30 December 2013

Federal elections are approaching gradually. In the past two years numerous fiscal changes have been adopted to make up for budgetary deficits and to boost economic growth. Still, more tax legislation was issued right before the year-end. Below is an overview of the most important provisions of the law containing various fiscal and financial provisions of 21 December 2013 and the fiscal provisions of Programme law I of 26 December 2013 (both published in the Belgian State Gazette of 31 December2013).

Law on various fiscal and financial provisions

In contrast to the previous eight fiscal Laws made by Di Rupo I, the principal emphasis lies on simplifying and adapting existing rules, and not on introducing new taxes. The most important provisions are explained below. 

Notional interest tax deduction after Argenta case

European case law provided for an adjustment to the Belgian rules governing notional interest deduction. This means that own equity belonging to foreign permanent establishments or immovable property is now included in the calculation basis, whereas previously, the tax administration barred this from the calculation basis. Considering the current budget problems, a compensating measure was provided to restrict the tax benefit. There can only be an additional tax benefit when a permanent establishment has its registered office in an EEA Member State if the notional interest deduction on the permanent establishment’s own equity is greater than the establishment’s (exempt) profit. The remainder can then be deducted from the Belgian profit.  

Date of commencement: assessment year 2014

Tax authorities can take books and documents

The Income Tax Code provides that the taxpayer must always be able to present to the tax inspector any books and documents necessary to determine the taxable income. The tax inspector may from now on also take the documents for the duration of any normal inspection. The tax inspector shall be required to draw up an official order to do so. Books that have not yet been closed may not be taken. Issues discovered by the inspector in the documents taken may also be used to impose taxes on third persons.

Date of commencement: 10 days following the date of publication in the Belgian State Gazette

Obligation to present books and documents in relation to foreign life insurance policies

Now that foreign life insurance policies need to be mentioned in the annual tax return, the Income Tax Code was extended, obliging to present all books and documents related to these foreign life insurances upon first request of the belgian tax authorities. As mentioned above, the tax administration is also allowed to take these documents for the duration of the inspection.

Date of commencement: 31 December 2013

Taxable benefit in kind on company cars

The new law provides that the reference period to determine the CO2 emissions to calculate the taxable benefit in kind on company cars is brought forward, i.e. from 1 October N-2 to 30 September N-1. This means that the new reference for CO2 emissions can start from 1 January, and not from April, as has been the case to date. With this measure problems caused by retroactive calculations are now a thing of the past.  

Date of commencement: advantages attributed from 1 January 2014

Prior notification of indications of fraud

The wording of the legislation relating to prior notification to a foreign taxpayer of indications of fraud is amended, pursuant to the fact that the Constitutional Court declared Article 333-1, §1, third paragraph of the Income Tax Code of 1992 (ITC92) null and void on 16 May 2013.

Date of commencement: 10 days following the date of publication in the Belgian State Gazette

Procedure for ex officio exemption extended to Article 145 of the ITC92

Sometimes taxpayers do not know that they are entitled to tax exemption or they simply forget to include this in their income tax return. This could only be rectified in such cases by means of an appeal. The procedure of ex officio exemption is now extended to all matters of tax reduction included in Articles 145-1 to 145-36 ITC92. This means that the term is extended from 6 months to 5 years, to be calculated as from 1 January of the respective tax year.  

Date of commencement: from assessment year 2014  

Intra-Community acquisitions

Intra-Community acquisitions of goods and services related to transactions that are exempt from VAT in Belgium, will henceforth no longer be subject to VAT.This regulation dismisses the recipient of the goods or services from all compliance formalities in relation to these transactions.

This measure affects the intra-Community acquisition of goods and services as provided for in art. 42§§1, 2 en 3, eerste lid 1°- 8° of the Belgian VAT Code.

Date of commencement: 10 days following the date of publication in the Belgian State Gazette

Equipment and machinery permanently installed

The supply of equipment and machinery that is permanently installed, will no longer qualify for the VAT exemption in relation to the leasing of immovable property. Those transactions will therefore become subject to VAT.

Date of commencement: 1 January 2014

Programme Law I

Beside the law on various tax provisions, the legislator also adopted a programme law. The following fiscal provisions are included in this act and take effect on 1 January 2014:

  • increase from 20% to 40% of the exemption for apprenticeship bonus for employers who employ young people who are enrolled in part-time education;
  • additional reduction of the labour costs for construction work;
  • general investment allowance of 4% for small companies for the years 2014 and 2015;
  • 2.2% increase in exemption of withholding tax for night and shift work.