Belgium

Federal government negotiations: Expected tax reform 

In the context of the federal government negotiations, a tax reform is anticipated following the elections held on 9 June 2024. Although proposals for adjustments to certain tax measures are being negotiated, no agreement has been reached as of December 2024.

Changes to the Belgian transfer pricing documentation forms (Royal Decree of 16 June 2024, Official Gazette of 15 July 2024)

The Belgian administration has published adjusted transfer pricing documentation forms and guidance (Master File, Local File, and Country-by-Country [CbC] Reporting). The adjusted forms (275 LF, 275 MF, and 275 CBC NOT) and explanatory notices were included in the Royal Decree dated 16 June 2024 and were published on 15 July 2024 in the Belgian Official Gazette. The adjusted forms will come into effect from financial years starting per 1 January 2025.

The most significant adjustments are on the form 275 LF where transactions in Part B must be completed per country instead of aggregating the countries and the form 275 CBC NOT where a notification can be the first notification, a change in the previous notification, or a termination of the notification if the Belgian entity is no longer part of the multinational group.

Public CbC Reporting law of 8 January 2024 (Official Gazette of 26 January 2024) and Royal Decree of 18 April 2024 (Official Gazette of 6 June 2024)

The Public CbC Reporting Directive has been implemented by the law of 8 January 2024 and the Royal decree of 18 April 2024.

Companies that fall in scope of the Belgian Public CbC Reporting law are: (i) Belgian (parent) companies with a net turnover of more than 750 million euros (EUR) and subject to income taxation in multiple jurisdictions as well as (ii) non-European parent companies with a net turnover of more than EUR 750 million that are economically active in Belgium through a subsidiary or branch and subject to the Belgian tax system.

Although the Belgian Public CbC Reporting law was generally drawn up to be consistent with the Directive, specific deviations include, among others:

• The Belgian Public CbC Reporting law defines small enterprises as entities with a yearly turnover below EUR 9 million for at least two consecutive financial years as opposed to the European Union (EU) Directive, which applies a EUR 8 million threshold.
• In principle, entities in scope must publish their Public CbC Reporting on their company website and simultaneously file it with the Balance Sheet Centre of the National Bank of Belgium.
• Disaggregated information should not only be published for jurisdictions that are mentioned on the blacklist (the EU list of non-cooperative jurisdictions for tax purposes) or on the greylist (list of the state of play of cooperative jurisdictions that have taken commitments to implement tax good governance principles), but also for those jurisdictions on the (generally broader) Belgian lists of countries with no or low taxation (so-called DRD list and Belgian list for payments to tax havens) or rated by the global forum on transparency and exchange of information for tax purposes as non-compliant or only partially compliant.
• An exception to the scope not only applies for credit institutions but also for regulated stock broking companies.
• The Belgian Public CbC Reporting law adopts the filing term of 12 months after the closing date, which differs from the filing term of seven months for the filing of annual accounts as provided for in the Belgian Companies and Associations Code.
• The Belgian Public CbC Reporting law does not provide for a ‘safeguarding clause’ to defer disclosure of commercially sensitive information.
• Members of a management body, as well as persons entrusted with the governance of an establishment in Belgium, who fail to comply with the Belgian Public CbC Reporting requirements could be punished with a fine of between EUR 50 and EUR 10,000 (and/or a prison sentence of up to one year in the case of fraudulent intent).

It is important to bear in mind that CbC Report data will soon be publicly available as the first Belgian Public CbC Report must be published for financial years starting on or after 22 June 2024. Hence, the first Belgian Public CbC Report filing date is set at 21 June 2026 (31 December 2026 for companies with financial statements following the calendar year).

Law of 12 May 2024 on various tax provisions (Official Gazette of 29 May 2024)

On 29 May 2024, the law of 12 May 2024 containing various tax provisions was published in the Belgian Official Gazette. This law implements several changes to the regime of the investment deduction and the innovation income deduction (IID).

The new regime is organised around three 'tracks':

• The general track: Ordinary investment deduction (10% or 20% [qualifying digital investments, Royal Decree still to be published]). This is only applicable to individuals and small and medium-sized enterprises (SMEs).
• The targeted track: An increased 'thematic' investment deduction (replacing the specific categories of qualifying investments) (40% [SME] or 30% [non-SME]). A list of eligible investments for this investment deduction was published by the Royal Decree of 20 December 2024 (Official Gazette of 31 December 2024) and will be reviewed/updated periodically. The increased thematic deduction will only be applicable to fixed assets for which no regional aid is requested (exceptions to be determined by the King).
• The technology track: The so-called ’technology‘ deduction applies in relation to qualifying investments in patents and fixed assets that are used to support research and development (R&D) of new products and future-oriented technologies that have no impact on the environment or that aim to minimise the negative impact on the environment of existing products and technologies (13.5% [one-off] or 20.5% [spread, not applicable to patents]). Taxpayers could opt to apply a tax credit for this category of investments.

The law provides for fixed investment deduction rates. Hence, going forward, these rates will no longer be subject to the yearly indexation mechanism.

A taxpayer can only choose one of the above-mentioned types of investment deduction per fixed asset.

The general conditions to benefit from the investment deduction remain the same.

The new regime, as well as the correction related to the (partial) professional withholding tax (WHT) exemption regime to determine the investment deduction basis, will be applicable for investments made as of 1 January 2025.

In addition, the law of 12 May 2024 provides for the following modifications to the IID and tax credit for innovation income:

• As of tax year 2025, taxpayers will have the option not to offset part or the full amount of IID against the taxable basis but to convert it into a non-refundable tax credit for innovation income.
• The tax credit for innovation income can be carried forward and offset against corporate income tax (CIT) of (one of) the following taxable periods. Taxpayers will have the choice for each taxable period whether or not to apply this tax credit.
• From 2026 onwards, the effect of the tax credit for innovation income will be evaluated on a yearly basis, paying special attention to the budgetary cost of the measure and Belgium’s competitive position compared to neighbouring countries.