On 25 November the various political parties who are in the process of establishing a new Belgian government, agreed on various changes to Belgian tax legislation that will be introduced during the coming weeks and months.
Please note that the changes have been decided upon in a very general manner. Precise legal texts have yet to appear, as a result of which the precise application of the various measures approved remains to a certain extent unclear. In addition, the timeframe for the application of the changes is not clearly defined yet.
As soon as we receive more details, we will of course provide you with further information and we will also organize a lunch seminar to which you will be invited.
In any event, the general principles of the various new measures can already be identified.
Please find below a summary of the most relevant new tax measures. We will be pleased to further discuss with you their application to your personal situation.
The new rules can be divided into various categories:
Taxation on an individual level
- No actual wealth tax and/or capital gains tax will be implemented (for the time being…).
- Taxation of interest and dividends:
- the tax rate on interest will be increased from 15% to 21%;
- an additional 4% tax (on the new 21% tax rate) will be levied if the annually received amount of dividends and interest exceeds 20,000 EUR, bringing the total tax burden at 25%;
- the present tax rate of 25% on dividends will remain unchanged;
- dividends presently taxed at the reduced rate of 15%, will also be taxed at 21%;
- specialized investment companies with fixed capital (so-called BEVAK’s or SICAFI’s) investing a minimum of 60% in residential real estate, will not fall within the scope of the increased tax rate of 21% for interest and dividends received. They will remain tax exempt.
- The tax rate of 10% on liquidation bonuses will remain unchanged.
- For the repurchase of shares, the rate will increase from 10% to 21% on all distributions that exceed the paid up capital.
- So-called “benefits in kind” provided to company directors will be more severely taxed. For example, the benefit in kind linked to free accommodation will increase, as well as the benefit in kind for heating and electricity put at their disposal by the company.
- The tax on company cars will also be increased based on the CO2 emission and value of the car.
- The beneficial tax regime on stock options granted by employers to their employees will be amended.
- The tax deduction of 40% for various energy saving measures (e.g. solar panels, energy saving heating installations, etc…) will be abolished at a Federal level. It is at this moment still unclear whether similar measures will be reinstated at a Regional level.
- Tax deductions for child care, mortgage loans and donations will still be granted at a Federal level, though they will be changed into a tax deduction at a flat rate of 45% instead of the actual deduction at the highest applicable tax rate.
- The premiums of 3% and 15% for “environmental friendly” cars will be abolished.
- The price of the so-called “service vouchers” will increase slightly (8.5 instead of 7.5 EUR) as from 2013. The tax deduction will, however, remain applicable.
Taxation on a corporate level
- The benefit of the notional interest deduction will be decreased in various ways:
- the rate will be limited to 3% in general, and to 3,5% for small and medium-sized enterprises;
- it will no longer be possible to carry forward the unused notional interest deduction;
- the remaining notional interest deduction to be carried forward that companies currently dispose of will, however, remain deductible, although limited to a maximum of 60% of the taxable profits.
- The tax exemption for capital gains on shares, will no longer apply if the capital gain is realized within one year as from the acquisition date of the shares.
- The tax rate on the capital gain realized will most likely be set at 25%.
- The ‘thin cap’ regulation on financing costs will apply in a more general manner and a debt/equity ratio of 5:1 will be imposed. As a result, interest costs on loans and borrowings exceeding five times the net asset value of the debtor-company, will no longer be tax deductible.
- Duties on tobacco and alcohol will be increased.
- Notaries and bailiffs will no longer be exempt from VAT.
- The tax on stock transactions will increase to 30%.
- “Pay television” will be subject to the 21% VAT regime.
Most likely, the new tax rules will enter into force on 1 January 2012, unless stipulated otherwise. However, many of the above-mentioned changes are still up for discussion, as is the date of their introduction.
For further information on these new tax rules, please feel free to contact Caroline Kempeneers (+32 2 787 9121, firstname.lastname@example.org) or Geert De Neef (+32 787 91 12, email@example.com).