The Belgian notional interest deduction (NID) rate for tax year 2019 (accounting years ending between 31 December 2018 and 30 December 2019, both dates included) would be 0,746%. For SMEs (Small and Medium-sized Enterprises), the NID rate would be 1,246% for tax year 2019.
According to article 205quater, §2 of the Belgian Income Tax Code (“BITC”), the NID rate is calculated based on the average rates for straight line Belgian bonds on 10 year (index J) of the months July, August and September of the last but one year preceding the tax year. The rate is capped at maximum 3%.
Hence, for tax year 2019, (accounting years ending between 31 December 2018 and 30 December 2019, both dates included) the NID rate is based on the July, August and September bond rates of calendar year 2017. The average of these bond rates amounts to 0,746%. As a result, the NID rate for tax year 2019 would be 0,746% (1,246 for SMEs). For tax year 2018, the NID rate is 0,237% (0,737% for SMEs).
To the best of our knowledge, this NID rate has not yet been published in the Official Gazette or on the website of the Belgian tax authorities.
Please note that, in the framework of the upcoming Belgian corporate tax reform, changes to the notional interest deduction would be introduced. As from 2018, this deduction would be calculated based on the incremental equity (over a period of five years) and no longer on the total amount of the company’s qualifying equity. Current rules would remain applicable to the equity formation and exclusions and regarding the existing carried forward NID. The increased rate for SMEs would continue to apply. Additional anti-abuse measures could be introduced. Don’t hesitate to visit our tax reform website for more information.
In case you have any further questions, do not hesitate to contact your PwC tax consultant.