COVID-19: the temporary support measures
As regards the support measures in force to deal with the COVID-19 crisis, the extension or modification of these measures will be examined on a case-by-case basis in the light of the evolution of the pandemic.
The new government wants to provide for an exit scenario whereby these support measures are gradually phased out and possibly replaced by an economic recovery plan in cooperation with the regional governments.
Companies operating in tax havens without being able to demonstrate a legitimate financial or economic need are in any event excluded from the aid and relief measures.
Interfederal recovery and transition plan
In order to further strengthen the solvency and liquidity of companies, companies will be able to exempt part of their profits for the taxable periods associated with the assessment years 2022 to 2024 by booking these profits to a tax exempt reconstruction reserve. In this way, future profits can be maintained fiscally advantageous in the company, provided certain conditions are met:
- Employment condition: the level of employment must at least be maintained. In the event of a decrease in the wage bill, the tax benefit granted would decrease proportionally
- Retention of equity capital: the reconstruction reserve becomes taxable at the moment of capital reduction, dividend distribution or liquidation
- Excluded companies: companies which hold direct participations in tax havens or which make payments that cannot be economically or financially justified.
Increased investment deduction: extension by 2 years
In order to stimulate productive investment, the government wants to extend the increased investment deduction (25%) by 2 years. The current investment criteria will be evaluated and possibly adjusted.
Demolition and reconstruction of buildings: 6% reduced VAT rate across the entire country
The reduced VAT rate of 6% for the demolition and reconstruction of buildings currently in force in certain urban areas will be extended (temporarily?) to the entire Belgian territory.
Internationalisation of SMEs
Customs must be a crucial link in logistics and economics. To this end, the government wants to work on the further modernisation of customs legislation.
The government wants to implement a comprehensive tax reform to modernise, simplify, make the tax system more equitable and neutral. This reform will be based on a number of principles:
- Further reduction of charges on labour, for employees, civil servants and the self-employed
- A shift in the tax burden, but the overall tax burden will not increase
- Simplification of personal income tax with an extinction scenario for certain deductions, tax credits and exceptional regimes.
No capital gains tax, no securities tax, but a 'millionaire's tax'
There will be no capital gains tax or securities tax. The government did, however, negotiate a 'contribution from large fortunes'. This 'millionaire tax' would be a withholding tax on large financial transactions (i.e. not a capital gains tax) aimed at people with assets of more than EUR 1 million.
The government wants to take measures to alleviate family taxation in order to allow a better combination of work, family and care for elderly, resident family members:
- Tax relief for child care
- Supplement to the tax-free allowance for dependent (grand)parents and siblings over the age of 65.
Reform of the tax status of professional athletes
Professional athletes and sports clubs will have to make a fair fiscal contribution, depending on the 'bearing capacity' of the sport.
The possibility of tax regularisation of undeclared income and capital will be discontinued on 31 December 2023.
Contribution to reforms in international tax rules
Belgium wants to play a constructive and proactive role in the reform of international tax rules. In the framework of the so-called "GloBE proposal" which aims at an international minimum tax, Belgium is in favour that the taxation of the profits of a multinational should be subject to a minimum tax in each individual country, without exception for certain tax regimes.
Belgium also wants to take the lead in developing a digital taxation at international level. In the absence of an international agreement, Belgium itself will introduce a 'digital services tax' by 2023. This digital services tax is intended to tax so-called 'Digital Giants' (Google, Apple, Facebook, Amazon, ... abbreviated to 'GAFAs') which generate digital services profits that are currently difficult to tax due to the fact that these companies have a limited physical presence in the countries where they operate.
Furthermore, the new government supports the revision of the Code of Conduct and aims to broaden the definition of 'harmful tax practices'.
Belgium will also participate in a number of cooperation projects within the framework of European tax harmonisation:
- Harmonisation of the VAT revision system
- Reduction of the so-called 'VAT Gap', i.e. the VAT gap between what the government should receive and what the government actually collects
- Introduction of a Common Consolidated Corporate Tax Base (CCCTB)
- Introduction of Multidisciplinary Investigation Teams to ensure a more effective approach to cross-border fraud
- Transparency and prevention measures seem to put banking secrecy at risk: bank balances of Belgian account numbers will have ot be reported to the CAP (the Central Contact Point at the National Bank of Belgium). When examining an individual file containing one or more indications of tax evasion, the CAP may be questioned. This will also be the case when there are one or more indications of tax evasion or signs and indications in the context of data mining by the tax authorities;
- Foreign notarial deeds of Belgian residents will be submitted to compulsory registration, resulting in payment of the Belgian gift tax.
The federal government supports the European climate ambitions and will examine how the Belgian tax system can be made more climate and environmentally friendly, based on the polluter pays principle. The use of fossil fuels will be discouraged fiscally as much as possible. At European and international level, the government wants to contribute to the revision of the current tax exemption on kerosene.
However, also in a non-punitive way the government wants to address climate challenges by, among other things, developing a framework whereby employees who are not etnitled to a company car can be granted a mobility budget by their employer.
Transipostion into law
All these proposals are the result of an agreement between the governing parties. They have yet to be transposed into concrete legal texts, which may lead to further adjustments. BDO is closely monitoring this and will inform on a regular basis about the state of affairs.
Our tax experts will be pleased to answer your questions regarding the upcoming tax measures. Please do not hesistate to contact us via [email protected] or your regular BDO contact.