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 from tax year 2024, the current CFC rules that are based on the transactional approach foreseen in the ATAD Directive are replaced by the entity approach of this Directive. This means that the new CFC rule would envisage taxing passive income, namely interest, royalties, dividend, 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 Corporate - Group taxation section for more information).
• In light of the SIAT case law of the CJEU, two anti-abuse measures (i.e. articles 54 and 344, §2 BITC) against international tax evasion have been modified. Article 54 BITC rejects the deductibility of interest payments, remunerations for certain 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 affiliated 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 authentic transaction in the sense that it was carried out for valid business reasons reflecting economic reality.
• As from 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 REIF taxation regime (real estate investment funds), 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 Corporate - 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 corporate income tax (CIT) perspective, a selection of the provisions of the Law of 28 December 2023 on various tax provisions is listed below:

• As from 1 January 2024, the annual tax on the assets of the non-profit sector is subject to some changes: (i) the rate of the tax will be gradually increased (exemption under KEUR 50 (previously KEUR 25); 0.15% between KEUR 50 - 250; 0.30% between KEUR 250 - 500; and 0.45% above KEUR 500), (ii) the tax base is broadened to “all assets wherever they may be located” (including real estate abroad), (iii) exemptions apply for certain taxpayers like healthcare institutions, schools, taxpayers organizing 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 Belgian Income Tax Code (BITC):
  • simplified sister merger without the issuance of new shares.
  • disproportionate partial demerger: 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 reorganizations 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 respectively the creditor or the debtor, 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 from 1 January 2024, the taxes on games and gambling and on amusement machines are no longer deductible.
• The deadline for filing the annual corporate income tax (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 5 years, to bring it in line with the 5-year assessment period.

Law of 19 December 2023 (Official Gazette of 28 December 2023) introducing a minimum tax for multinational companies (Pillar 2)

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 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 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 (CbCR) 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 corporate income tax will also apply to top-up taxes in Belgium or payable by the ultimate parent of the group.
• 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 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 which 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 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 Corporate - Taxes on corporate income section for more information).

Belgian PCbCR law of 8 January 2024 (Official Gazette of 26 January 2024)

On 26 January 2024, the Belgian law implementing the Public Country-by-Country Reporting (PCbCR) Directive was published in the Belgian Official Gazette.

Companies that fall in scope of the Belgian PCbCR law are: (i) Belgian (parent) companies with a net turnover of more than EUR 750 million and which are 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 which are therefore subject to the Belgian tax system.

Although the Belgian PCbCR law was generally drawn up to be consistent with the directive, specific deviations include among others:

• The Belgian PCbCR 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 PCbCR 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 that have been – for two consecutive years – 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).
• An exception to the scope not only applies for credit institutions but also for regulated stock exchange companies.
• The Belgian PCbCR 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 PCbCR 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 PCbCR 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 CbCR data will soon be publicly available as the first Belgian PCbCR must be published for financial years starting on or after 22 June 2024. Hence, the first Belgian PCbCR filing date is set at 21 June 2026 (31 December 2026 for companies with financial statements following the calendar year).

However, the content of the PCbCR still needs to be determined by Royal Decree.

Draft law on various tax provisions

One of the important tax measures resulting from the budget agreement of the Belgian Federal Government relates to a reform of the Belgian investment deduction regime. The expected new investment deduction regime would be applicable for investments made as of 1 January 2025, provided that the corresponding law will be approved.

In a nutshell, the existing investment deduction would be replaced by three categories of investment deductions:

• The rate of the ordinary investment deduction regime for SMEs and qualifying individuals would be increased from 8% to 10%. The 10% would further increase to 20% for qualifying digital investments.
• The existing specific categories of qualifying investments would be replaced by an increased thematic investment deduction of 40% (30% for non-SMEs) applicable for investments made in one of the following categories:

• investments relating to the efficient use of energy and renewable energy;
• investments in zero-emission transport;
• environmentally friendly investments; and
• supporting digital investments (linked to the above-mentioned categories).

• Finally, a so-called technology investment deduction would be introduced: the technology deduction would provide for a 13.5% investment deduction for 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. The 13.5% would be increased to 20.5% in case the investment deduction will be spread over time (not applicable for investments in patents). Taxpayers could opt to apply a tax credit for this category of investments.