New circular letter published on 30% EBITDA rule

Published


On 12 January 2023 a new circular letter (2023/C/8) was published regarding the 30% EBITDA regulation (Dutch/French version). 

Over the past few years, the Belgian tax authorities have periodically published guidance on the interpretation of the 30% EBITDA rule. The new circular letter is intended to summarize the guidance that is currently available to provide a comprehensive overview of the 30% EBITDA rule, and to provide further guidance on the practical application of the rule. This circular letter replaces Circular Letter 2021/C/87 which relates to assessment year 2020. No new technical positions have been taken by the Belgian tax authorities compared to the earlier communications.

Although the additional guidance is very much welcomed, certain topics have still not been discussed and this continues to present uncertainty for taxpayers in the practical application of the 30% EBITDA rule (e.g. group definition in view of private equity funds, interaction of deviating accounting periods in ad hoc consolidation, etc.). The authors would welcome further clarification from the Belgian tax authorities.

Considering the significant rise in market interest rates over the past months, borrowing costs of Belgian groups are expected to increase significantly going forward. It is important to note that the applicable interest deduction thresholds (30% EBITDA and EUR 3 million) remain unchanged. Hence, proactively assessing the impact of the 30% EBITDA rule remains key for many Belgian based groups.

How can we assist you?

PwC understands the struggle that multinationals face when trying to assess and deal with the impact of the measure. That’s why we’ve developed a web-based solution, named ILIA (Interest Limitation Insights & Analytics), which enables clients to perform the complex underlying calculations and assess optimization opportunities in-house. ILIA not only automates these calculations and makes estimations of cash tax effects, but also allows real-time EBITDA capacity transfers and group contributions transfers. In addition, it allows for certain modelling features to assess the impact of new financing structures, updated business plans, etc. As ILIA is web-based, the simulations can be performed and stored efficiently in a user-friendly environment.

We would be happy to give you a live demo to show you how ILIA can help you and your organisation to manage the impact of these new rules. Feel free to contact us to schedule a live demo, via David Ledure or via the following email address be_ilia@pwc.com.

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