Belgian parliament approves draft bill implementing EU Pillar Two directive

On 14 December 2023, the Belgian parliament approved the draft bill (Dutch | French) implementing the Pillar Two minimum effective tax rate of 15% for multinational enterprise groups or large domestic groups with consolidated annual revenues exceeding EUR 750 million.

As anticipated, parliament did not make any amendments to the draft bill submitted on 13 November 2023 (see our Tax Alert of 18 November 2023). The bill closely resembles the EU Pillar Two directive and introduces the qualified domestic minimum top-up tax (QDMTT), income inclusion rule (IIR), and undertaxed profits rule (UTPR) provisions in Belgium. The QDMTT and IIR will come into effect on 31 December 2023 (i.e., as from 1 January 2024 for calendar year taxpayers) whereas the UTPR will come into effect on 31 December 2024 (i.e., as from 1 January 2025 for calendar year taxpayers).

The approved bill also includes the proposed update to the research and development tax credit regime to meet the GloBE rule definition of a “qualifying refundable tax credit” and the prepayment system for collection of certain of the new taxes payable.  

In anticipation of the introduction in Belgium of the global minimum tax in accordance with Pillar Two, the government in Federal Budget 2023 announced a temporary amendment to the “basket limitation” rule, so that the relevant set of tax attributes would only be deductible from taxable profits up to 40% instead of 70% over the threshold of EUR 1 million for tax year 2024 (i.e., at the earliest for taxable periods starting on or after 1 January 2023). Given that there is now a final approved bill on the implementation of Pillar Two in Belgium, it is expected that this rule will be replaced by the former basket rule (i.e., EUR 1 million + 70%) as from tax year 2025 for taxable periods starting on or after 1 January 2024.

In-scope groups need to act swiftly to evaluate the potential impact of the new legislation and prepare for the data collection challenges that the new rules may bring. 

How can Deloitte help?

Deloitte’s OECD Pillar Two Tax Advisory service brings together the expertise of Deloitte tax specialists and the analytical power of our data and technology solutions to help multinational businesses assess and evaluate the tax implications of global tax reform. We offer support for everything from initial gap assessment, through tax impact analysis, to implementation, including these end-to-end services:

• Policy monitoring;
• Impact assessment modelling;
• Data assessment;
• Finance system enhancement;
• Tax technology;
• Technical advisory;
• Accounting and tax provision; and
• Global compliance.