In the context of its comprehensive political agreement reached last week, the Belgian Government decided to advance the implementation of the new interest limitation rule from 2020 to 2019 (i.e. financial years starting on or after 1 January 2019).
The new Belgian interest limitation rule is the transposition of the EBITDA-based interest limitation rules included by the EU Anti-Tax Avoidance Directive (“ATAD I”) into Belgian tax law. This rule was introduced at the end of last year in the context of a major corporate tax reform and would take effect as from 2020. Although ATAD I imposed this rule to take effect in 2019 at the latest, the Belgian Government relied on the exception foreseen in the Directive for countries already having “equally effective” rules.
The new political agreement thus realigns the implementation date with the general principle under ATAD I. Although there are no legislative texts available yet, the existing features of the Belgian EBITDA rule aren’t expected to change.
Belgian entities that risk exceeding the threshold of 3 million euros / 30% taxable EBITDA are recommended to carefully analyse this new measure and whether its advanced implementation date could have adverse tax consequences.
More information on the EBITDA rule under ATAD 1, can be found here
More information on the the Belgian tax reform can be found here