Corporate tax measures
Last update: 17 December 2013 - 16:00 CET
Law containing tax and financial measures of 17 June 2013
The current maximum NID rates, which have been decreased to 3% for large enterprises and 3.5% for small and medium sized enterprises by the Law of 28 December 2011, remain intact.
However, in order to align the NID rate with the most recent evolutions of the 10-year government bond rate, the NID rate is now calculated based on the average 10-year government bond rate of the third quarter of the penultimate year prior to the tax year.
This new reference rate applies as of tax year 2014 (based on said 10-year government bond rate for July, August and September 2012), resulting in a lower effective NID rate of 2.742% for large enterprises and of 3.242% for small and medium sized enterprises for tax year 2014. Changes to the financial year’s closing date as of 21 November 2012 are not opposable towards the tax authorities.
For the year 2015 the NID rates are 2.63% (multinationals) and 3.13% (SME's).
The Law containing tax and financial measures dated 17 June 2013 (Kamer | Chambre - Staatsblad | Moniteur) provides some clarifications and changes in relation to the application of the 309% secret commissions taxation with respect to fringe benefits.
In the bill’s explanatory memorandum, a distinction is made depending on the nature of expenses and possibility to still tax fringe benefits in the hands of the beneficiaries:
|Excessive expenses of which the character of fringe benefit is not clear||
|Small calculation errors and mistakes (concerning lump-sum fringe benefits or benefits originating from mixed use) which are rectified by the company,also indicating the beneficiary, within the normal 3-year assessment period||
|Fringe benefits, originating from “mixed” or “clearly private” expenses, for which no form has been filed but where the company “immediately” identifies the beneficiary upon audit, provided the beneficiary agrees and can still be effectively taxed within the standard 3-year assessment period||
|Unreported fringe benefits for which no form has been filed and for which the company does not identify the beneficiary, but where a “final” tax is assessed in the hands of the beneficiary within the standard 3-year assessment period||
|Unreported fringe benefits for which the company does not identify the beneficiary and for which no final tax is assessed in the hands of the beneficiary within the standard 3-year assessment period||
Under the old legislation, the secret commissions tax’s application could only be avoided when the company demonstrated that unreported costs or benefits had been reported spontaneously by the beneficiary in his tax return. This exception is maintained. If this exception applies, the tax authorities already accepted in practice before the enactment of the Law of 17 June 2013 containing tax and financial measures that unreported costs and benefits are deducted by the company, although based on the text of the then applicable tax law such deduction was only possible if the secret commissions tax was applied. This administrative practice has now been formally included in the Income Tax Code by the Law of 17 June 2013, meaning that the cost is deductible in the hands of the company if the secret commissions tax does not apply because the cost or benefit was reported by the beneficiary.
Business related restaurant expenses will henceforth fall outside the 309% tax’s scope of application, meaning that unreported business related restaurant expenses will not activate the secret commissions tax. This has been confirmed in an administrative circular dated 28 November 2013 (Dutch | French).
These changes are applicable as of tax year 2014.
The tax authorities commented on the changes introduced by the Law of 17 June 2013 in the circular letter Ci.RH.421/628.803 of 22 July 2013 ( | ). The key message of this circular is that the effective taxation in the hands of the beneficiary is to be preferred over the application of the secret commissions’ taxation. Furthermore, the tax authorities adopt an even more flexible approach that goes beyond the ‘softening’ that was introduced by the Law of 17 June 2013 by also accepting amongst others that:
- the secret commissions tax does not have to be applied in situations where the beneficiary is effectively taxed on the benefit without his consent;
- the softening introduced by the Law of 17 June 2013 and the new circular letter can also be applied to pending disputes and files currently under audit, even if they relate to older tax years.
The Finance Minister also stated that double taxation (as disallowed expense and fringe benefit) must be avoided when possible.
The tax shelter regime is amended on several points. Amongst others the following amendments have been introduced :
- Requirement that 70% of the global budget must be used for costs directly related to the production of the work and 30% can be used for indirectly related costs;
- Introduction in the Income Tax Code of non-exhaustive lists of costs considered as respectively direct and indirect costs, whereby costs that would not be included in these lists would have to be analysed on a case-by-case basis;
- The part of the budget that needs to be spent in Belgium would be fixed at 90% of all funds collected.
These amendments, which have been submitted to the European Commission for approval, apply to framework agreements for tax shelter productions concluded as of 1 July 2013.
Program Law of 27 December 2012
The existing corporate tax regime of capital gains on shares remains intact. However, capital gains qualifying currently for full exemption are subject to a “separate tax” at the rate of 0.4%, calculated on the net amount of the previously exempt gain. It is not possible to net capital gains subject to the 0.4% separate tax with capital losses on shares. This tax is not tax deductible and taxpayers are not allowed to offset tax attributes such as e.g. prior year tax losses against the 0.4% separate tax.
The separate tax does not apply to small and medium-size companies which meet the conditions laid down in Article 15 of the Companies Code.
Due to the 3% additional crisis surcharge of Art. 463bis ITC, the effective tax rate is 0.412%.
Capital gains will henceforth be subject to 1 of 4 regimes:
- full exemption for capital gains realised by SME satisfying all conditions (holding period and taxation requirement)
- tax at the rate of 0.412% for capital gains realised by companies other than SME satisfying all conditions (holding period and taxation requirement)
- tax at the rate of 25.75% for capital gains satisfying the taxation requirement but not the holding period requirement
- tax at the rate of 33.99% for capital gains not satisfying the taxation requirement.
Note in this respect that there is also taxation in the hands of companies subject to the Royal Decree of 23 September 1992 (credit institutions, investment companies and management companies for collective investment undertaking) for capital gains realised on shares belonging to their “trading portfolio”.
The tax is due as of tax year 2014, with a specific anti-avoidance rule making changes to the closing date of the financial year as of 21 November 2012 not opposable towards the tax authorities.
The Program Law of 22 June 2012 ( | ) introduced a 1.5% special social security contribution on extra-legal pension premiums exceeding certain thresholds. The special contribution in relation to employees is due in the 4th quarter of the year for employees and by December 31 of the year at the latest for self-employed directors.
For practical implementation reasons, the calculation is made – and the 1.5% special contribution is due – based on the premiums paid and reserves acquired during the year preceding the year in which the 1.5% special contribution is due. This implies for contribution year 2012 that the contribution is determined and calculated based on the relevant data relating to 2011.
Only net premiums, i.e. after deduction of insurance taxes and the 8.86% contribution on extra-legal pensions, are taken into account.
Notwithstanding the authority granted to the King in this respect, the Program Law of 27 December 2012 (Dutch | French) implementing some of the budget 2013 measures (Kamer | Chambre) contains highly technical rules on how to calculate if – and to what extent – the € 30,000 threshold is exceeded under the transitional regime. The € 30,000 threshold is index-tied.
The most relevant clarifications in relation to the calculation of the € 30.000 threshold and the 1.5% special contribution under the transitional regime can be summarised as follows:
- For contribution years 2012 and 2013 slightly different calculation rules are applied;
- “Death insurance premiums”, exceptional premiums (such as “back service” or “future service” premiums) and premiums paid during the notice period in case of termination of employment are included in the premiums for extra-legal pension schemes which are subject to the 1.5% special contribution;
- Additional amounts paid by the employer in case of “underfunding” are not caught by the 1.5% special contribution and do not need to be included for the calculation of the total amount of premiums paid in relation to a certain contribution year;
- Premiums paid upon the outsourcing of internal pension accruals or certain keyman insurance contracts are excluded from the 1.5% special contribution calculation base as well as from the 1.5% special contribution;
- When the threshold is exceeded, the 1.5% special contribution is only due by the employer on the portion of the contributions exceeding the € 30.000 threshold. If the employer’s portion in the “excessive premiums” is smaller than the total of the “excessive premiums”, the 1.5% special contribution will only be due on the employer’s portion of the excess.
Furthermore, the Program Law of 27 December 2012 introduces the obligation for the employers and sectoral organisations to provide a list to the pension institutions containing an overview of the employees that were affiliated during the year preceding the contribution year prior to 28 February of the contribution year. For employers the first due date is 28 February 2013 whereas sectoral organisations only have to file by 28 February 2014 for the first time. A similar rule is introduced for legal entities in relation to self-employed persons which were affiliated to extra-legal pension schemes.
Except for contribution year 2012, the additional three month payment term for self-employed persons have been abolished.
The Program Law of 27 December 2012 also provides additional technical clarifications on the calculation of the excessive premiums under the final regime. Under the final regime “death insurance premiums” are no longer taken into account to determine whether the threshold is exceeded and are thus no longer subject to the 1.5% special contribution.
Under the final regime, and contrary to the transitional regime, internal pension accruals and certain “keyman” insurance agreements are taken into account for the calculation of the amount in excess of the € 30,000 threshold and would be subject to the 1.5% special contribution.