Belgium: Tax provisions in 2018 budget | KPMG | GLOBAL

Belgium: Agreement reached on tax provisions in 2018 budget

Belgium: Tax provisions in 2018 budget

Belgium's government has reached an agreement concerning various tax measures for the 2018 budget—including measures that would:

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  • Reform the tax treatment of savings by individuals
  • Reduce the rate of corporate income tax for large companies and for small and medium-sized enterprises (SMEs)

Individual tax proposals

The reform of taxation of savings includes the following:

  • The standard exemption from withholding tax on interest received with respect to saving accounts would be reduced to €940 (from €1,880). 
  • A new tax exemption for the first €627 received as income on shares (dividends) would be introduced.
  • An annual tax at a rate of 0.15% would be payable on securities accounts having a value of €500,000 (€1 million for married couples) or more.
  • To encourage pension savings, taxpayers would be allowed to save a higher yearly amount of €1,200 (but subject to a tax reduction limitation of 25%).

Corporate income tax proposals

For large companies, the rate of corporate income tax would be reduced, and there would be changes to the notional interest deduction rules.

  • The rate of corporate income tax would be phased down to 25%—the rate would be reduced first to 29% as from income year 2018, and then to 25% as from income year 2020. 
  • The “crisis contribution” (the 3% additional tax) would be gradually phased out. 
  • The corporate income tax rate reduction would be paid for (that is, the lost revenue would be offset) by compensatory measures within the corporate income tax.
  • There would be a limit imposed on the amount of the notional interest deduction (available only with respect to an increase in the value of the equity of the company). 
  • Rules for a minimum tax base would apply, thus limiting the value of a “basket of deductions” (losses carried forward, notional interest deduction, the carryforward of the dividend received deduction) for the amount above €1 million. The available deduction would be limited at 70%—thereby, effectively resulting in a minimum tax rate of 7.5% for the excess amount (plus the corporate income tax at the rate of 25%).

For small enterprises, from the income year 2018, the corporate income tax rate would be reduced to 20% on the first €100,000 of profit of the SME (as defined in article 15 company code). To claim this reduced rate of tax, an amount of minimum remuneration would have to be paid to a director of the company.

 

Read a July 2017 report prepared by the KPMG member firm in Belgium

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