Tax reform in Belgium 2015/2016

Tax shift announced

On 10 October 2015, the Belgian Federal Government reached a new agreement on the so-called ‘tax shift’. The tax shift is a shift from tax on earned income to other taxes.

The objectives are as follows:

  1. Complying with budgetary commitments;
  2. A revival of the economy by creating more jobs;
  3. Reducing labour taxes to increase competitiveness;
  4. Giving support to SMEs and entrepreneurs;
  5. Increasing the purchasing power for low and moderate salaries;
  6. Fighting against poverty;
  7. Reducing the tax burden.

The following tax measures have been announced by Prime Minister Charles Michel during a press conference on 10 October 2015:

Social security: Decrease in employers’ (from 33 to 25%) and self-employed social security contributions (from 22 to 20.5%). To offset this decrease, the structural reduction of charges is removed for the profit sector.

  • Personal income tax rates – statutory tax rates ad brackets: Abolition of the 30% rate and increase in the tax bracket of the 45% rate;
  • Personal income tax – professional expenses: Increase in the lump-sum amount for professional expenses;
  • Personal income tax – tax-exempt amount: Increase in the amount that is tax-exempt;
  • Personal income tax – fiscal work bonus : increase in the tax benefit;
  • Wage withholding tax: Increase in the exemption for remitting wage withholding taxes in case of night and shift work;
  • Speculation tax: Introducing a so-called ‘speculation tax’ (taxe sur les plus-values spéculatives – speculatietaks). This would imply a 33% tax charge on capital gains realised by individuals on shares of listed companies, options, warrants, certificate shares held for a period of less than six months. Stock options and units of Sicavs would not fall within the scope of the tax. Capital losses would not be deductible. Financial intermediaries would have to levy a discharging withholding tax. The tax would apply to capital gain realised on or after the 1st of January 2016.
  • Withholding taxes on income from investment: Increase in withholding tax on income from investment, such as interest and dividends, from 25% to 27%; except for interest derived from savings accounts, Leterme State notes and interest derived from cash contribution under the VVPR-bis treatment. This new rate would apply to investment income paid or attributed on or after 1st of January 2016.
  • Excise duties: Increase in excise duties on diesel, alcohol, tobacco and sugared sodas and ‘light’ sodas.
  • Fight against fraud: Intensify the fight against fraud.
  • Fiscal amnesty: A new measure regarding fiscal amnesty would be introduced:
    • Investment income will be liable to the tax normally due burdened by a 20% penalty, which will gradually increase till 26% in 2021;
    • capital will be subject to a 36% levy which will increase till 41% in 2021.

The new system will no longer make any distinction between time-barred capital and non-time-barred capital.

  • Other measures: Introduction of specific measures for investments (e.g. increase in investment deduction for SMEs) and for promoting high technology.
  • VAT on plastic surgery: plastic surgery (of a non-therapeutic nature), medical care and hospitalisation related to this treatment will be subject to a 21% rate from 1 January 2016.

These measures are subject to change. The present web section will be updated as soon as the bill is available.


Entities - Companies - Corporate income tax

The Program Act of 10 August 2015 provides the following measures:

  • Contribution of financial institutions: 

As part of the Belgian government agreement, it was decided that banks and insurance companies should pay an additional contribution to the State revenue, via an amendment to the notional interest deduction regime (NID), taking into account Basel III and Solvency II agreements.

The draft bill aimed at considering specific own funds of credit institutions and insurance companies as representing the part of prudential capital on which a reduction of the NID would be charged.

The final Program Act however introduces a limitation to the notional interest deduction itself, the dividend received deduction and the deduction of tax losses carried forward. Finally, no limitation of the basis for calculating the NID is provided.

Entry into force: tax year 2016.

  • Liquidation reserve

Currently, SMEs can benefit from a reduced tax charge of 10% (instead of generally 25% or 15%) on distributions by creating a ‘liquidation reserve’. The Program Act of 10 August 2015 introduces a similar regime for (after-tax) profits realised for tax year 2013 (financial years ending between 31 December 2012 and 30 December 2013, both dates included) and tax year 2014 (financial years ending between 31 December 2013 and 30 December 2014, both dates included).

These profits can – under certain conditions – also be converted into a liquidation reserve, by paying a corporate income tax of 10% (payable on 30 November 2015 at the latest and on 30 November 2016 at the latest). No additional withholding tax is due in the case where this liquidation reserve is distributed to the shareholder upon liquidation. In the case where the liquidation reserve is distributed via a dividend distribution within 5 years of its creation, (an additional) 15% withholding tax is due. In the case where it is distributed via a dividend distribution after 5 years, a withholding tax of 5% is due.

Entry into force: as from 18 August 2015 (date of publication in the Belgian Official Gazette).

Diamond regime

The Program Act introduces the so-called ‘diamond regime’ for registered companies (incl. Belgian permanent establishments of foreign companies) active in the diamond sector. The taxable result of these companies is determined on a lump-sum basis, being 0.55% of the turnover from the diamond activities. Companies subject to the diamond regime cannot benefit from the notional interest deduction and cannot deduct losses carried forward. For certain registered traders of rough diamonds, the diamond regime is optional.

Entry into force: tax year 2016 (financial years ending on 31 December 2015 at the earliest), subject to confirmation by the European Commission that this measure cannot be considered as illegal state aid.

Investment deduction for digital investment

The Program Act provides for an increased investment deduction for SMEs and individuals investing in this field (information security, communication technologies, digital payment and billing system). 

Entry into force: tax year 2016.

Intermunicipal entities

The Act of 19 December 2014 stipulated that intermunicipal entities, collaborations and project associations are no longer automatically exempt by law from corporate income tax and are subject to legal entities tax. The entities at hand could be subject to corporate income tax or legal entities tax, depending on certain criteria (whether or not they carry out activities with a profitable nature, the way they do business etc.). The Program Act of 10 August 2015 introduces an exception for hospitals and institutions assisting the disabled, elderly people, protected minors, etc. They remain subject to legal entities income tax. Furthermore, the Program Act provides for less stringent consequences upon the conversion from legal entity income tax to corporate income tax. For example, retained earnings are now deemed to be taxed reserves.

Entry into force: this new measure is applicable as from tax year 2015, on financial years that are closed at the earliest on 1 August 2015.

Joint and several liability of the ‘maître de l’ouvrage’ / ‘opdrachtgever’

The Program Act extends the joint and several liability for social and tax debts of the contractor (or sub-contractors) to the ‘maître de l’ouvrage’/’opdrachtgever’.

Entry into force: as from 18 August 2015 (date of publication in the Belgian Official Gazette).

The following measures are enacted by the Act of 19 December 2014:

Secret commission tax: the so-called secret commission tax of 309% (payable on amounts which have not been properly filed on salary slips, and fee forms and due on hidden profits) is limited to 103%. The rate is further limited to 51,5% in the case where it can be demonstrated that the beneficiary of the income is a legal entity, or that the hidden profits are recorded in subsequent financial accounts, to the extent that the taxpayer has not been informed (in writing) of the ongoing tax audit. Further, the secret commission tax does not apply to the extent the hidden profits derive from disallowed business expenses. The secret commission tax does not apply in the case where it can be demonstrated that the beneficiary has properly declared the income. Further, in the case where income was not properly declared by the beneficiary, no secret commission tax is levied if the beneficiary is identified at the latest within 2 years and 6 months following 1 January of the tax year concerned. The secret commission tax itself is tax-deductible but it depends on the situation at hand whether or not the underlying cost is tax-deductible.

Entry into force: this measure is applicable as from 29 December 2014 and is applicable to all disputes that are not finally settled on that date.

Intermunicipal entities: The Act of 19 December 2014 stipulates that intermunicipal entities, collaborations and project associations are no longer automatically exempt by law from corporate income tax and are subject to legal entities tax. The entities at hand could be subject to corporate income tax or legal entities tax, depending on certain criteria (whether or not they carry out activities with a profitable nature, the way they do business etc.).

Entry into force: the measure is applicable as from tax year 2015, on financial years that are closed at the earliest on 1 July 2015.

Liquidation reserve: SMEs are allowed to set up a so-called liquidation reserve. The liquidation reserve can be created by requalifying (part) of the after-tax profit account to a separate account on the liabilities side of the balance sheet. The creation of this liquidation reserve is subject to a 10% corporate income tax. In the case where the liquidation reserve would be distributed before the company’s liquidation, an additional tax, being a withholding tax, of 15% would be due in case of distribution within 5 years after the liquidation reserve is created. A withholding tax of 5% would be due in case of distribution of the liquidation reserve after 5 years of its creation. No withholding tax is due in the case where the liquidation reserve is distributed upon liquidation. In case the ‘intangibility condition’ is not complied with, the liquidation reserve can no longer benefit from reduced withholding tax rates upon distribution.

Entry into force: the measure is applicable as from tax year 2015 (financial years ending between 31 December 2014 and 30 December 2015, both dates included).

The following measures are announced, but not yet enacted:

  • Anti-fraud measures: the following measures have been announced at the end of the budgetary control of March 2015: spontaneous report of undeclared income, fight against abuse of corporate structures and online fraud, extension of data-mining projects, better exploitation/use of information concerning the 183-day rule.
  • General Belgian anti-abuse measure: confirmation that the Ruling Office can issue rulings on the general anti-abuse rule. In addition, an assessment (and if needed adaptation) would be implemented in respect of the general anti-abuse rule in order to increase legal certainty for the taxpayer.
  • Disallowed expenses: simplification of disallowed expenses (divided into three categories: (i) penalties and taxes, (ii) donations and (iii) non-individualised benefits) and streamlining of the concepts of disallowed expenses in the framework of corporate income tax and VAT.
  • The federal tax code would be simplified and consolidated.
  • Tax pact’: conclusion of a ‘tax pact” to eliminate the uncertainty factor in the economic and fiscal environment for entrepreneurs.
  • Catch-all clause: Belgian companies in principle are required to levy a professional withholding tax on qualifying fees attributed or made payable as from 1 March 2013 to certain types of non-residents. These payments may be subject to an effective professional withholding tax of 16,5% - which needs to be levied at source by the Belgian company - unless the applicable double tax treaty provides for a reduced rate. In this context, the ‘perverse’ side effect would be removed.

Assessment (and possible expansion) of the Belgian patent income deduction regime with regard to software licenses.


Individuals - Personal income tax

A. Federal tax measures

New tax measures enacted by the Program Act of 10 August 2015 (Official Gazette 18 August 2015):

  • Cayman tax:

The ‘Cayman tax’ is a tax charge on certain income from certain legal constructions, in the hands of Belgian individuals (and Belgian entities subject to legal entities income tax). Under the Program Act, constructions are deemed to be transparent.

The legal constructions in scope include – among others - foreign trusts, foundations, undertakings for collective investments or pension funds when not publicly offered, low-taxed or non-taxed entities, etc. to which the Belgian individual (or Belgian entity subject to legal entities tax) is, in one way or another, linked as a founder, effective beneficiary, potential beneficiary etc.

Under these new provisions, the income of certain legal constructions becomes taxable in the hands of the private individual before distribution of the income. Consequently, the owner may be taxed on income that he has not yet received. In this regard, the Program Act lays a heavy burden of proof on the founder. The Program Act makes a distinction between two categories of legal constructions. The legal constructions of the first category concern trusts without legal personality. The income realised by these trusts, or paid or attributed by these trusts as from 1 January 2015, is taxable in the hands of a Belgian private individual (being the founder or beneficiary of the legal construction) - as if the Belgian individual would have realised the income directly. It concerns real estate income, movable income, (interest, dividends, royalties) miscellaneous income and earned income.

The second category concerns legal constructions, being foreign entities (with legal personality), which are subject to an effective tax rate of less than 15%. The income realised by the legal constructions is deemed to be realised directly by the Belgian private individual (being the founder or beneficiary of the legal construction). It concerns profits, such as real estate income, movable income, (interest, dividends, royalties) miscellaneous income and earned income.
For the second category, two lists with the legal constructions in scope have been published in the Official Gazette of 28 August 2015 via the Royal Decrees of 23 August 2015. The first list (legal constructions located in the European Economic Area) mentions the ‘Société de Gestion de Patrimoine familiale’ of Luxembourg, the ‘Stiftung’ and the ‘Anstalt’ of Lichtenstein. The second list – a non-exhaustive list – mentions the type of legal entities in scope that are not based in the European Economic Area.

The taxpayer has to mention on his yearly tax return the existence of a legal construction of which he (or his spouse or his children) is the founder or the third beneficiary.

In this framework, new anti-abuse rules specific to legal constructions are also enacted.

Moreover, every change to the incorporation deed of a legal construction with as purpose its conversion since 9 October 2014, is not enforceable towards the tax authorities.

Entry into force: The measure would be applicable on income that was obtained, attributed or paid by a legal construction as from 1 January 2015. With regard to withholding taxes (incl. wage withholding tax), the measure would be applicable on income attributed or paid as from 1 September 2015 (first day of the month after which the Act introducing the Cayman tax is published in the Belgian Official Gazette).

Tax incentives for investments in starting SMEs:

  • The Program Act of 10 August 2015 introduces a new tax deduction for individual taxpayers (both residents and non-residents) who acquire new shares in a starting SME even when the investment is made via a recognised crowdfunding platform or via a recognised starters’ fund. This tax deduction will amount to 30% (45 % if it concerns micro-companies) of the qualifying amount (which is limited to EUR 100.000,00 per taxable period) and will only be granted if several conditions are met regarding shares, time of acquisition of these shares and enterprise in which the taxpayer invests. The tax deduction can be cancelled retroactively in the case where the taxpayer does not meet a 4-year holding period. This is applicable to shares issued as from 1 July 2015.
  • New SMEs or SMEs which already exist for a period of maximum 4 years will be able to benefit from a new partial exemption of remittance of withholding taxes. If certain conditions are met, 10% (or 20% if it concerns a micro-company) of the withholding taxes levied on salaries that were paid as from 1 August 2015 to their employees, does not have to be remitted by these SMEs to the Belgian tax authorities. The Program Act of 10 August 2015 introduces a new tax exemption, notably with respect to the annual interest income received by individual taxpayers (private investors) and resulting from newly-issued loans within the framework of a recognised crowdfunding platform to new SMEs or to SMEs which already exist for a period of maximum 4 years. The tax exemption relates to interest received in relation to the first portion of EUR 15.000 of the loan amount. Certain conditions must be met in order to benefit from this tax exemption. These conditions concern among others the loan itself (amount, term, etc.) and the companies which are financed via this method. This tax exemption applies to interest income from loans concluded as from 1 August 2015.
  • Fiscal work bonus: The Program Act provides to gradually increase the fiscal work bonus from 14.40 % to 17.91% (for wages paid from 1 August 2015) with a maximum of EUR 235, from 17.91% to 28.03% (for wages paid from 1 January 2016) with a maximum of EUR 420 and from 28.03% to 33.14 % (for wages paid from 1 January 2019) with a maximum of EUR 500:
  • Additional tax reduction for pensions and replacement income is increased for taxpayers who only receive pensions or replacement income. This provision is applicable as from tax year 2016.
  • Investment deduction for digital investment: The Program Act provides for an increased investment deduction for SMEs and individuals (who meet the conditions of SMEs enacted by Section 15 of the Companies Code) investing in this field (information security, communication technologies, digital payment and billing systems). 

Entry into force: tax year 2016.

  • Innovation premium: Until recently, employers were no longer able to grant an innovation premium, as this ‘instrument’ expired on 1 January 2015. However, via the Program Act of 10 August 2015, the Belgian government has extended the regulation regarding innovation premiums with 2 years (i.e. until 1 January 2017). 

The following measures are enacted by the Act of 19 December 2014:

  • Lump-sum amount of business expenses for employees: the lump-sum amount has been increased and results in a higher net income for employees as of January 2015. The increase in lump-sum business expenses (as included in the Program Act of 19 December 2014,), will be partially implemented in the new tax scales (and thus processed via the monthly payroll). Full implementation should be achieved as of January 2016.
  • Tax reductions: various federal tax reductions, such as pension savings, the tax-exempt amount for interests of savings deposits, gifts, etc. are no longer subject to indexation during tax years 2015 up to 2018 (income years 2014 up to 2017) and have been frozen (‘standstill’) at the level of the amounts applicable for assessment year 2014 (income year 2013). However, the tax reduction for pension or replacement income has been indexed for tax year 2015 (income year 2014) and is now frozen.
  • Tax reduction for pension savings: the maximum qualifying amount of tax reduction for pension savings has been frozen at the level of income year 2013 (EUR 940). For taxpayers who have already paid an amount of 950 EUR (initially indexed amount for income year 2014), the excess amount of EUR 10 paid in 2014 cannot be taken into account for a tax reduction with respect to income year 2014. However, the excess amount (maximum EUR 10) would be automatically transferred to income year 2015. It will be considered as ‘paid during income year 2015’ (and will thus further qualify for tax relief in 2015).
  • The tax charge on certain pension savings (third pillar pension) has been modified. The tax was set at 10%. However, it has been reduced to 8%. Furthermore, the tax will be collected at an earlier point in time, meaning that a 1% tax will be levied anticipatively during each of the next 5 years (2015 up to 2019) and, when the beneficiary reaches the age of 60, the (remaining) tax due will be (limited to) 3%.
  • For income year 2015, the formula for calculating the taxable benefit in kind for private use of a company car in the hands of company directors and employees remains unchanged. However, the reference CO2 emission for this calculation has been updated via the Royal Decree dated 16 December 2014 as follows:
    • Petrol, LPG or natural gas cars: 110 g CO2/km (instead of 112 g C02/km for income year 2014)
    • Diesel cars: 91 g CO2/km (instead of 93 g C02/km for income year 2014).

Tax measures announced but not yet enacted:

  • Continuation of the partial exemption for transferring wage withholding taxes on the wages for qualifying researchers.
  • Standardisation of the concept of remuneration for both social and tax law.

B. Regional tax measures

Flemish Region

Measures enacted

The Flemish Decree of 17 July 2015, published in the Official Gazette of 14 August 2015, provides for the following main changes:

  • It sets up a Flemish Ruling Office for regional registration duties and inheritance taxes. This office is competent to deliver advance decisions on requests concerning exclusively the application of (the provisions of) the Tax Flemish Code. With respect to mixed situations or operations (issues including federal and regional provisions), it will deliver a binding opinion on the advance decision to the Ruling Office (which will issue the advance decision). Entry into force: 14 August 2015 (date of the publication), except for the provision related to the binding opinion on the advance decision (date to be determined by the Flemish Government).
  • Family companies: exemption or reduced rates are applicable to gifts and legacies of family companies if certain conditions are fulfilled, notably a minimum shareholding by the donor with his close family members. The terms ‘close family members’ now include lineal relatives and their partners and relatives up to the second degree and their partners. According to the Flemish Tax Administration website, this is immediately applicable.
  • Adoption: with respect to inheritance and gift taxes, a child adopted by his/her father-in-law or mother-in-law also benefits from reduced rates in case of inheritance or gift in direct line. According to the Flemish Tax Administration website, this is immediately applicable.
  • Regarding registration duties and inheritance taxes, the Decree amends or complements a series of provisions introduced by the Decree of 19 December 2014: it broadens the definition of ‘building plots’, of ‘family dwelling’ (it includes now ‘outbuildings’) and also the concept of ‘close family members’ (regarding reduced rates applicable to gifts and legacies of family companies); conditions to take advantage of the compensation and refund regimes are amended; there are also changes to the regime of property traders and the rules applicable to the charge of debts incurred to acquire specific assets.

The Flemish Program Decree of 3 July 2015, published in the Official Gazette of 15 July 2015, provides for the following measures:

  • The Flemish Region reformed and lowered the donation tax rates on donations of immovable property (except for building plots). There are no longer four tables but only two, using the same rates and brackets: one between descendants and ascendants and between married people/partners and a second one, between other persons. For immovable property situated in the Flemish Region, the Program Decree provides for a limited refund if the beneficiary carries out renovation works in the building for an amount of at least EUR 10.000 excl. VAT within 5 years after the donation. Such refund is also possible if the beneficiary produces a conformity certificate, a 9-year registered rental agreement within 3 years after the donation, and provided the building has been rented out for an effective period of 9 years. An additional reduction is applicable for disabled beneficiaries. Entry into force: 1July 2015.
  • Currently, donations of building plots to individuals are subject to a reduced rate. This reduction will be applicable until 31 December 2019. Therefore, it has been defined in the explanatory statement that the taxpayer may choose between the current special regime and the new one. Entry into force: 1 July 2015.
  • The Decree also introduces a tax on gambling (horses races, dog races) and sports betting, submits the ‘maison mortuaire’ clause (attribution of the matrimonial property to one of the spouses, whether surviving or not) to inheritance tax and brings amendments to the ecological fee.

The Decrees of 19 December 2014 includes the following changes:

  • Regional tax reduction for burglary and fire: the tax reduction for expenses made with regard to the security of a home against burglary and fire will be abolished as from income year 2015 (assessment year 2016). Consequently, only expenses made until 31 December 2014 will be eligible for this tax reduction.
  • Regional tax reduction for an ‘own dwelling’- mortgage loans concluded as from 1 January 2015: the tax reduction in relation to interest payments and capital redemptions for an ‘own dwelling’ will be fixed at 40% for mortgage loans concluded as of 1 January 2015. Moreover, for these loans the maximum qualifying amount of the tax reduction will be reduced with EUR 760 per taxpayer.
  • Regional tax reduction for an ‘own dwelling’ – mortgage loans concluded up to 31 December 2014: for mortgage loans concluded up to 31 December 2014 for an own dwelling, the tax reduction will still be granted at the marginal income tax rate (maximum 50%).
  • Regional tax reduction for an ‘own dwelling’: non-indexation. The maximum qualifying amounts will be frozen at the level of tax year 2015 (income year 2014) and thus no longer indexed going forward. The reduced qualifying amounts for the tax deduction for mortgage loans concluded as from 1 January 2015 will also be frozen (and thus not subject to indexation).
  • In case a first mortgage loan was concluded by a taxpayer for his own dwelling prior to 1 January 2005 (old system of tax benefits) and a second mortgage loan (for the renovation of this dwelling) would concluded as from 1 January 2015, the latter will no longer give rise to the application of tax benefits for interest payments and capital redemptions under the old system. Indeed, the taxpayer will no longer be able to make a choice for the benefits of ‘building savings’ and ‘additional deduction of interest’.
  • As of assessment year 2015 interest paid in relation to a loan for an own dwelling but which is not eligible for the corresponding regional tax reduction, can no longer be deducted from the taxpayer’s other immovable income (federal competence). However, at the level of the Flemish region which states that a tax reduction for the interests paid will still be possible.
  • Surcharges: If the regional surcharges (calculated on the ‘reduced federal tax’) would not be sufficient to offset the regional tax reductions, it will be possible to deduct the remaining amount of the regional tax reductions from the federal personal income tax (overflow mechanism).

Win-Win loan: As from assessment year 2015, the Flemish tax reduction for a win-win loan is converted into a regional tax credit which can be offset against the personal income tax and which is refundable. This tax credit will only be granted if the creditor has his fiscal residence in the Flemish region on 1 January of the assessment year. Although some have been abolished, other conditions remain unchanged until further notice. 

Brussels Region

Tax reform announced in the Brussels Region

The Brussels Capital Region has recently presented its budget for 2016. Amongst others, a tax reform was announced, to be implemented partly in 2016 and partly in 2017.

  • In 2016, the lump-sum regional tax of EUR 89 and additional levy of 1% on federal personal income taxes will be abolished. Property taxes will, however, increase by 12% but residents of the Brussels Region will be entitled to a EUR 120 reduction in this respect. Also in 2016, registration duties on donations of real estate properties will be lowered.
  • In 2017, the tax relief for the sole and own dwelling will be abolished. Instead, when purchasing their own dwelling in the Brussels Region, buyers will be entitled to a reduction in registration duties of up to EUR 22.500,00 subject to certain limits. Regional surcharges on personal income taxes will also be lowered by half a percentage.
  • The purchase price of service vouchers (i.e. EUR 9 per voucher) will be maintained until 2020, and the tax relief will be limited to 15%.

Walloon Region

Tax reform announced in Wallonia

The Walloon Government reached an agreement on the reform of the regional tax reduction for mortgage loans for the sole and own dwelling; a so-called system of “cheque habitat” would be introduced.

The tax relief would be maintained but will be less generous. It would become an incentive for the first acquisition also calculated in relation to the taxpayer’s personal situation (income, number of dependent children):

  •  the tax credit would be granted for 20 years maximum for the first sole and own dwelling, calculated in relation to the net taxable income of the taxpayers involved and would be increased by EUR 125 per child at charge;
  • the tax credit would be equal to 100 % for the first ten years and then reduced to 50 % from the eleventh year;
  •  the maximum tax reduction would be capped at EUR 1.520 per year per taxpayer, for taxpayers having a net taxable income up to EUR 21.000. If the taxable income exceeds EUR 21.000 per year, the tax benefit will be reduced gradually.
  • the taxpayer whose taxable net income is equal to or higher than 81.000 EUR would not be entitled to benefit from the tax credit;
  • the tax reduction for loans for one’s own dwelling contracted before 2016 would be maintained but the eligible (maximum) amounts for the tax reduction will no longer be subject to any indexation.

The Decrees of 11 December 2014 and 12 December 2014 include the following changes:

  • Regional tax reduction for service cheques (i.e. titres services / dienstencheques): the amount of the qualifying expenses made with regard to service cheques will be determined differently (i.e. in a three-step approach). This new calculation method will reduce the amount of the qualifying expenses (and thus the actual tax reduction) significantly. Please note that the maximum amount (EUR 1.400,00) and the percentage (30%) of the tax reduction will not change.
  • Regional tax reduction for burglary and fire: the tax reduction for expenses made with regard to the security of a home against burglary and fire will be abolished as from income year 2015 (assessment year 2016). Consequently, only expenses made until 31 December 2014 will be eligible for this tax reduction.
  • Regional tax reduction for an ‘own dwelling’- mortgage loans concluded as from 1 January 2015: the tax reduction in relation to interest payments and capital redemptions for an ‘own dwelling’ has been fixed at 40% for mortgage loans concluded as of 1 January 2015.
  • Regional tax reduction for an ‘own dwelling’ – mortgage loans concluded up to 31 December 2014: for mortgage loans concluded up to 31 December 2014 for an own dwelling, the tax reduction will still be granted at the marginal income tax rate (maximum 50%).

Surcharges: If the regional surcharges (calculated on the ‘reduced federal tax’) would not be sufficient to offset the regional tax reductions, it will be possible to deduct the remaining amount of the regional tax reductions from the federal personal income tax (overflow mechanism).


Indirect Taxes – VAT – Excise duties

VAT

  • The VAT rate for the supply of electricity to private individuals increased from 6% to 21% as from 1 September 2015.
  • The liability of plastic surgery (of a non-therapeutic nature) to a 21% VAT rate has been approved by the Council of Ministers. This would apply from 1 January 2016.
  • The increase of the age requirement for the renovations of private dwellings from 5 to 10 years will be examined in a later phase.
  • The VAT rate applicable to the construction, construction works and leasing of school buildings would be decreased from 21 to 6%.

Excise duties

  • The excise duties on coffee, wine, liquors and energy would become subject to indexation.
  • Tobacco: the duties on tobacco would increase.
  • Diesel: the duties on diesel would increase.
  • Sodas: duties on sugared and light sodas would be introduced.

Other Taxes or tax measures

Procedure and penalties

  • Increase of mutual trust between taxpayer and competent tax authorities in order to increase foreseeability. Focus on consultation and efficient settlement of disputes.
  • Harmonisation of tax procedures in order to safeguard legal certainty for the taxpayer.
  • Decrease of redundant high punishment in case taxpayer acted in good faith.
  • Differences between tax penal law and common penal law will be examined in order to abolish anomalies.
  • Reassessment of the VAT penalty system and interest for late payment.
  • Decrease of secret commission taxation of 309% (supra).

Social security

Social security contributions would decrease from 33% to 27% and even to 25%.

Tax on stock exchange transactions

The current temporary increases of taxes on certain stock exchange transactions would become permanent. In addition, the percentages would increase.

Fight against fraud

The current fight against tax and social fraud would continue. Additional tax inspectors will be hired and trained by the government.

In the framework of the budgetary control in March 2015, the following measures in this regard have been announced: spontaneous report of undeclared income, fight against abuse of corporate structure and online fraud, an extension of data-mining projects, a better use of information concerning the 183-days rule.