Tax measures in response to COVID-19
As a result of the COVID-19 crisis, the Belgian government has introduced various tax measures of which some examples are listed below. For more details, see PwC's COVID-19 Updates.
Individuals with a CBE number or companies that can prove that they are facing difficulties directly resulting from the coronavirus spread, subject to additional conditions, can request for payment arrangements, such as payment by instalments, waiver of interests for late payments, and/or discounts on fines, for wage withholding taxes (WHTs), value-added tax (VAT), personal income tax (PIT), corporate income tax (CIT), income tax on legal entities, and non-resident income tax.
Companies that are confronted with difficulties in paying the social security contributions on their employees’ wages as a direct result of the coronavirus pandemic can also request a payment by instalments for the social security contributions due for the first, second, third and fourth quarter of 2020.
It has also been decided that the tax credit related to the advance tax payments to be made for the third and fourth quarters of tax year 2021 will (temporarily) be increased (see Payment of tax in the Tax administration section in the Corporate tax summary for more information).
Individual taxes and labour
For individuals and the self-employed, a deferral or exemption from payment of social security contributions is offered, and, under certain conditions, these individuals can be entitled to transitional rights, which include a replacement income.
There is also an exemption of regional aids allocated to workers and self-employed workers in the framework of the COVID-19 crisis.
Double tax treaties (DTTs)
There is no general 'force majeure' tolerance for cross-border employment.
Belgium has, however, concluded specific agreements with France, the Netherlands, Germany, and Luxembourg, which implement a mutual 'force majeure tolerance' for cross-border workers in relation to COVID-19 (travel) restrictions. These agreements have been extended until 30 September 2021.
As of 14 March 2020, the presence of a worker (who normally works in Luxembourg) teleworking at home in Belgium will not be taken into account in the calculation of the 24-days in a calendar year. This is the day count calculation that tax residents of Belgium, who (under normal circumstances) work in Luxembourg, can work outside the territory of Luxembourg without attributing taxation power to Belgium.
Similarly, the Belgian and French authorities consider that the current situation related to the coronavirus meets the characteristics of a force majeure situation. Therefore, it was decided that, as of 14 March 2020, the presence of a French frontier worker at one's place of residence (in particular for teleworking) will not be taken into account for the calculation of the 30-days period by reference to which tax residents of France who usually work in Belgium can work outside Belgium.
Please note that there is currently still no administrative tolerance foreseen for foreign executives working in Belgium under the special tax regime with respect to the foreign travel that is impacted solely because of COVID-19 measures. Moreover, it seems that no such tolerance will be foreseen going forward.
Temporary unemployment due to force majeure
The National Employment Office (NEO) has formally acknowledged the coronavirus pandemic as a force majeure event, warranting the introduction of temporary unemployment due to force majeure in affected Belgian companies. This system of temporary unemployment allows employers to temporarily suspend the employment agreement of (some of) their employees, both blue collar and white collar workers, if it’s no longer possible for the employer to put these employees to work as a direct result of the coronavirus outbreak (e.g. because production is halted due to a lack of parts or for employees who have been quarantined).
During the suspension of the employment agreement, no salary is due and the employees are entitled to unemployment benefits. As a result of the coronavirus pandemic, these unemployment benefits have been temporarily increased to 70% of the capped gross monthly salary (capped at 2,754.76 euros [EUR]) instead of the normal 65%. The same holds true for unemployment benefits due to temporary unemployment for economic reasons (see below). The unemployment benefit is increased with a daily allowance of EUR 5.63 for each day of temporary unemployment.
Businesses, such as bars and restaurants, that have been forced to fully or partially close their doors following the government’s contingency measures can also apply for the system of temporary unemployment due to force majeure for their affected staff, however, only until the end of these contingency measures.
Temporary unemployment for economic reasons
Companies that are confronted with a reduction in their customer base, production, turnover, etc. as a direct result of the pandemic and can therefore no longer maintain the normal working time schedule in the company can use the system of temporary unemployment for economic reasons for their blue collar workers. Temporary unemployment for economic reasons is also possible for white collar workers, however, in principle only in companies that are recognised as undertakings in difficulties. As a result of the current pandemic, companies that have not yet been recognised as undertakings in difficulties can file for such recognition based on exceptional circumstances. Pending approval of their request, they can use the system of temporary unemployment due to force majeure (see above).
The information in this summary relates to calendar and income year 2020 (tax year 2021).
After the 6th Reform of the State in 2014 introducing an increased regionalisation of the taxes, the Belgian tax system has been further modified by the 'tax shift', introducing several tax measures applicable from income year 2016.
In addition, the following measures have been introduced/abolished in the course of 2020/21:
- The mobility allowance, or 'cash for car', introduced in 2018 and enabling (under certain conditions) employees to hand in their company car in exchange for a cash compensation, has been abolished. The system remained in place until 31 December 2020 for those who opted for this system before it was abolished in January 2020 following a decision of the Belgian Constitutional Court.
- The mobility budget introduced effective 1 March 2019, which allows the employer to provide a (eco-friendly) company car while possibly also creating budget for other ways of sustainable transportation, remains in force.
- Introduction of a mandatory reporting (as of 1 January 2019) and withholding (as of 1 March 2019) requirement in the hands of a Belgian entity in case affiliated foreign companies grant taxable benefits (in kind or in cash) to employees or directors working for the benefit of the Belgian entity.
- According to the latest administrative instructions of the National Security Office (NSSO), social security contributions are due on all benefits related to the work performed by the employee in the framework of one's employment contract with the employer. This adjusted NSSO position applies a very broad, and possibly questionable, interpretation by stating that employees of a Belgian subsidiary only receive a benefit that is granted by a foreign parent company because of their employment with the Belgian subsidiary and that, consequently, such benefit should always be considered as salary subject to Belgian social security contributions, even when there is no intervention of the Belgian employer in the grant of the benefit and no recharge of the costs to the Belgian employer.
- The complete exemption of employer social security charges for the first employee hired in the next five coming years and the extension of the reduction of the employer's contributions for the first six employees introduced by the tax shift will be extended until 31 December 2021.
- The tax on securities account that reaches or exceeds EUR 500,000 per account holder has been abolished with effect as of 1 October 2019 after a decision of the Belgian Constitutional Court and will be replaced by a solidarity tax of 0,15% on securities accounts that reach or exceed EUR 1.000.000 (held by Belgian resident taxpayers in Belgium or abroad and by non residents in Belgium).
- The Belgian tax authorities have updated the former lump-sum amount of EUR 0.3542 per kilometre to EUR 0,3707 per kilometre. This new amount is applicable to reimbursements made during the period from 1 July 2021 to 30 June 2022.
- The list of the so-called 'false hybrid cars' has been updated on 30 October 2020. This has an impact on the determination of the taxable benefit in kind for the beneficiary and on the corporate tax deductibility.
- Resident taxpayers who own a real estate abroad must report their foreign property in their Belgian tax return. Since 2021, they must submit a declaration to the Administration of Measurement and Valuations - Cel foreign cadastral income, which will determine the deemed rental value of the foreign real estate.
- The tax authorities, following a judgement of the Court of Cassation (15 Oct 2020) accepts now to mitigate double taxation of foreign source dividends by means of a foreign tax credit. This foreign tax credit (FTC)is available for French source dividends and may be applied for other foreign source dividends provided that the tax treaty between Belgium and this other country is drafted in a manner strictly similar to the Belgian-French treaty.