Belgian Tax reform – VAT
Latest update: 10 November 2020
Draft Program Law adopted in first reading by the Council of Ministers
The draft Program Law regarding the budget statement of 2021 has recently been adopted in first reading by the Council of Ministers. The most important tax measures that would be introduced from a VAT perspective are the following.
VAT of 6% on demolition and reconstruction of private residences
Apart from the rules that are already applicable to the reduced VAT rate of 6% regarding demolition and reconstruction of private residences in one of the 32 urban areas, it would be possible as from January 1, 2020 to apply the 6%-rate for demolition and reconstruction in the entire Belgian territory. This extension to the entire territory will be however a temporary measure until December 31, 2022.
In addition, these new rules would only be applicable to residences:
- used as the only and own home during a period of minimum five years and
- with a maximum habitable surface of 200 m².
Taxation increase in excise duties on tobacco products
In the year 2021 the excise duties on cigarettes and smoking tobacco would increase. An additional increase of these excise duties is planned for 2022, 2023 and 2024. The increase of excise duties is part of the government’s proactive policy to discourage tobacco consumption.
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