On 30 September 2019, the new Flemish coalition agreement was finally announced (read the full text here). Below, you can find an overview of the most important anticipated changes from a personal income tax point of view. For an overview of the gift and inheritance tax measures, we refer to our newsflash of 3 October 2019:
- The most eye-catching and mediatized measure is of course the anticipated phase out as of 1 January 2020 of the existing Flemish tax reduction for mortgage loans in relation to the taxpayers’ own property (home bonus/woonbonus). In return, the registration duty applicable when purchasing a property (that is the sole property of the taxpayer), will be lowered from 7 % to 6%. This way, the (focus of the) tax benefit should be shifted from ‘owning a house’ to the ‘acquisition of the property’. This envisaged reduction of the registration duty with 1% can however not compensate for the loss of the mortgage tax relief in most cases. Note that for mortgage loans concluded before 1 January 2020, a tax benefit will still be applicable. Furthermore, the tax reductions in relation to the (mortgage) loan for a second property remain available, as it concerns a federal competence and thus not subject to regional approval.
- The tax reduction for service vouchers (dienstencheques) will be maintained going forward, however the tax reduction will be lowered from 30% to 20%.
- Introduction of a so-called ‘job bonus’ as of 2021, which is a tax break for the taxpayers who earn the lowest incomes. The job bonus would at least amount to EUR 600 on an annual basis for individuals working full time and earning a gross monthly salary of maximum EUR 1.700. The benefit of the job bonus would afterwards be phased out towards higher monthly salary levels (i.e. salary levels up to EUR 2.500) for individuals working full time. The number of actual working hours will also be taken into account for determining the applicable amount of the ‘job bonus’. This measure, which will aim to increase the monetary difference between ‘working’ (earning a salary) and ‘inactivity/unemployment’ (receiving an allowance), should provide an incentive for people to work and thus result in an increased employment rate.
- An increased green tax system for cars, as of 2021, via the introduction of the new Worldwide Harmonised Light Vehicle Test Procedure (WLTP). As a result, polluting cars will become more expensive and environmentally friendly cars will become cheaper. Indeed, this new manner of calculating the CO2-emissions of a car would increase the calculation of the CO2-emission by 20 to 30% (which means higher taxes). However, for cars with low CO2-emissions the Flemish government will make sure the tax burden declines.
- In the Coalition Agreement it is also mentioned that singles and single parents often run a high risk of poverty. That is why it will be investigated in various relevant policy areas such as taxation whether new or existing policy measures do not unfairly affect singles.
Note that the proposed measures are not yet converted into draft legislation and thus certainly not yet enacted, but it will be used as a guideline for implementing new regional tax measures during the upcoming 5 years.