Until recently, Belgian tax policy has been geared to meeting budgetary challenges, especially in the wake of the economic crisis. As public anger in Belgium rose over the tax practices of some multinationals, Belgium’s previous government realized that the fight against aggressive tax planning could help smooth the passage of certain measures through Parliament.
The tax focus of Belgium’s current government, elected in May 2014, continues to be on job creation and economic growth. With salary costs in Belgium becoming prohibitively high relative to its neighbors, Belgium is seeking to reduce its reliance on tax revenue from labor and to increase revenue from other sources (e.g. energy and natural resource companies, consumption taxes). In a tax mix shift implemented at the end of 2015, the government reduced social security contributions and individual income taxes for employees and the self-employed to stimulate employment, and introduced additional incentives for investment and innovation. Indirect taxes and taxes on financial incomefor individuals were increased.
The fight against tax fraud — a key responsibility of Belgium’s Minister of Finance — remains a high priority. The government has just agreed on a corporate tax reform which reduces the corporate tax rate from 33.99 percent to 29.58 percent as from 2018 and 25 percent as from 2020.
As a founding member of the OECD, Belgium has fully supported the BEPS initiative but has not been an early adopter. So far, Belgium has implemented some specific anti-BEPS measures in direct response to the OECD project. Certain anti-abuse rules to safeguard the tax base of individuals and corporations against aggressive planning have existed for quite some time. Recently, the government has taken more steps that are in line with the spirit of the OECD BEPS project.
Specific anti-abuse rules backed by a GAAR have been in place for decades. Interest, royalties and service fees paid to tax havens are not deductible unless the taxpayer can prove that the expenses are connected to transactions actually carried out and do not exceed normal limits. Under the GAAR, a transaction as a whole cannot be invoked against the tax authorities if the authorities demonstrate by presumptions or any other evidence that fiscal abuse is one of the transaction’s main drivers.
Recent years have seen significantly stepped-up audits aimed at detecting international tax fraud. About 100 specialized auditors have been allocated to this area, and this centralized team is steering the audits of large multinationals across Belgium.
Current BEPS trends in Belgian tax rules and practice are asfollows:
The new regime took effect as of 1 July 2016.