The unrealistic interest rate of 7% is finally also abandoned. The qualifying capital gain is not (immediately) taxed but is deducted from the tax base of the assets in which the proceeds of the disposal are re-invested. Businesses not incorporated in the form of a limited liability company are either sole proprietorships or contractual arrangements offering no separate legal personality and no limited liability. Probably in Belgium as well, the optional regime will be subject to several conditions. The Corporate Tax Rate in Belgium stands at 29 percent. Belgium has an attractive tax regime for the financing of audiovisual and certain other creative works, allowing corporate investors in such projects to deduct their investments from their taxable income, up to certain thresholds. See 2017 instructions for more information on blended tax rates. Furthermore, the current outgoing Belgian coalition (caretaker) government has not (yet) opposed EU Commissioner Moscovici’s plans for the creation of a “digital tax”. The Dutch corporate income tax rate for profits that exceed EUR 200,000 will remain 25% in 2020, but this rate will be reduced to 21.7% as of 2021. At the end of 2017, Belgium introduced CFC rules that are mostly in line with the EU’s ATAD. Otherwise, both types of Interest Groupings are governed by the same rules. Belgium has a 5:1 thin cap rule in place to limit the amount of deductible interest paid or owed by a local company – whether foreign-owned or not – to non-local ultimate beneficiaries. A 25% rate of corporate tax will apply from 2021, and the crisis tax will be abolished completely. Please enable Strictly Necessary Cookies first so that we can save your preferences! Corporate taxpayers are taxed on an accruals basis. In principle, dividends from subsidiaries (foreign or Belgian) are taxed in the hands of a Belgian corporate shareholder but, subject to several conditions, such dividends will be 100% deductible by virtue of the dividends-received deduction. Exceptions may apply – for example, if the taxpayer, together with his or her close family, owned more than 25% of the share capital in a Belgian company at any time during the five-year period immediately preceding the sale, and the shares are sold to a corporate buyer outside the EEA (the capital gains tax rate would then be 16.5%). Any reasonable formula (based on sales, staff, or any other reliable criterion) can be used. Corporate taxpayers are taxed at the rate of 29.58% (2018-2019) or 25% (from 2020 onwards). YA 2016 See 3.4 Sales of Shares by Individuals in Closely Held Corporations. Please note that the EU Court of Justice has dismissed the “Excess Profit Rulings” case brought by the EU Commission against Belgium. There are several other taxes that may be due, depending on the business operated by corporations (or unincorporated businesses) and the region where they are operating. ©2010-2021 WWW.TAXPATRIA.BE - flavoured by eFlavours. Belgium has adopted a somewhat far-reaching version of the Country-by-Country Reporting standard (BEPS Action 13), inter alia, by imposing CbC reporting for financial years starting on or after 1 January 2016. Targeted corporate income tax rates apply if the taxable profit does not exceed a certain value. For the diamond industry, Belgium applies a so-called carat tax that offers a relatively low – to some extent notional – tax base for diamond traders. For tax years 2020 and 2021 (financial years ending 31 December 2019 and 2020 and later), the surcharge is 6.75%. In principle, capital gains are taxed as ordinary profits. Especially for larger taxpayers, data mining will be used to seek “suspicious” elements that would warrant a more thorough audit. Depreciations will then only be allowed on this reduced tax base, resulting in the taxation of the temporarily exempt capital gain over time, as the newly invested assets are depreciated. You collect income in Belgium (for instance, remuneration, pension, rent) and ... Belgian income will be exempted from tax in Belgium. Belgium does not have any change of control provisions that would apply to the disposal of an indirect holding in a Belgian corporation higher up the non-resident group or parent company. As a result, only the consolidated tax base would then be subject to corporate income tax. Corporate taxation: Rates Corporate income tax rate 25% Branch tax rate 25% Capital gains tax rate 0%/25% On wages for qualifying scientific workers, 80% of the statutory amount of Wage Withholding Tax does not need to be transferred to the tax collector, substantially reducing the “cost to company” for employing such workers. Many details of this regime are still unclear at the time of writing. There is currently little or no experience in Belgium of compensating adjustments in connection with transfer pricing claims; how this will work out in practice remains to be seen. Practitioners generally advise taxpayers to apply for an advance tax ruling from the Ruling Commission in order to prevent any dispute with the tax auditors afterwards. The accounting profits are the basis for determining the taxable income of a corporation. Under certain conditions, a reduced rate of withholding or personal income tax may be available. In the wake of the financial crisis of 2008, banks are subject to a so-called bank tax. The hybrid entity’s income will be taxed in Belgium to the extent that it is not already taxed under the laws of Belgium or any other jurisdiction. Keep up-to-date on significant tax developments around the globe with EY’s Global Tax Alert library. Thus, it will be 11.7% in 2018, 11.6% in 2019 and 11.5% in 2020. Many practitioners in Belgium believe that BEPS and its European twin-sisters (ATAD I and II) will eventually lead to some form of formulary apportionment, nicknamed the “Common (Consolidated) Corporate Tax Base”. Under specific circumstances, Belgium allows a foreign tax credit for dividends, interest and royalties that were subject to withholding tax in the source country. As a result, this securities account tax is now only due with respect to the reference periods ending on or before 30 September 2019. The penalty for the failure to submit a tax return will also be increased significantly. By continuing to browse our site (by scrolling or clicking), you agree to the use of these cookies. The Corporate Tax Rate in Greece stands at 24 percent. In exceptional circumstances, non-resident individual shareholders may be subject to Belgian capital gains tax on the sale of stock in Belgian companies, but not as a general rule. The present Belgian coalition (caretaker) government aims to transpose – or has already transposed – the BEPS and ATAD measures without much “gold plating”, to create a level playing field with other jurisdictions that offer similar non-tax benefits to potential or existing inward investors. 2020 Corporate Income Tax Rates. Each company will be required to pay at least € 45,000 per year to (at least one) company manager. These are all tax transparent, whereas corporations – even these that do not have limited liability – are taxed as such under the Corporate Income Tax (CIT) rules, which are part of the Income Tax Code of 1992 (ITC92). This new measure will have a significant impact on the real estate market in Belgium. The average rate being 7%. On the one hand, there is an exhaustive list of non-deductible items, which are added back to the accounting profits (eg, most fines, most local taxes, the corporate income tax itself, the non-deductible part of automobile costs, etc). In the past, most limited risk distribution arrangements (eg, commissionaire structures) were commonly used and not aggressively scrutinised by the Belgian tax authorities, but this is rapidly changing, especially since Belgium decided in 2017 to opt in to the MLI provision on commissionaire structures (Article 12). Belgium does not impose (capital gains or other) tax on the sale of stock in a Belgian company by non-resident corporate shareholders. For example, businesses selling certain goods packed in plastic or other packaging material (aluminium cans, etc) must pay a “recycling tax”. 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