• SECOND BUDGET CONTROL INVOLVES NEW TAX MEASURES

SECOND BUDGET CONTROL INVOLVES NEW TAX MEASURES

31 July 2013

(Latest update 10 September 2013)

The government recently finalised its second budget control of this year and came up with new savings and tax generating measures.
The measures are meant to represent an intense effort to reorganise finances, but should not be detrimental to the economical growth. The focus this time is a first shift towards a higher tax burden on consumption.

De fiscal measures were adopted in a law containing various provisions (law dated 30 July 2013, B.S. 1 August 2013).

The main tax changes can be summarised as follows.  

A minimum tax for large companies

A minimum tax (“fairness tax”) is introduced for companies distributing dividends, but barely paying corporate income tax because they are in a position of tax loss or benefit from the notional interest deduction.

These companies will be submitted to a 5.15% fairness tax (including 3% surcharge) on the dividends distributed during the current accounting year but compensated with tax deductions or tax losses (with the exception of the investment deduction). This minimum tax does not apply to SME’s. 

The fairness tax also applies to Belgian establishments of foreign companies to the extent that the dividends distributed by the foreign company find their origin in a low taxed profit of the Belgian establishment in application of the aforementioned tax deductions.

The faireness tax is a non-deductible tax. This implies that the tax is always due, as no tax deductions can be offset against the taxable base for the fairness tax.

The fairness tax should also be taken into account when calculating the advance payments, as a tax increase is due in case of insufficient advance payments.

Date of commencement: assessment year 2014

Harmonisation regulations 

Lawyers services subject to VAT

The decision has finally been taken to submit lawyer’s services to VAT at a 21% rate. On the other hand, VAT incurred on capital goods and on costs will be deductible.
In parallel to the situation of bailiffs and notaries, the tax authorities will soon publish new instructions for the application of this new regime. 

Date of commencement: 1 January 2014

Associations of communes subject to a special contribution in legal entities tax

Associations of communes (“Intercommunales”) exercising a commercial activity, such as the processing of waste, will be subjected to a special contribution of 25% on the distributed dividends.

Date of commencement: assesment year 2014

Public open-ended investment companies (BEVEK/SICAV)

Some income stemming from foreign bond funds are not taxed at all because the funds do not have a European passport. These will now be subject to the normal scheme for that type of income and thus taxed at 25%. Until now, the tax rate was set at 15%.

Date of commencement: 1 July 2013

Increase of excise duties

Some excise duties have not been indexed for a while and will now increase (8%).
However, excise duties on diesel, gasoline, gas, electricity and heating oil, are excluded from this regulation.
On the other hand the excise duties on alcohol and tobacco will again increase.

Date of commencement: 1 August 2013 

Notification of legal constructions in the personal income tax return

The personal income tax return henceforth needs to mention any legal construction  in relation to which the tax payer, his/her spouse or their children are either the founder, or the beneficiary or potential beneficiary.

Date of commencement: assessment year 2014

Decrease of labour costs

In view of the revival plan, a decrease of labour costs will be introduced as from 2014 by means of an exemption of professional withholding tax payment of EUR 50 million for SME's.

Date of commencement: 1 January 2014 

Non-recurring bonuses

Non-recurring bonuses are not considered as remuneration for social security purposes, as long as they do not exceed the maximum amount of EUR 3,100 (per calendar year and per employee). This implies that they are not subjected to the regular social security contributions. However, they are subject to a special employers contribution (33% of the amount of the bonus) and since the aforementioned Programme Law, they are also subjected to a solidarity contribution of 13.07% in hands of the employee.

There is also a tax advantage connected to the non-recurring bonuses: they are not subjected to income taxes as long as they do not exceed a fixed maximum amount. Currently, this maximum has been determined at EUR 2,200 (EUR 2,488 for 2013). This threshold has not been adjusted in the aforementioned Programme Law.

However, it was never the intention of the legislator to create an inconsistency between tax and social law for that matter. For this reason, the maximum of EUR 2,200 has been increased to EUR 2,695. This corresponds with the maximum amount of EUR 3,100 for social security purposes, reduced by 13.07% solidarity contribution introduced by the aforementioned Programme Law.

Date of commencement: this measure applies to advantages paid or granted as rom 1 January 2013 

Restriction of tax exemptions for diplomats

Foreign diplomats will henceforth be benefiting from a more restricted range of products qualifying for a tax exemption (e.g. tobacco, alcohol and fuel).

Increase of subscription tax for the banking industry

The banking industry will have to pay a higher contribution to the so-called subscription tax (abonnemententaks/ taxe d’abonnement).

Date of commencement: 1 January 2014 

Service vouchers

Service vouchers will henceforth qualify for a tax exemption for only EUR 920 (indexed amount EUR 1,380) per year. Before service vouchers qualified for a tax exemption up to EUR 1,810
(indexed amount EUR 2,720).

For expenditures made prior to 1 July 2013, the former threshold stil applies. In next year's personal income tax return, services vouchers can therefore be taken into account according to the former threshold to the extent that the extra expenses (exceeding the new threshold) were made in the period 1 January - 30 June 2013.

Example

A tax payer acquiring service vouchers by the amount of EUR 2,000 during the first six months of the year 2013, will be able to take this amount into account for a tax relief in his 2014 personal income tax return, as the former threshold (indexed amount) was not exceeded. If the same tax payer would buy more service vouchers in the second half of 2013, these will not qualify for a tax relief, as the new threshold is already exceeded on an annual basis. 

On the other hand, a tax payer acquiring service vouchers by the amount of EUR 600 during the first half of 2013, could still take into account an amount of EUR 780 service vouchers acquired in the second half of 2013 for the calculation of the tax relief.

Date of commencement: 1 July 2013

 

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