Foreign losses
The Law MTP amends the (complex) Belgian tax regime applicable to foreign losses, and this mostly in response to comments made by the Council of State.
Regarding the imputation of Belgian losses or losses from non-treaty countries on profits for which the Belgian tax is reduced on the basis of a tax treaty, the Law MTP provides for the possibility for the taxpayer to oppose this imputation. The taxpayer’s choice - which can be made for each taxable period - is irrevocable and will result in the Belgian losses or losses from non-treaty countries being carried forward to a subsequent taxable period. .
As the application of the recapture rule(s) requires one to know when a loss was effectively offset, the Law MTP provides for an “identification obligation” for taxpayers who intend to offset losses that may fall within the scope of the recapture regime (identification in an annex to the tax return).
Some other technical changes are brought about by the Law MTP as well.
Taxable base of secret commissions tax as minimum taxable base
Art. 207, ind. 7 ITC listed a number of items on which the various tax deductions may not be applied. This is for instance the case for the part of the result that occurs from the taxable base of the secret commission’s tax on “non-reported costs and benefits in kind”. The Law MTP extends that specific deductibility limitation to the entire taxable base of the secret commission’s tax, including - for instance – “hidden gains” and the new income elements which the Law MTP subjects to a fee form obligation (see above).
R&D tax credit and tonnage tax
The Law MTP amends the Program Law of 2 August 2002, to the effect that the R&D tax credit can no longer be applied during the periods in which the relevant profits are taxed under the tonnage tax regime.
Entry into force: applicable as from tax year 2022 connected to a taxable period starting on 1 January 2021 at the earliest.
European Long Term Investment Funds (ELTIFs)
The Law MTP introduces a tax regime for European Long Term Investment Funds (“ELTIFs”). Although ELTIFs are governed by Regulation (EU) 2015/760, which is directly applicable in the Belgian legal order, some national implementing measures are nevertheless required, e.g. in relation to the ELTIFs’ tax regime. Contrary to other Member States, Belgium had not yet provided for an appropriate tax regime.
An ELTIF is defined as “any [alternative investment fund] taking the form of a company incorporated under Belgian law with legal personality and which has been approved by the FSMA before commencing its activities in accordance with Regulation (EU) 2015/760 […]”. Contrary to, e.g., regulated real estate companies, ELTIFs must be recognised before commencing their activities.
The Law MTP includes several provisions which are essentially intended:
• to achieve neutrality from corporate income tax perspective;
• to prevent economic double taxation in the hands of corporate investors; and
• to provide for a WHT exemption for non-resident investors.
Generally speaking, the Law MTP ensures that ELTIFs are subject, mutatis mutandis, to the tax treatment applicable to the majority of Belgian investment companies.
Entry into force: absent any specific provision, 10 days after publication in the Belgian State Gazette.