Skip to main content

Policy Note Public Service Finance | A glimpse into the Government’s tax policy ambitions and objectives for the coming year(s)

Tax Reforms Hub Belgium

For those who want to get an idea of the tax policy priorities of the Federal Government, the Finance Minister’s Policy Note published on the Belgian Chamber’s website in November is mandatory reading.

In this overview, we will focus on the most relevant tax ambitions and objectives in the Policy Note for tax practitioners dealing with corporate tax, individual tax, VAT, international tax or private wealth.

The most eye-catching measures include:

  • New legal framework for the taxation of inbound taxpayers and inbound researchers, replacing the administrative circular on the “special tax status for foreign executives in Belgium”;
  • Revisit the wage tax exemption regimes to increase legal certainty for the taxpayer, to tackle “inappropriate” use, and to contain the “rising cost” of the regimes;
  • Preparation of a blueprint for a “broad” tax reform, covering employment, investment and consumption taxation. The government envisages a gradual shift from alternative forms of remuneration to cash remuneration. New remuneration optimisation techniques that are being developed and that are not compatible with this mission should, according to the Minister, be tackled as soon as possible;
  • Annually advance the filing deadline for corporate income tax returns by 2 weeks;
  • Further increase the number of large enterprises participating in the Cooperative Tax Compliance Program (CTCP);
  • The capacity of the Intra-Group Transfer Pricing Control Unit for multinational companies will be strengthened by doubling the staffing of the unit;
  • Combat the use of international private arrangements set up “with the aim of avoiding tax obligations”;
  • Implementation of a new, automated VAT chain, with the aim to incentivise taxpayers to fulfil their obligations;
  • Phased implementation of mandatory e-invoicing.

  • An accessible, flexible and customer-oriented attitude on the part of the administration towards individual and corporate taxpayers;
  • Further roll-out of a fair, neutral and green tax system;
  • An efficient and effective customs service;
  • Fair taxation and efficient fight against fiscal fraud.
Digital services
  • Further development of the MyMinfin portal;
  • Further development of the eBOX into a digital mailbox allowing citizens and companies to communicate with the government;
  • electronic correspondence will become the default practice, paper correspondence the exception.
Good cooperation with accountants and tax advisers 
  • Further increase of the number of large enterprises participating in the Cooperative Tax Compliance Program (CTCP);
  • Development of a vision concerning horizontal supervision for SMEs, with an emphasis on the development of partnerships;
  • Investigate to what extent the compliance programme can be supported by a further roll-out of the Registered Cashier System 2.0 or by deploying additional digital features;
  • Further strategic cooperation with the Institute for Tax Advisers and Accountants (ITAA).
Flood disaster support
  • Gifts to the Regional Disaster Funds will become tax deductible;
  • Increase of the deductibility cap for companies: EUR 2m instead of EUR 500k;
  • Expansive application of the 6% VAT rate in case of renovation or reconstruction of private dwellings that incurred severe damage because of the flood disaster;
  • Flexible payment modalities for victims.
Administrative simplification
  • Simplification of the income tax reporting obligations;
  • Annually advance the filing deadline for corporate income tax declarations by 2 weeks, as part of a plan to “structurally solve a number of annually recurring problems in the system of income tax return and payment deadlines”;
  •  Ensure a smooth information flow of tax data within and to the FPS Finance, while respecting data protection rules;
  • Prepare a more harmonised tax procedure;
  • Application of the administrative appeal procedure whenever a taxpayer wishes to object to the way in which the tax administration exercises its investigative powers;
  • Implementation of a new, automated VAT chain, with the aim to incentivise taxpayers to fulfil their obligations (e.g. a longer VAT return filing period and payment period);
  • Measures will be taken so that invoices may be issued in digital form unless the customer/client explicitly requests a paper document; with regard to GKS (Registered Cashier System) tickets, bills or receipts, the VAT-administration will investigate whether this is also possible;
  • The VAT certificate for renovation works on a private home will be replaced by a standard declaration on the invoice. This measure has already been included in the amendment dated 9 November 2021, to the draft bill containing miscellaneous VAT provisions dated 26 October 2021.
Timely and correct levy, collection and recovery 
  • Refine and complement the definition of different target groups and define a strategy for each of them to increase their compliance:
  • A first set of measures on e-invoicing, digitisation of invoices and the VAT chain have been taken to reduce the VAT gap between what the government should receive and what the government actually collects (the so-called "VAT Gap") to the level of our neighbouring countries; further measures will be worked out in 2022;
  • Evaluation by the tax administration of the entire system of declaration and payment periods for the main federal taxes, in consultation with the professional federations.
Predictability & legal certainty
  • All federal public service obligations on the energy bill, including the surcharge for green certificates from wind energy and the federal contribution for natural gas and electricity, will be transformed into special excise duties as from 1 January 2022. The aim is to move away from the system where costs are automatically passed on to the energy bill;
  • The legislation on the VAT exemption for medical services was annulled by the Constitutional Court in December 2019 for not complying with European regulations. The new, EU compliant regulation will enter into force on 1 January 2022. The VAT administration, in consultation with the actors within the health sector, will address the practical application questions in an administrative circular;
  • In the first half of 2022, the VAT administration will issue a circular updating the concept of "fixed establishment" in accordance with the recent case law of the Court of Justice;
  • In the context of the tax reduction for gifts, a reform of the recognition procedure for socio-cultural institutions will be worked out;
  • In order to avoid unfair competition in the hotel sector, providers of furnished accommodation subject to VAT are excluded from the scope of the VAT exemption scheme for small businesses. However, certain lessors will be able to opt for the collaborative economy scheme and thus remain largely exempt from VAT obligations in so far as the platform that they use, will be recognized as of 1 July 2022.
Fair taxation
  • The social contributions and tax benefits of professional athletes and sports clubs are being reformed. The draft programme law contains a series of changes in this regard.
  • Controls on sports agents will be strengthened.
Neutral taxation
  • The Special Social Security Contribution, a crisis tax dating back to 1994, will be phased out;
  • The loss of revenues for the Government as a result of this measure will be compensated, inter alia, by a reduction in the rising cost of wage tax exemption regimes (abuses, imperfections, legal uncertainty, etc.), by higher excise duties on tobacco, and by the introduction of a tax on embarkation.
Green taxation
  • The recent law on the tax and social greening of mobility is a first important step towards green taxation. The administration will develop a FAQ on the greening of mobility. Circulars will also follow regarding the tax treatment of electricity costs borne by an employer. The advice of the social partners (Dutch | French) regarding the mobility budget will also be followed up;
  • A second step that will be taken is the reduction of the existing benefit for professional diesel;
  • Find ways to further expand the application of the tax-free bicycle allowance;
  • Taxation will have to play an important supporting role in achieving the Belgian and European climate ambitions. A revised energy tax directive must create a uniform European framework to end the various subsidies that currently still exist for fossil fuels, such as the exemption for paraffin used in aviation.
Stimulating the labour market and purchasing power

The government plan to increase the purchasing power of workers and, in order to achieve this, fiscal and parafiscal measures can be taken to increase the net wage. To this end, the following measures, among others, will be developed:

  • Increase of the maximum amount per babysitting day and per child further to 14 euros from assessment year 2022;
  • Increase of the threshold for the tax exemption of regional training premiums to 700 euro within the existing federal framework;
  • Replacement of the additional reduction for unemployment benefits by an additional reduction for unemployment benefits similar to the additional reduction for pensions and other replacement income;
  • In order to increase the monthly income and to reduce the personal income tax refunds, the wage tax will be adjusted to the final personal income tax over a period of 3 years.
Broader tax reform

In accordance with the Coalition Agreement, the Minister plans to prepare – in 2022 - a blueprint of a “broader” tax reform, covering employment, investment and consumption taxation.

The government envisages a gradual shift from alternative forms of remuneration to cash remuneration. New remuneration optimisation techniques that are being developed and that are not compatible with this mission should, according to the Minister, be tackled as soon as possible.

The most striking guiding principles for this blueprint would be the following:

  • Further reduce the fiscal and para-fiscal charges on labour (for employees, civil servants and the self-employed);
  • Sustainable financing of this reduction by widening the tax base;
  • Deductions, tax credits and exemption regimes will be phased out as much as possible;
  • Gradual shift from alternative forms of remuneration towards remuneration in euros;
  • Minimise or discourage the possibilities for optimisation;
  • Contribute to the realisation of the climate and environmental objectives set out in the Coalition Agreement;
  • levy and collect the taxes as simply and effectively as possible. 
  • Continue to focus on measures that encourage companies to increase their solvency and strengthen their own capital structure;
  • Investigate how the establishment of ELTIFs (European Long-Term Investment Funds) in Belgium can be “facilitated” from a tax point of view;
  • The temporary application of the increased investment deduction of 35% for the purchase of e-trucks will be brought forward by one year (applicable to investments made as from 1 January 2022 instead of 1 January 2023);
  • Evaluate the current criteria for eligibility for the investment deduction;
  • The maximum ceilings that can be raised by start-ups and growth companies under the tax shelter regime would be doubled (start-ups: from €250,000 to €500,000; scale-ups: from €500,000 to €1,000,000). 
  • In order to improve cooperation between Belspo and the tax administration, a legal framework will be elaborated in which tasks and competences are more clearly delineated;
  • This should lead to more legal certainty for companies that make use of the partial wage tax exemption for research and development;
  • With clearer legislation, the Minister also aims to tackle “inappropriate” use and “excesses” of the wage tax exemption regimes and to avoid a disproportionate rise of the cost;
  • Streamline the various partial wage tax exemption regimes.
EU and OECD initiatives
  • Play a constructive and proactive role in the EU and OECD initiatives on reform of the international tax rules:
  • When transposing the OECD agreement on the international minimum tax (Pilar Two), the Minister will advocate that the profits of a multinational company must be subject to a minimum level of taxation in each individual country (jurisdictional blending), and that no exceptions should be made for certain tax regimes. At the same time, it will ensure that the competitiveness of certain important sectors of the Belgian economy is maintained;
  • The Minister will advocate the introduction of a digital services tax at international level with the OECD and the EU;
  • The Minister also intends to support the revision of the Code of Conduct and advocate broadening the definition of harmful tax practices;
  • The Minister is hopeful that the negotiations concerning the reform of the VAT rates at European level will culminate in a political agreement under the Slovenian EU Presidency;
  • As far as the “VAT In The Digital Age” initiative (platform economy, single EU VAT registration, modernise VAT reporting and e-invoicing) is concerned, the Minister expects an agreement before the summer of 2022.
New expat regime
  • Create a legal framework for the taxation of foreign executives in Belgium (and qualifying researchers), in line with similar regimes in neighbouring countries in order to avoid a competitive disadvantage;
  • The current administrative regulation governing the taxation of foreign executives in Belgium will extinguish.
Transfer pricing

To better tackle tax avoidance by multinational companies, the capacity of the Intra-Group Transfer Pricing Control Unit for multinational companies will be strengthened by doubling the staffing of the unit.

The General Law on Customs and Excise will be modernised in several steps. First, the law will be adapted to the entry into force of the Union Customs Code. In a second step, the sanctions policy will also be revised.

Intensive fight against tax avoidance and tax fraud
  • Tax audits will, where possible, evolve from an audit of the past into a “real-time” tax supervision;
  • Control activities will be focused on taxpayers who do not fulfil their obligations or who meet a risk profile. In this regard, efforts will be made (1) to use new techniques (2) to determine the various target groups, (3) to achieve maximum automation, (4) to gradually roll out the basket system whereby tasks are distributed over a larger geographical area with a view to the flexible deployment of staff and the equal treatment of taxpayers, (5) to reduce the VAT gap and (6) to make further investments in knowledge sharing through the existing networks and customised training courses;
  • The College for the Fight against Tax and Social Fraud has proposed a first action plan which has been approved by the Ministerial Committee;
  • The main project for 2022 is the elaboration of a legal framework that should allow the competent authorities to better cooperate in the fight against “serious tax fraud”;
  • The action plan also foresees initiatives to combat the use of international private arrangements with the aim of evading tax obligations. A dedicated squad specialised in complex international tax private constructions will elaborate measures to that effect;
  • The "Specific Matters" centre has been set up in view of targeted tax inspections of foreign corporate taxpayers. A tax analysis of a multinational group requires that all interactions and risks within a group of companies are mapped out. The knowledge and skills of the staff will be expanded by, among other things, developing new knowledge platforms;
  • The Minister intends to (continue to) play a pioneering role in the use of internationally exchanged data and in the reform of international tax regulations;
  • The Special Tax Inspection (BBI/ISI) and the Anti-Fraud Coordination Service (CAF) will elaborate additional anti-fraud measures, based on the recommendations made by the Special Commission Panama Papers;
  • Intensify the cooperation between the tax authorities and the Prosecutor’s Office by creating MOTEMs (‘multidisciplinaire onderzoeksteams / équipes d’enquête multidisciplinaires’);
  • In 2022, further actions will be taken to stimulate the taxpayers concerned to regularise time-barred capital before the regularisation procedure takes an end (31 December 2023).
  • In order to reduce the VAT Gap, seven working groups were established last spring within the VAT administration, including an "einvoicing" working group.
  • The e-invoicing obligation will be implemented step by step so that businesses can prepare themselves in due time. Goal is to make einvoicing mandatory by 2025 for B2B-transactions.