• Important tax tips & tricks for year-end closing on 31 December 2022

Important tax tips & tricks for year-end closing on 31 December 2022

24 November 2022

The end of 2022 is approaching fast! Time to take a moment to consider the following attention points that can make a difference in the amount of corporate income tax due for financial year 2022.

1          A final advance payment: deadline 20 December 2022

Companies must make advance payments to avoid a tax increase. For financial year 2022 the rate of the tax increase is 6.75%.

A final advance payment can still be made at the latest on 20 December 2022 (final date by which you must have paid on the bank account of the Advance Payment Department). The benefit associated with this advance payment is equal to the amount of the advance payment x 4.50%. This benefit, added to the benefits associated with previous advance payments of the year, is deducted from the tax increase.

Your company has carried out advance payments but you do not know if they are sufficient? Then assess together with us how much tax is estimated to be due and what financial benefits have already been realised with previous advance payments.

 

2          Increased minimum taxable base: deadline 31 December 2022

In the context of the tax reform, the minimum taxation of 7.5% - applicable to companies whose taxable base after the 8th operation in the corporation income tax return exceeds €1,000,000 - would be increased to 15%.

To this end, 60% instead of the current 30% of profits above €1,000,000 can no longer be offset by certain tax deductions (e.g., deduction of carried forward tax losses). This rule would take effect on 1 January 2023.

You may be considering certain disinvestments (or other transactions) in the future where you count on (partially) neutralising the expected capital gains with these deductions. If so, it may be appropriate to make such disinvestments still this year so that the company does not fall under the increased minimum taxation.

Feel free to give us a call, should you want assistance with this, and we will look at the tax impact together.

 

3          Last call hybrid cars: deadline 31 December 2022

Fuel costs of plug-in hybrid cars purchased (where the date of order is decisive), leased or rented (where the date of signing the contract is decisive) as from 1 January 2023 will no longer follow the favourable tax deductibility of the hybrid car itself, but will only be deductible for 50%. Electricity costs for hybrid cars, on the other hand, will remain fully deductible.

Are you considering investing in a plug-in hybrid company car?  If so, you have every interest in placing the order or entering into the leasing or renting contract before the end of the year to preserve the favourable tax deductibility of fuel costs.

 

4          Personal pension scheme ('IPT/EIP'): deadline 31 December 2022

With a personal pension scheme, the company finances a complementary pension capital for you as a self-employed director in a tax-efficient way. Premiums paid are indeed deductible for the company within the 80% rule.

Due to the new calculation method to be used in this respect for the legal pension, less premiums may be deductible. For the financial year 2022, the deduction will continue to be guaranteed if, among other things, the excess premiums are recorded in account 'Deferred charges' (the excess amount then serves as an advance on the premium to be paid for the following year).

Therefore, contact your insurance broker or agent now who can work with you to optimise the premiums.

 

5          Investment deduction
 

5.1 Temporarily increased ordinary one-off investment deduction for SMEs: deadline 31 December 2022

During the corona crisis, the base rate of the ordinary one-off investment deduction for investments by SMEs was temporarily increased from 8% to 25%. This measure expires on 31 December 2022.

Is your company still planning to invest in tangible fixed assets that meet all application conditions? If so, it is tax-wise advantageous to make these investments before the end of this year, as the one-off investment deduction drops back to 8% from next year. 
 

5.2 Investment deduction with certificate: deadline 31 March 2023

For some investments, certificates are required to benefit from the investment deduction.

Increased investment deduction for energy-saving investments

This investment deduction applies to fixed assets that serve for rational use of energy, improvement of industrial processes for energy considerations and energy recovery in industry (e.g., solar panels, heat pump, double glazing, insulation, etc.). For such investments during financial year 2022, an investment deduction application must be submitted before 31 March 2023.

SMEs have the choice between this increased investment deduction and the one-off investment deduction for investments by SMEs (which is exceptionally 25% for investments until 31 December 2022, see above). Which deduction is most advantageous depends on the specific situation, but we can of course look into this for your company. 

Research and development tax credit

Companies investing in fixed assets for research and development can benefit from a tax credit. This requires obtaining a certificate from the competent energy agency showing the environmentally friendly nature of the investments. Unlike the Flemish region, where there is no deadline for the application, the application for investments made during the financial year 2022 in the Brussels or Walloon region must be submitted by 31 March 2023.

If there is any doubt as to whether or not an investment qualifies for the above benefits, feel free to give us a call. We can investigate this further for your company, and can also assist with the applications to be made.

 

Does your company have a financial year that does not run per calendar year? Then most deadlines fall later.