In Bart De Wever’s “Super Nota,” the proposed tax reform introduces substantial changes to the existing tax system. This article summarises the tax measures that were under consideration and might be used as a starting point when negotiations start again. As political discussions are not final, the information presented here may be subject to change based on future negotiations.
Overall objective of the tax reform
The tax reform proposal includes various measures aimed at reducing the taxation of labor income and stimulating entrepreneurship by introducing tax benefits for self-employed individuals, while also fighting against the misuse of Personal Service Company/Management Company. Additionally, the reform supports investments to maintain our competitiveness and further stimulates the green transition by proposing additional tax incentives for green investments.
This tax reduction would be financed amongst other things through the introduction of a capital gains tax, the abolishment of the “VVPR bis” regime, adjustments to VAT rates and excise duties, a reform of corporate tax, etc.. Additional measures include overhauling the taxation of benefits in kind, with particular attention to the tax regime for stock option plans for instance.
The document further indicates that a significant number of these proposed measures could be implemented as early as 2025 (pending confirmation, of course).
What is on the table
Here is a high-level overview of some of the envisaged changes based on the information available at this time:
- A reduction of personal income tax via an adjustment of the (progressive) personal income tax rate brackets and an increase of the tax free (lump sum) amount;
- The abolition of the special social security contributions (currently the maximum amount per year is 731,28 EUR);
- Except for meal vouchers, all other vouchers (i.e., eco vouchers, consumption vouchers, culture vouchers, etc.) would be abolished;
- The abolition of the maximum annual income limit of 12,000 EUR for flexi-jobs. This change aims to provide greater flexibility and opportunities for individuals to engage in additional work without income restrictions;
- The abolition of the marital quotient, which currently allows an income splitting between spouses in certain circumstances;
- The tax deduction for childcare would gradually be increased from 45% to 100%, and it would only be deductible from labor income;
- Alimony payments would no longer be taxable for the beneficiary nor deductible for the taxpayer who pays it;
- The introduction of a tax-free basket for movable income (irrespective of the origin and the form of the investment);
- The adaptation of the existing tax shelter regime for start-ups and scale-ups in order to encourage the investment in the economy;
- The introduction of a new deduction for self-employed individuals, allowing them to deduct 20% of their benefits or professional profits from their taxes, with a maximum deduction of 20,000 EUR. Moreover, the increase for insufficient prepayments would be abolished and the bonification system would be enhanced;
- To fight against the misuse of corporate structures, the minimum remuneration for company directors to benefit from the reduced corporate tax rate would increase from 45,000 EUR to 50,000 EUR and be indexed annually. Additionally, this remuneration must be paid in cash, ensuring transparency and compliance;
- The expat regime would be improved to attract and retain international talent in Belgium.
- The liberatory movable withholding tax would be maintained, but there would be a reporting obligations in the individual income tax return;
- The abolition of the ‘VVPRbis’ regime. This would likely have a significant impact for the taxpayers who organize their activities via their own Personal Service Company/Management Company’;
- The modification of the ‘liquidation reserve’ regime, by deleting the 20% rate and increasing the 5% rate to 10%;
- The introduction of a tax on capital gains. The envisaged tax on capital gains would be set at a 10% rate without retroactive application, and historic capital gains would be exonerated. Related costs, including stock exchange tax and direct taxes, would be deductible, and there would be an exoneration cap of 6,000 EUR to exclude ‘small investors’. Additionally, capital losses would be deductible with the possibility of carrying them forward.;
- The increase of the taxable income of a third real estate when not rented out;
- The overhaul of the taxation of certain benefits in kind, with a specific focus on options and warrants
- The reduction of the movable withholding tax from 30% to 25%;
- The modification of the tax on securities account;
- The adaptation of the participation exemption (so called ‘dividend received deduction (DRD)’), by transitioning to a ‘true’ DRD exemption instead of a deduction. For big companies, this regime would be limited to participation in a company with which a long-term relationship is established;
- The simplification of the disallowed expenses, by introducing one fixed flat-rate which would be used in replacement of the current specific rules which depends on the type of expenses;
- The deductibility of collective outpatient and hospitalisation insurance;
- The extension of the investment deduction for digital investments;
- The consolidation of the reduced VAT rates of 6% and 12% into one single rate of 9%;
- …
What is next
The above is only an initial overview of some of the proposed measures which might be the start point for new in-depth discussions/negotiations by the different political parties in Belgium.
For more insights on the impact of these possible changes, please do not hesitate to reach out to your regular PwC contact, or contact Pieter Deré or Bart Van den Bussche.
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