• Fiscal measures from 2022 federal budget agreement enacted in programme law

Fiscal measures from 2022 federal budget agreement enacted in programme law

07 January 2022

Mid-October 2021, the federal government announced some new fiscal measures in its budget agreement for 2022. This budget agreement sought a balance between investments for an economic recovery and new resources to bring the budget back into balance.

The announced measures are now laid down in a programme law of 27 December 2021 (Belgian Official Journal dd. 31 December 2021). Eyecatchers are the reform of the tax status of sportsmen and women and sports clubs, the reform of the expat status and the extension of the favourable tax regime on tax shelters for start-ups and scale-ups.  

Here’s an overview of the tax changes.

Tax incentives for sportspeople

The reform of tax benefits for sportsmen and women has been causing quite a stir for several months now. The final changes can be summarised as follows:

Young sportsman

The tax status of the young sportsman is undergoing some changes:

  • Uniformisation of the age to qualify as a 'young' sportsman. The maximum age for young sportsmen and women is uniformly set at 23 years (instead of 26) for the purpose of applicable separate taxation rates and the exemption from payroll tax. However, a transitional period ensures that sportsmen and women who are 23, 24, or 25 years old on the date the measure takes effect remain young sportsmen and women according to the old rules until they reach the age of 26. The age limit is important for the tax rate applicable to sportsmen or women. Young sportsmen and women are taxed at a rate of 16.5% on their sports income. Amateur athletes over 23 years of age are taxed at 33% (on the first bracket of 12,300 EUR - basic amount).
  • Higher exemption from payment of payroll tax: the law previously provided for an exemption from payment of payroll tax of 70% with the possibility for the King to increase this percentage to 80%. The exemption is now increased to 75%, but the possibility to increase the exemption by royal decree is abolished.

 

Other sportsmen

For the exemption from paying payroll tax for sportsmen and women, other than those who qualify as ‘young’ sportsmen and women, the compulsory spending obligation for the training of young sportsmen and women is raised from 50% to 55% of the non-paid withholding tax.

 

Limited deductibility of sports agent fees

From now on, payments to sports agents can only be tax deductible up to 3% of the gross annual remuneration for the entire duration of their employment contract. This is to discourage the granting of excessive remuneration to sports agents.

This limitation only applies in corporate income tax (incl. non-residents) and in the legal entities tax. The limitation does not apply in the personal income tax.

Natural persons who pay their own brokers are therefore not targeted by the measure. However, as a rule, brokers are paid by the club and not by the sportsman himself.

 

Amendment of supplementary pension scheme for sportsmen and women

Previously, sportsmen could have their supplementary pension paid out from the age of 35 when they permanently and completely stopped working as a sportsman. If necessary, the supplementary pension is taxed at a rate of 20%. This possibility is abolished by the Programme Law. From now on, sportsmen and women will be subject to the same tax provisions as 'normal' employees. However, a transition is provided for with regard to connections to a pension commitment dating from before 20 October 2021.

 

Foreign executives

The expat regime for foreign executives has also been given a legal framework. You can read about the new rules in our publication 'Important amendments of the special tax regime for expatriates in Belgium'.

 

Healthcare real estate reform

In view of the risk of a higher bill for the residents of care institutions, a reduced rate of withholding tax on dividends paid was introduced by the Act of 18 December 2016 for regulated real estate companies that focus at least 60% of their investments on real estate that is used or intended to be used exclusively or primarily for residential care or health care units. The percentage of investments in these specific real estate assets (nursing homes, service flats, assisted living facilities, etc.) is now increased to 80%.

The Programme Law also clarifies how the ratio of investment in care real estate to investment in total real estate should be determined.

 

Deductibility of regularisation charges restricted

The Act of 21 July 2016 establishing a permanent system of tax and social regularisation and regional legislation allow a taxpayer to regularise his or her situation by declaring sums, income, capital and transactions that were previously undeclared to the Regularisation Contact Point or to the Flemish Tax Administration in exchange for tax and criminal immunity.

The Programme Law now explicitly stipulates that these regularisation charges, as well as the deposited sums of money that lead to the forfeiture of the criminal proceedings, are not tax deductible professional expenses.

 

Tax relief for child care

The amount of tax relief for child care in personal income tax has already been increased by the Programme Law of 20 December 2020 to EUR 13 for the assessment year 2021, and to EUR 13.70 from the assessment year 2022 onwards.

As of the assessment year 2022, you can take an amount of EUR 14 per day of childcare per child into account for the tax reduction.

Since the Programme Law of 20 December 2020, the amount of the tax reduction has been indexed on the basis of the coefficient provided for by the law (1.6679 for the 2022 assessment year). The basic amount provided for in Article 14535, ITC92, is replaced by the amount of 8.40 EUR.

 

Tax shelter for start-ups and scale-ups strengthened

As part of the economic recovery from the COVID-19 pandemic, the government is also looking into the potential of start-ups and scale-ups. Because start-ups can only offer limited collateral, they often have difficulty in obtaining capital and loans today, despite their valuable growth prospects. To support these companies, we have the system of the tax shelter for start-ups and scale-ups, which grants tax relief to investors under certain conditions.

In order to provide additional support for these companies in their expansion, the maximum amounts they can raise under the existing regime are doubled from EUR 250 000 to EUR 500 000 for start-ups and from EUR 500 000 to EUR 1 million for scale-ups.

 

Overtime with overtime allowance construction

The shortage on the labour market for skilled workers in the construction sector will not be resolved quickly. Therefore, the sector often resorts to overtime. The programme law now increases the number of tax-advantaged overtime hours in the construction sector from 180 to 220 hours.

Also for road and railway workers who work according to an atypical schedule/work plan, the number of overtime hours that are tax deductible is increased from 180 to 280 hours for employees who are employed by employers who mainly carry out road or railway works (excluding the laying of underground pipes and cables) and who are required by the government to work at weekends, on public holidays or at night for these employers.

 

VAT - exclusion of the provision of furnished accommodation from the tax exemption scheme

Suppliers of furnished accommodation are excluded from the VAT exemption scheme for small enterprises.

Taxable persons can benefit from a VAT exemption for the supplies of goods and services they carry out whose realised annual turnover in Belgium does not exceed EUR 25,000.

There are a number of exceptions to that rule. To these exceptions, a new paragraph is now added concerning 'the provision of furnished accommodation in hotels, motels and establishments offering lodging to paying guests'.

 

Professional diesel

The tax advantage that currently exists for diesel used for certain professional purposes has been reduced. The amount of the special excise duty exemption was reduced to EUR 226.9716 per 1 000 litres from 1 January 2022.