Belgium

Program Law of 22 December 2023 (Official Gazette of 29 December 2023)

From a corporate income tax (CIT) perspective, the main provisions of the Program Law of 22 December 2023 are the following:

• As of tax year 2024, the current controlled foreign company (CFC) rules that are based on the transactional approach foreseen in the European Union (EU) Anti-Tax Avoidance Directive (ATAD) are replaced by the entity approach of this Directive. This means that the new CFC rule henceforth taxes passive income, a.o. interest, royalties, dividend, and income from disposal of shares, which is subject to low taxation abroad (defined as half of the taxation that would occur under the Belgian rules), unless the taxpayer can prove that sufficient substance is available locally (see Controlled foreign companies (CFCs) in the Group taxation section for more information).
• In light of the SIAT case law of the Court of Justice of the European Union (CJEU), two anti-abuse measures (i.e. articles 54 and 344, §2 of the Belgian Income Tax Code [BITC]) against international tax evasion have been modified. Article 54 BITC rejects the deductibility of interest payments, remunerations for certain intellectual property (IP), and fees for services when they are directly or indirectly paid to entities in jurisdictions where this income is not or lowly taxable. Article 344, §2 BITC allows the Belgian tax authorities to ignore the transfer of certain assets or cash to entities in jurisdictions where the income from these assets is not or lowly taxable. The scope of both measures now covers direct or indirect transactions with foreign affiliates. In addition, the modified counter-proof rules allow the taxpayer to avoid the application of these anti-abuse measures by demonstrating (i) that the effective tax equals at least half of the income tax that would be due if the foreign entity were resident in Belgium, or (ii) that it concerns an genuine transaction in the sense that it was carried out for valid business reasons reflecting economic reality.

• As of 2024, the 80% non-deductibility of the banking tax (for banks), the insurance tax (for insurers), and the net asset tax (for collective investment vehicles) is increased to 100%. As far as the banking tax is concerned, a progressive rate has been introduced envisaging a larger contribution of the largest financial institutions.

• From 1 January 2024, the registration duties rate applicable on the granting of long-lease rights or building rights is increased from 2% to 5%.
• For entities entering the specific Belgian real estate investment funds (REIF) taxation regime, a minimum five-year ’standstill‘ period is introduced. If this period is not respected, an additional 10% tax would be imposed, increasing the initial exit tax rate from 15% to 25%.
• Also worth mentioning is the strengthening of the Cayman Tax on the basis of the report of the Court of Audit (see Cayman Tax in the Other issues section for more information). Note that this tax is only applicable to Belgian resident individuals and Belgian legal entities other than Belgian companies.

Law of 28 December 2023 on various tax provisions (Official Gazette of 29 December 2023)

From a CIT perspective, a selection of the provisions of the Law of 28 December 2023 on various tax provisions is listed below:

• As of 1 January 2024, the annual tax on the assets of the non-profit sector is subject to the following changes:

• The rate of the tax will be gradually increased (exemption under 50, 000 euros [EUR] (previously EUR 25,000) to 0.15% between EUR 50,000 and EUR 250,000, 0.30% between EUR 250,000 and EUR 500,000, and 0.45% above EUR 500,000).
• The tax base is broadened to ’all assets wherever they may be located‘ (including real estate abroad).
• Exemptions apply for certain taxpayers, like healthcare institutions, schools, taxpayers organising theatrical, choreographic, or cinematographic performances, exhibitions, concerts, or conferences, etc.
• Further to the implementation of the Mobility Directive, three new restructuring operations are defined in the BITC:
• Simplified sister merger without the issuance of new shares.
• Disproportionate partial demerger, with the possibility of remunerating the operation by allocating shares of the demerged company only or of the demerged company and the receiving company or companies.
• Cross-border partial demerger by separation, in which the shares are allocated to the partial demerged company (rather than to the shareholders of the partially demerged company).
• Further to the implementation of the European Directive 2019/1023 in the Code of Economic Law, the tax rules applicable for judicial reorganisations have been modified accordingly. Based on articles 48 (2) and 48/1 BITC, impairments on receivables and profit from a waiver of debt are tax-exempt in the hands of the creditor or the debtor, respectively, if they occur in the framework of a homologation (by the Court) of a reorganisation plan or a notification (by the Court) of an amicable agreement, provided certain conditions are met. These cases are extended in line with the cases foreseen in the Code of Economic Law and the rules applicable for the creditor and the debtor are aligned. However, the (potentially) permanent exemption of profit resulting from a waiver of debt becomes a temporary exemption, as the exempt amount will be gradually included in the debtor's taxable base. This will be done on a staggered basis from the third to the sixth taxable period following that in which the full implementation of the amicable agreement or plan was achieved, or its withdrawal took place.
• As of 1 January 2024, the taxes on games and gambling and on amusement machines are no longer deductible.
• The deadline for filing the annual CIT return and the legal entities tax return has been incorporated into the BITC. As a general rule, these tax returns must be filed, at the latest, on 30 September of the tax year for financial years ending between 31 December of the previous year and the last day of February of the tax year. An extension of the deadline is possible in case of serious reasons or force majeure.
• For wage withholding tax, the investigation period is extended to five years, to bring it in line with the five-year assessment period.

Law of 19 December 2023 (Official Gazette of 28 December 2023) introducing a minimum tax for multinational companies (Pillar 2) and Royal decree of 15 May 2024 (Official Gazette of 29 May 2024)

The law of 19 December 2023 introduces a minimum tax for multinational companies and large domestic groups. This is the Belgian transposition of Council Directive (EU) 2022/2523 of 15 December 2022 ensuring a global minimum level of taxation for groups of multinational enterprises (MNEs) and large domestic groups in the European Union.

The law includes a coordinated system of rules designed to ensure that large (domestic/MNE) groups with a consolidated revenue exceeding EUR 750 million for at least two of the four previous years are subject to a minimum effective tax rate of 15%.

Take aways:

• The law is applicable to financial years beginning on or after 31 December 2023.
• In general, the Belgian law closely follows the (Dutch/French translation of the) EU Directive and therefore the Organisation for Economic Co-operation and Development (OECD) Model Rules.
• Belgium has introduced a Qualified Domestic Minimum Top-up Tax (QDMTT) that is aimed to qualify for the QDMTT Safe Harbour as well as the Income Inclusion Rule (IIR, or taxes collected by the ultimate parent) and the Under-Taxed Payment Rule (UTPR, or backstop rule).
• The Transitional Country-by-Country (CbC) Report Safe Harbours are included in the law in line with the guidance released by the OECD on 20 December 2022. With respect to the qualifying CbC Report, reference is made to the Belgian legislation introducing transfer pricing documentation.
• The Belgian prepayment system for CIT will also apply to top-up taxes in Belgium.
• The Belgian ruling office will not grant advance rulings on questions with respect to global minimum taxation.
• The first Belgian compliance obligation is the QDMTT return to be submitted before the last day of the 11th month following the end of the financial year. For groups that have accounting periods ending on 31 December 2024, the first QDMTT return deadline is 30 November 2025.
• A Global Anti-Base Erosion (GloBE) return has to be filed (only in some cases) before the last day of the 15th month following the end of the financial year. For the first year, groups have 18 months. For groups that have accounting periods that follow the calendar year, the first GloBE return deadline is 30 June 2026.
• For any top-up taxes due, group entities shall be jointly and severally liable for the payment of any top-up taxes arising under the law.
• In the event of a violation of the provisions of the law, a fine of EUR 2,500 to EUR 250,000 may be imposed.
• The Belgian research and development (R&D) tax credit will be refundable within four years, making this a qualified refundable tax credit under Pillar 2.
• The loss limitation rule or so-called ‘basket rule’ (limiting the use of carried forward tax losses that may offset taxable income exceeding EUR 1 million) will increase again from 40% (applicable for FY 2023) to 70% as of tax year 2025 linked to a taxable period starting at the earliest on 1 January 2024 (see Minimum tax base (‘basket rule’) in the Taxes on corporate income section for more information).

To comply with their Pillar 2 requirements, groups in scope of the rules must register at the Crossroads Bank for Enterprises. The modalities are included in the Royal Decree of 15 May 2024 (Official Gazette of 29 May 2024).

Public CbCR 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 Country-by-Country Reporting (Public CbCR) 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 CbCR law are: (i) Belgian (parent) companies with a net turnover of more than EUR 750 million 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 CbCR law was generally drawn up to be consistent with the Directive, specific deviations include, among others:

• The Belgian Public CbCR 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 EU Directive, which applies a EUR 8 million threshold.
• In principle, entities in scope must publish their Public CbCR 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 which are 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 CbCR 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 CbCR 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 CbCR 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 CbCR must be published for financial years starting on or after 22 June 2024. Hence, the first Belgian Public CbCR 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 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 will be published by Royal Decree (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 which are used to support research and development 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 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 innovation income deduction (IID) and tax credit for innovation income:

• As of assessment 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 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.