THE “MICHEL I” FEDERAL GOVERNMENT HAS LANDED

PERSONAL INCOME TAX

No indexation for certain tax exemptions and tax reductions

The automatic indexation of tax exemptions and tax reductions will be limited. For instance, the amount of tax exemption on savings deposits, or the tax reduction for replacement income or pension savings will not be indexed.

Date of commencement:

• Assessment year 2015
• The measures regarding pension savings take effect from the date of publication of the programme law (29 December 2014)

Source: programme law dd. 19 December 2014, Belgian Official Journal 29 December 2014

Increase of lump sum deduction for business expenses

There wil be a tax shift from taxes on labour to taxation of other revenue, including an increase of the lump sum deduction for business expenses. 

Date of commencement: assessment year 2016 (salary paid or attributed from 1 January 2015)

Source: programme law dd. 19 December 2014, Belgian Official Journal 29 December 2014

"Look through" tax after all

At the end of last year, the "look through" tax on assets embedded in complex (possibly international) structures, such as a trust or companies in tax havens, was put under the microscope. Now the new government proposes to actually introduce this tax. The transparency tax (also referred to as the “Cayman tax”) means that the income in such vehicles will be taxed on the beneficiaries of such structures, even if the income has not been paid out.

Tax on extra-legal pensions

To encourage extra-legal pension saving, the tax on pension savings (3rd pillar) will be reduced from 10% to 8%. This tax will be collected progressively: the outstanding reserves on 31 December 2014 will be taxed over the next 5 years at 1% and 3% will be due at the age of 60.

Date of commencement: 1 January 2015

Source: programme law dd. 19 December 2014, Belgian Official Journal 29 December 2014

CORPORATE INCOME TAX

Reform of the system of disallowed expenses

The system of disallowed expenses will be remodelled and simplified. A system with fines, taxes and surcharges will be introduced.

Harmonisation of concepts “costs” and “expenditures”

In order to create a transparent tax system, the new government intends to harmonise the notion “cost” and “expenditure” both for VAT and income tax purposes.

Associations of communes subject to corporate income tax

The previous government already proposed to submit certain utilities (the so-called “intercommunales”) to corporate income tax. The measure will now be enacted. The purpose is to create an equitable tax system with fair fiscal competition between the private and public sector.

Date of commencement: assessment year 2015, for accounts closed on 1 July 2015 at the earliest

Source: programme law dd. 19 December 2014, Belgian Official Journal 29 December 2014

Liquidation bonuses

The tax on the gain on liquidation of a company of 25% will be modified. The temporary measure whereby reserves are converted into capital, subject to the payment of 10% withholding tax will become a permanent measure for SMEs. Part of the taxed reserves or profits may be transferred annually to a capital (non-distributable reserve) account which will be subject to a withholding tax of 10%.

In the event of distribution of reserves within 5 years, an additional withholding tax of 15% will be payable; beyond 5 years, the withholding tax will be 5%.