On 22 May 2025, the US House of Representatives approved the “One, Big, Beautiful Bill” (OBBB). The Bill is now set for Senate deliberations which are expected to follow swiftly. The Republican majority aims to have the bill signed into law by President Trump before the July 4th recess. The legislation features permanent extensions and modifications of key provisions from the 2017 Tax Cuts and Jobs Act (TCJA), new business and individual tax measures and, importantly from a Belgian perspective, changes to the international tax rules. For more details on the Bill, we refer to the following news alert. In this news flash, we will exclusively focus on the corporate tax measures which could potentially impact Belgian and other non-US companies that have operations/subsidiaries in the US or transactions with US companies.
Section 899: A new retaliatory tax measure targeting “Unfair Foreign Taxes”
One of the key provisions of the Bill from an international tax perspective is the proposed Section 899, which introduces a retaliatory tax regime aimed at countries imposing “unfair foreign taxes” on US companies. These include digital services taxes (DST), diverted profits taxes (DPT), and, most notably for Belgian groups, the OECD’s undertaxed profits rule (UTPR). It also leaves the door open for expansion to other taxes. Belgium, along with most other OECD and EU countries, is expected to be in scope due to the introduction of the UTPR as part of the broader Pillar 2 implementation in domestic law.
- Mechanics and impact: In short, Section 899 would allow the US to override tax treaties and increase US withholding and gross-basis tax rates on residents of targeted countries by up to 20 percentage points above the rate that would otherwise apply. The increase would be phased in at 5% per year. The measure is designed to pressure countries to repeal “unfair” taxes. If that does not happen, the impact on investments and cross-border payments could be significant. The exact mechanics and scope are still subject to debate, and further guidance from the US Treasury is anticipated.
- Impact on Belgian companies: If the legislation would pass as is, a Belgian company receiving US-source royalty, for example, currently subject to a 0% treaty rate could see this rise to 5% in the first year, and up to 20% over time. Belgian companies which are suffering an increased US withholding tax on US-sourced royalties and interest due to Section 889 could in principle benefit from the foreign tax credit mechanism under Belgian domestic tax law (up to a maximum of 15% and subject to certain conditions, e.g., in terms of calculation method).
Proposed BEAT (Base Erosion and Anti-Abuse Tax) changes and their impact
The bill also proposes to introduce a separate BEAT regime that is distinct from the existing “standard” BEAT regime (also referred to as super BEAT for companies from countries targeted by Section 899):
- Current BEAT regime: Under current law, BEAT applies to large multinational groups, generally those with average annual gross receipts of at least $500 million and a base erosion percentage of at least 3%. BEAT is a minimum tax that targets deductible payments (such as interest, royalties, and certain service payments) made by US companies to related foreign parties, ensuring that a minimum level of US tax is paid.
- Proposed changes under section 899: For companies resident in, or owned by residents of, a country that imposes an “unfair foreign tax,” the current text of the bill would eliminate the $500 million gross receipts and 3% base erosion percentage thresholds. Additionally, the BEAT rate would be increased to 12.5% for these companies. The definition of base-eroding payments would be broadened and the exception for the services cost method would no longer apply in these cases.
- Impact on Belgian companies: This means that even smaller Belgian companies with US operations could become subject to BEAT if Belgium is targeted under Section 899. This significantly expanded scope increases the impact of BEAT for Belgian multinationals with US subsidiaries, potentially resulting in a (much) higher US tax liability on cross-border payments and a significant additional compliance burden for groups that previously fell below the BEAT thresholds.
Other key provisions affecting Belgian companies
The current GILTI and FDII rates would be permanently extended. The bill would also restore 100% bonus depreciation for qualified property and allow for immediate expensing of US-based research and experimental expenditures under certain conditions. The latter could benefit Belgian multinationals with US subsidiaries investing in US assets or R&D.
In addition, the limitation on business interest expense would be calculated without regard to depreciation, amortization, or depletion, potentially increasing interest deductibility for US operations of Belgian companies/groups.
Customs and trade measures
De Minimis Customs Exemption: The bill proposes to repeal the $800 de minimis exemption for customs duties for commercial shipments. This repeal is budgeted to bring additional income of $39 billion. It is a further expansion on some actions already taken by Executive order on China and Hong Kong and mainly impacts eCommerce business.
Belgian exporters relying on this exemption for low-value shipments to the US may face increased customs costs and administrative burdens.
Conclusion: impact and the need for vigilant monitoring
The proposed US tax legislation represents a significant shift in the international tax landscape, with direct implications for Belgian and other foreign companies that have operations/subsidiaries in the US or transactions with US companies. Section 899, in particular, introduces substantial uncertainty and could increase the US withholding taxes on cross-border payments. The tightening of BEAT and changes to customs rules further add to the complexity.
Given the outstanding questions—especially around the application of Section 899, the interaction with tax treaties, and the final effective dates—Belgian companies should closely monitor legislative developments and assess potential impacts on their US-related structures, supply chains, and cash flows and potentially take proactive steps to review the implications for their group.
The situation remains fluid, and further clarifications are expected as the Bill progresses through the Senate and towards enactment. Feel free to reach out to Gilles Lormans, Dennis Matthijs or Evi Geerts.
