The Belgian Ministry of Finance has issued specific instructions (Circular Letter 2020/C/45 of March 23, 2020 – the “Circular”) in order to support professional taxpayers (individuals and corporations) confronted with the severe financial consequences of the Corona crisis.
As a general rule, Belgian professional taxpayers can benefit from a tax exemption for depreciations on trade receivables accounted for and which relate to “sharply defined losses”. Such losses need to be “probable” and need to be supported by specific circumstances other than a “general risk” (art. 48 Belgian Income Tax Code and art. 22 Royal Decree on Belgian Income Tax Code).
As a result, any tax-exempt depreciation on a trade receivable requires the proof of the presence of specific circumstances.
The Circular confirms that the Corona crisis qualifies as a “specific circumstance” allowing the exemption of depreciations booked on trade receivables.
Please note that the other conditions for the tax exemption of such depreciations remain applicable. This implies that the depreciations are booked on one or more separate accounts at the end of the taxable period concerned. In addition, each debtor involved and considered to represent a risk on a solvency level, will need to be included on a specific administrative form (form 204.3).