New budget measures following agreement of 30 June 2013

Olivier Hermand 2 July 2013


On 30 June 2013, the Belgian government has reached an agreement on the budget 2013-2014. The most important new tax measures that are announced in this respect are as follows:

“Fairness tax”

A “fairness tax” will be introduced for companies not paying any income taxes (due to tax deductions) while they distribute dividends.

The rate would be 5% on the amount of distributed dividends i) stemming from the profit of the year and ii) stemming from profit that has been compensated with notional interest deduction or tax losses carried forward. These conditions should be simultaneously met. Hence, the origin of the dividends needs to be identified to correctly apply this measure.

The part of distributed dividends that stem from (i) dividends received (ii) income which has been exempt under a double tax treaty, (iii) exempted gifts (iv) application of the patent income deduction (v) application of the investment deduction (vi) application of the stock of notional interest deduction would not be subject to the new minimum tax.

The new minimum tax is not tax-deductible and is not applicable to SMEs.

Please note that the currently existing profits carried forward which will be distributed as a dividend in future years, would not be subject to the minimum tax.

An anti-abuse measure would be introduced, stating that profits (as from 2013, related to tax year 2012) will be distributed via the “LIFO” principle.

VAT and lawyers

Lawyers will become subject to VAT. Hence, lawyers’ fees will be subject to 21% VAT, while these are currently not subject to VAT.

Excise duties

Excise duties on tobacco and alcohol would be increased.

SICAVs/BEVEKs

The 25% withholding tax on sale/repurchase of shares of certain accumulating bond funds will be/is extended to the sale/repurchase of shares in accumulating bond funds which do not have a European passport. In this respect an official statement by the Belgian government published on 1 July 2013 mention that this new rule is applicable as from 1 July 2013 (although not yet enacted).

Notional interest deduction

No changes are announced with regard to the notional interest deduction system, which will continue to exist as it is currently applied. For SMEs however, the NID rate might be increased.

Please note that the full details of the above measures are not yet clear and could still be modified, as no draft texts of the law are published yet. Once more information is available, we will let you know (or you may consult www.taxreform.be).