Belgian Tax reform – Individuals – Personal income tax

Latest update:  8 October 2020


Belgian tax reform : new measures announced

On 30 September 2020, 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 :

  • besides the measures related to the taxation of digitalised companies and the introduction of a minimum tax for businesses, 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. Guiding principles are, among others, the simplification by gradual abolishment of deductions, tax reductions and exception regimes and the gradual shift from alternative remuneration to remuneration in cash.
  •  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 would include a fair share of contribution from the wealthiest – with respect for entrepreneurship. 
  • Increase of the tax reduction for child care and of the tax-exempt income share supplement for the care of relatives (parents, grandparents, dependent brothers and sisters over the age of 65);
  • reform of the current fiscal and parafiscal advantages of professional sportsmen and sports clubs;
  • 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;
  • transparency and preventive measures would be taken, and therefore the saldo of Belgian bank accounts would 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;
  • the “cheese route” (“kaasroute”/”route de fromage”) would be closed by requiring the registration of foreign notarial deeds by Belgian residents in Belgium, taking into account the opinion of the Council of State;
  • 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.
  • 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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