Update of the Belgian EBITDA rule provides opportunities for infrastructure and energy sector


Recently the Belgian legislator published a Royal Decree containing some clarifications on the repair law of 20 December 2020 containing changes to the 30% EBITDA rule.

As mentioned in our previous Newsflash of 6 January 2021, the Belgian legislator published on 20 December 2020 new legislation in order to address criticism of the European Commission on inter alia the Belgian implementation of the “EBITDA interest limitation rule”. One of the changes in this new legislation was the replacement of the notion “public-private partnerships” with the term “long-term public infrastructure projects” in article 198/1 Income Tax Code 92 (“ITC92”).

Following this change, a new Royal Decree was recently published to further align several articles of the Royal Decree/Income Tax Code 92 (“RD/ITC92”) with the EU ATAD I

What’s new?

In order to better align the Belgian implementation of the rule with ATAD I, the new Royal Decree introduces two major types of changes:

  • Further explanation on the notion “long-term public infrastructure projects” and formalities that should be fulfilled when aligning on the exclusions for long-term public infrastructure projects; and
  • Technical corrections.
(i) Alignment of the RD/ITC92 regarding “long-term public infrastructure projects”

Article 73, 4/10 RD/ITC92 states the conditions when applying for the “long-term public infrastructure projects” exemption under the EBITDA interest limitation rule. Since the notion of “public-private partnerships” in article 198/1 ITC92 was replaced with the term “long-term public infrastructure projects”, article 73, 4/10 RD/ITC92 needed to be altered as well.

This Royal Decree clarifies that a long-term public infrastructure project is to be understood as meaning a project intended to deliver, improve, operate and/or maintain a large-scale asset considered by a Member State to be of general interest.

It is important to note that the word “public” does not imply that the infrastructure project is financed with public funds, although the presence of public financing can be an element in the assessment of its public character. The assessment of the public nature is in principle a matter of fact that will have to be assessed by the tax authorities on a case-by-case basis. Examples (as provided by the Royal Decree) are inter alia transport infrastructure (roads, bridges, tunnels, tracks, canals etc.) located in a location accessible to the public, energy production and distribution infrastructure, etc.

The explanatory memorandum of this new Royal Decree states that the Belgian tax authorities will assess whether a project can be qualified as long-term public infrastructure on the basis of the following criteria: (i) accessibility, (ii) added value for environment and society, and (iii) to which extent others than the investors could make use of it.

Furthermore, the Royal Decree states that, in case you would like to apply for the exemption, a statement needs to be enclosed with the tax return, including specific information, such as the identification and description of the assets delivered/improved/operated and/or maintained, a description of the public character of the project, etc.

The above clearly shows that application of the “long-term public infrastructure” exemption is of a very factual nature.

(ii) Technical corrections

Additionally, the Royal Decree foresees in four technical corrections to align the RD/ITC92 with the altered article 198/1 ITC92 and the objective of ATAD I:

  1. This first correction makes sure that the notion “public-private partnerships” is replaced with the term “long-term public infrastructure projects” in the RD/ITC92;
  2. The second correction clarifies that the grandfathering regime (article 73, 4/9 RD/ITC92) also applies to income and costs economically equivalent to interest;
  3. The third correction clarifies that all Belgian intra group income and costs need to be eliminated when determining the EBITDA of a Belgian entity (article 73, 4/11 RD/ITC92). The previous wording of this article seemed to imply that Belgian intra group financing income and costs could not be eliminated when determining the EBITDA of a Belgian entity; and
  4. The fourth correction clarifies that, when determining the EBITDA of a Belgian entity, Belgian intra group costs can only be eliminated when the corresponding income is qualified as income at another Belgian group entity (article 73, 4/11 RD/ITC92).


Groups having Belgian entities that are involved in “long-term public infrastructure projects” should carefully review the impact of this new Royal Decree.

Due to the fact that these amendments merely are a consequence of the legislation dd. 20 December 2020, which entered into force on 31 December 2020 and applies to the taxable periods closed from that date, these amendments are also applicable as from assessment year 2021. The only exception to this are the third and fourth technical correction (see above), which are applicable as from assessment year 2022.

How can we assist you?

Understanding the struggle of multinationals trying to assess and deal with the impact of the measures, PwC has developed a web-based solution, named ILIA (Interest Limitation Insights & Analytics), that enables clients to perform these complex underlying calculations and assess optimization opportunities in-house. ILIA not only automates the 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 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.

Follow our tax news updates for further information in the coming months!