Reform of the corporate income tax (CIT) regime in Belgium
In July 2017, the Belgian government announced that the CIT regime would be reformed, resulting in the Corporate Tax Reform Law of 25 December 2017 (Official Gazette of 29 December 2017). This law has been amended and supplemented by the Reparation Act of 30 July 2018 (Official Gazette of 10 August 2018). The tax reform in Belgium introduces several tax measures spread out over a period of three years. The tax measures that are applicable as of tax year 2019 (financial years ending 31 December 2018 and later) include a lower CIT rate, a minimum tax base, a 100% participation exemption, modified conditions in order to claim the exemption of capital gains on shares, reimbursement of paid-up capital subject to withholding tax (WHT) to the extent that taxable reserves are deemed to be distributed, modified calculation of the notional interest deduction (NID), etc. The European Anti-Tax Avoidance Directive (ATAD) measures (30% earnings before interest, taxes, depreciation, and amortisation [EBITDA] rule, controlled foreign company [CFC] rules, hybrid mismatches, and exit taxation) and the tax consolidation will enter into force as of tax year 2020 (financial years ending 31 December 2019 and later). Finally, as of tax year 2021 (financial years ending 31 December 2020 and later), a further reduction of the CIT rate and a new, more economic permanent establishment (PE) concept will come into play.
Notional interest deduction (NID)
The Belgian NID rate for tax year 2018 (accounting years ending between 31 December 2017 and 30 December 2018, both dates inclusive) is 0.237% (0.737% for small and medium-sized enterprises [SMEs]). The NID for tax year 2019 (accounting years ending between 31 December 2018 and 30 December 2019, both dates inclusive) amounts to 0.746% (1.246% for SMEs).
Fairness tax abolished
The Belgian Constitutional Court has ruled in its decision on the 1 March 2018 that the fairness tax is unconstitutional; consequently, it annulled the fairness tax as of tax year 2019 (financial years ending 31 December 2018 and later). This decision follows a series of actions on both the national and European level. The annulment does, however, not have a retro-active effect, except in specific situations (e.g. redistribution of European Union [EU] dividends).
Implementation of DAC6 (pending)
On 25 May 2018, the Council of the European Union has formally adopted Directive amending Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements (also known as DAC6). DAC6 aims at bridging the information gap between taxpayers and tax authorities by installing a mandatory disclosure obligation for cross-border arrangements/transactions that fall within one of the hallmarks. Under DAC6, the reportable information will be disclosed to the national tax authority, shared between the tax authorities of the EU member states, and will also be (partly) accessible by the EU Commission.
Cross-border arrangements of which the first step was implemented on or after 25 June 2018 and the date of application of this Directive (1 July 2020) will be reportable by 31 August 2020.