Korneel Decroix, Counsel - Kelly Moens, Associate
During 2016, the Belgian tax landscape has been the subject of considerable debate, and several proposals have been made to modify the existing tax system. These proposals related, among other things, to the reform of the corporate income tax regime and the introduction of a capital gains tax, although none of these measures have been adopted (so far). Below we list the changes on which political agreement has actually been reached and which are expected to come into force as from 2017. At present, none of these measures have been enacted in instruments with legal force.
A reform of corporate income tax will not be implemented for the time being. No agreement has been reached, either, on the introduction of a capital gains tax on shares. Below we list the (most important) tax measures on which the Federal Government did decide in the framework of the budgetary agreement of 14 October 2016:
The withholding tax rate will increase from 27% to 30% as from 1 January 2017. This applies, in principle, to all income from movable property such as dividends and interest. The existing reduced rates and exemptions are maintained.
Following the increase of the standard withholding tax rate, the withholding tax rate on the "liquidation reserve" is also increased from 17% to 20% as from 1 January 2017 for reserves recorded for a financial year that is connected, at the earliest, to tax year 2018.
The speculation tax will be abolished as from 1 January 2017.
The scope of the tax on stock exchange transactions will be considerably extended for transactions that take place as from 1 January 2017. The existing taxation ceilings will be doubled. In addition, the tax on stock exchange transactions will also apply to Belgian investors investing through a foreign intermediary.
The "internal capital gains" tax planning technique has been tackled. This technique allows – in essence – the creation of fiscal capital via a tax-free contribution in capital of shares in an operational company to a private holding company, which makes future tax-free capital reductions possible. As of 1 January 2017, in such cases, fiscal capital will only be created in an amount equal to the initial acquisition value of the contributed shares. The part of the value of the contributed shares corresponding to the capital gain realised by the contributor upon contribution will be considered as taxed reserves and will consequently, in principle, always be subject to withholding tax upon distribution. Furthermore, it has been announced that contributions before 1 January 2017 will be evaluated in the light of the existing anti-abuse rule (article 344 §1 Income Tax Code).
An extension of the reduced VAT rate for social housing is provided for. The reduced VAT rate of 12% will be extended to private investment in a limited number of cases as from 1 January 2017.
Fuel cards granted to employees will be more heavily taxed at the employer level.
A "mobility budget" will be introduced by April 2017, which will allow employees, with the agreement of their employer, to change their current company car for a mobility budget (this is an alternative mobility solution) or additional net salary.
Besides the measures announced in the budgetary agreement, the following legislative initiatives are currently being prepared:
- In a decision dated 11 January 2016, the European Commission concluded that Belgian "excess profit rulings" constitute illegal State aid. The consequence of this decision is that Belgium has to recover about EUR 700 million from 35 multinationals. A legal framework will be provided for in order to facilitate this recovery.
- At last, a reduced withholding tax rate of 15% should be (re)introduced as from 1 January 2017 for dividends distributed by Belgian REITs which invest at least 60% of their real estate directly or indirectly in "healthcare real estate" (immovable property that is exclusively or mainly used or destined for residential
Contact Eubelius : Korneel Decroix. T +32 (0) 2 543 31 56