Corporate income tax (CIT)
In general, the tax base for CIT purposes is determined on an accrual basis and consists of worldwide income less allowed deductions. The rules are equally applicable to companies and PEs. It is assumed that all income received by a company is, in principle, business income. The income tax base is based on the Belgian Generally Accepted Accounting Principles (GAAP) financial statements of the company.
CIT is levied at a rate of 25%. This rate applies to both Belgian companies (subject to Belgian CIT) and Belgian permanent establishments (PEs) of foreign companies (subject to Belgian non-resident CIT).
Capital gains on qualifying shares realised when meeting all conditions are fully exempt, while non-qualifying shares are subject to the 25% rate.
Small and medium-sized enterprises (SMEs) (based on article 1:24 of the Code for Companies and Associations or on article 15 of the old Companies Code, and provided several other conditions are met) are able to benefit from a reduced rate of 20% on the first bracket of EUR 100,000 profit.
A surcharge is due on the final CIT amount upon assessment. The surcharge can be avoided if sufficient advance tax payments are made (see Payment of tax in the Tax administration section for more information). For tax years 2022 and 2023 (financial years ending 31 December 2021 and 2022 and later), the surcharge is 6.75%.
Secret commissions tax
A special assessment of 100% is applicable to so-called ‘secret commissions’, which are any expenses of which the beneficiary is not identified properly by means of proper forms timely filed with the Belgian tax authorities. These expenses consist of:
- Commission, brokerage, trade, or other rebates, occasional or non-occasional fees, bonuses, or benefits in kind forming professional income for the beneficiaries.
- Remuneration or similar indemnities paid to personnel members or former personnel members of the paying company.
- Lump-sum allowances granted to staff members as reimbursement of actual costs proper to the employer. Although the reporting was extended to variable allowances as well, the omission to draw up forms in this case can only be sanctioned with an administrative fine, not with the application of the secret commissions tax.
- Copyrights and related rights income and the concession of these rights.
The secret commissions tax can be limited to 50% if certain conditions are met. In some cases, no secret commissions tax applies.
As of tax year 2021 (financial years ending 31 December 2020 and later), the special assessment is no longer tax deductible.
Minimum tax base ("basket rule")
A minimum tax base applies for companies with a taxable profit that exceeds EUR 1 million via the limitation of certain deductions. Deductions outside the basket are fully deductible. Deductions within the basket can only be claimed up to the amount of 70% of the profits exceeding the EUR 1 million threshold. The remaining 30% is fully taxable at the CIT rate. The threshold of 70% is replaced by 40% as of tax year 2024 associated with a taxable period beginning at the earliest on 1 January 2023. It will become 70% again as of tax year 2025 linked to a taxable period starting at the earliest on 1 January 2024 provided a law transposing the draft Council Directive (COM/2021/823) on ensuring a global minimum level of taxation for multinational groups in the EU (so-called Pillar 2) has entered into force.
The deductions within the basket are the deduction of tax losses carried forward, the dividends-received deduction (DRD) carried forward, the innovation income deduction carried forward, and the notional interest deduction (NID) (both carried forward and new incremental NID). Other deductions are excluded from the basket and thus fully deductible (e.g. current year tax losses, current year dividends-received deduction, current year innovation income deduction, investment deduction [both current year and carried forward]).
Taxable income of non-residents
Certain income attributed by a Belgian tax resident to a non-resident is taxable in Belgium. A paragraph in the Belgian Income Tax Code functions as a ‘catch all clause’ to tax certain payments made to a non-resident of Belgium.
The ‘catch all clause’ applies in case the following conditions are all met:
- Revenues stem from ‘any provision of services’.
- Revenues qualify as benefits or profit in the hands of the non-resident beneficiary.
- The services are provided to an individual tax resident in Belgium in the framework of one’s business activity, a corporation, a taxpayer subject to the legal entities tax, or a Belgian establishment.
- There are (in)direct links of interdependence between the foreign supplier and its Belgian client.
- Such revenues are taxable in Belgium according to a DTT or, in the absence of any DTT, if the non-resident taxpayer does not provide evidence that income is actually taxed in the state where the taxpayer is resident.
Given the condition of ‘any direct or indirect links of interdependence’, provision of services between non-related parties should thus, in principle, remain out of scope.
The rate amounts to 25% on the gross fee paid (resulting in an effective tax rate of 12.5%, as a lump sum deduction of 50% as professional expenses is allowed).
Local income taxes
No tax is levied on income at the regional or local level. Note that immovable assets (land, building, and possibly machinery and equipment) situated within the Belgian territory are, in principle, subject to an immovable WHT that is levied locally.