Key figures corporate income tax: Liquidation reserves

A Small and Medium-sized Enterprises (SME) may set up liquidation reserves. These reserves offer a tax advantage in the event of a subsequent distribution or upon liquidation.

  Liquidation reserves (old and new regimes)
Date of allocation no later than 30 December 2025 as from 31 December 2025
Rate Allocation: 10% contribution

Distribution:
- before 3 years: 20%
- between 3 and 5 years: 6.5%
- after 5 years: 5%
- upon liquidation: 0%		 Allocation: 10% contribution

Distribution:
- before 3 years: 30%
- after 3 years: 9.8%
- upon liquidation: 0%


SMEs have the option of allocating their post-tax profits to a liquidation reserve. Upon such allocation, a separate contribution of 10% of the reserve formed is payable.

Upon the subsequent distribution of this liquidation reserve, an additional withholding tax is payable, the rate of which is determined at the time of distribution:

  • If the liquidation reserve is distributed after at least three years, a reduced rate of 9.8% applies;
  • If the liquidation reserve is distributed before the expiry of the three-year period, the rate is 30%;
  • If the liquidation reserve is distributed only upon the company’s liquidation, no additional withholding tax is due.


The old regime nevertheless continues to apply if the liquidation reserve was established no later than 30 December 2025.

  • If the liquidation reserve is established no later than 30 December 25, the rate remains at 5% provided the five-year waiting period is observed;
  • If a three-year waiting period is observed, the rate is 6.5%;
  • For a waiting period of less than 3 years, the rate remains at 20%.
Since 1 July 2026, an important exception applies to the tax-exempt distribution of liquidation reserves upon the liquidation of a company. If the beneficiary of the distribution assumes, directly or indirectly, a position as a company director in a company carrying out the same or similar activities as the liquidated company within three years following the liquidation, the distribution will nevertheless be taxed as movable income in the year in which this situation first occurs. The taxpayer may avoid this taxation by demonstrating that this decision was primarily motivated by reasons other than obtaining this tax advantage.