Temporary “Belgian minimum tax”
In anticipation of the introduction of the global minimum tax of Pillar Two (which is expected to enter into effect on 1 January 2024), the government has decided to amend the current “basket limitation” rule, so that the relevant set of tax attributes would only be deductible from taxable profits up to 40% instead of 70% (as is currently the case) over the threshold of EUR 1m.
Said amendment would apply as from tax year 2024 (linked to a taxable period starting at the earliest on 1 January 2023). It is expected that measures will be taken to address changes to the closing date of the annual accounts. The “Belgian minimum tax” is intended to be temporary, in the sense that it would be abolished once the Pillar Two rules enter into force in Belgium.
Notional interest deduction
The notional interest deduction (“NID”) regime would be abolished. Timingwise, the NID would no longer be available as from financial years closing after 30 December 2022. Again, it is expected that measures will be taken to tackle changes made to the closing date of the annual accounts.
At this stage it is unclear whether the regime would be abolished for large companies only or also for SMEs.
Non-deductibility of financial sector levies
The annual taxes levied on credit institutions, insurance undertakings and undertakings for collective investment which are due after 1 January 2023 would be subject to an 80% deductibility limitation for corporate income tax purposes (incl. non-residents).
Foreign tax credit for royalties
The current lump-sum regime would be transformed into a credit for actual (withholding) taxes paid abroad.
Authors’ rights
The tax (and social security) regime applicable to authors’ rights income would be reformed as from 1 January 2023, with transitional rules that would apply during a two-year period.
Whilst only the broad principles of the reform have been agreed upon, the reform would lead to (i) a restriction of the scope of application of the regime to align it with historic legislative intent and (ii) a threshold/cap above which the beneficial regime would no longer apply.
Reduction of tax burden on labour
The government also agreed to bring forward a tax reform which is intended to reduce the tax burden on labour. In that respect, the Finance Minister is asked to prepare an ambitious project for a first phase of the tax reform, the implementation of which would (still) start in the current legislative term.
At this stage, no specific details are yet available, although it is expected that the Finance Minister will move along the lines set out in his Blueprint for a broad tax reform, which was published in July 2022 (Dutch | French).
Tax reduction for long-term savings
The tax reduction for “long-term savings”, which concerns repayments of mortgage loans taken out to build, acquire or renovate a home in the EEA (other than the own dwelling), would be abolished as far as it concerns loans taken out after 1 January 2024.