Budget control 2013
Corporate tax measures
Last update: 14 August 2013 - 11:30 CET
Budget Control 30/06/2013
The Government agreed to introduce a so-called “fairness tax" for companies.
Expected revenue for 2013: EUR 140 Million; for 2014: EUR 215 Million.
The fairness tax is a separate tax that is due under certain circumstances if, for the same taxable period, a company distributes dividends and the taxable base is reduced with previous year tax losses and current year NID.
The notion of dividends also includes reimbursements of paid-in capital, issue premiums and profit shares that, in tax terms, are treated as taxable dividends. Buyback and liquidation dividends, including dividends subject to the recently introduced transitional 10% tax rate further to the modification of the liquidation withholding tax regime are excluded from the fairness tax.
The taxable base of the fairness tax should be determined as follows:
- firstly, the taxable base is in principle equal to the positive difference between the gross amount of dividends declared for the taxable period and the final taxable base effectively subject to corporate tax as meant by Art. 215-216 of the Income Tax Code;
- secondly, this taxable base is reduced with the portion of the declared dividends originating from previously taxed reserves; to avoid "manipulations", only taxed profits reserved until and including tax year 2014 will be out of the fairness tax's scope (note that dividends distributed for tax year 2014 cannot be considered as tax year 2014 taxed reserves); moreover, to identify the origin of reserves distributed, the LIFO (last in, first out)-method is used;
- thirdly, the balance is limited according to a percentage expressing the proportion between, on the one hand, (i) the previous year tax losses and current year NID (hence excluding any NID stock) that have been effectively deducted for the taxable period and, on the other, (ii) the taxable result of the taxable period exclusive of any tax-exempt write-offs, provisions and capital gains, i.e., the taxable base after the "first operation".
On the taxable base, as determined above, the fairness tax is due at the rate of 5%, to be increased with the 3% crisis surcharge, leading to an effective tax rate of 5.15%.
None of the tax attributes referred to in Art. 207 ITC (tax losses, NID, etc.) can be offset against this separate tax.
The fairness tax is subject to the obligation to make advance tax payments.
The explanatory memorandum contains the following 2 examples:
|Taxable base after first operation:||1,600|
|Dividend received deduction:||-300|
|Notional interest deduction:||-800|
|Previous year tax losses:||-50|
|Final taxable base taxable at the ordinary rate:||450|
Calculation fairness tax
|Dividends distributed minus final taxable base:||600-450=150|
|Taxable base fairness tax:||150 x 53.12%=79.68|
|5% Fairness tax due:||3.98 (to be increased with 3% surcharge=4.10)|
|Decrease of previous year taxable reserves:||-1,000|
|Taxable base after first operation:||2,100|
|Dividend received deduction (foreign dividends):||-100|
|Notional interest deduction:||-1,000|
|Previous year tax losses:||-1,000 (NID stock -1,000)|
|Final taxable base taxable at the ordinary rate:||0|
Calculation fairness tax
|Dividends distributed minus final taxable base:||3,000-0=3,000|
|Dividends distributed minus dividends originating from previously taxed reserves:||3,000-1,000=2,000|
|Taxable base fairness tax:||2,000 x 95.23%=1,904.60|
|5% Fairness tax due:||95.23 (to be increased with 3% surcharge=98.09)|
The fairness tax does not apply to companies that qualify under company law as SME's on a consolidated basis for the taxable period for which dividends have been distributed.
The fairness tax is not tax deductible.
The fairness tax also applies to non-resident companies with taxable presence in Belgium. For these non-resident companies, the notion of "distributed dividends" means "the portion of the gross dividend declared by the company, corresponding proportionally to the positive share of the Belgian establishment's accounting result in the global accounting result of the company".
Entry into force
The fairness tax applies as of tax year 2014. An anti-avoidance measure disregards changes made as of 28 June 2013 to the financial year's closing date.
Compliance with European law
It is debated whether the fairness tax complies with European law, specifically whether or not the fairness tax qualifies as a prohibited withholding tax under the EU Parent-Subsidiary Directive (cf. the EU Court of Justice jurisprudence in the cases Athinaiki and Burda). That is why the Government has notified the European Commission of this measure.
Budget Control 29/03/2013
As of tax year 2014, taxpayers will no longer be allowed to claim both the 95% dividend received deduction (DRD) and notional interest deduction (NID) on treasury investments. The DRD regime will prevail, in which case these investments would have to be excluded from the NID calculation basis. NID can only be claimed for these investments if they are not eligible for DRD.
The expected revenue would amount to EUR 30 Million for 2013.