Calculating and optimizing the advance tax payments relating to assessment year 2019 has become even more important in light of the announced changes.
Should you have any further question or require a personal advice on the computation and optimisation of the advance tax payment for the fourth quarter of assessment year 2018 and/or the advance tax payments for assessment year 2019, please get in touch with your local PwC contact.