Taxation of company cars
Basically, the company that provides a company car to its employees is taxed on 17% of the taxable benefit in kind. In this respect, the Program Act entails two changes as from 1 January 2017:
- an increased taxable basis: the benefit in kind is no longer reduced by the beneficiary’s contribution to calculate disallowed expenses;
- an increase in the non-deductible amount to 40% of the taxable benefit in kind (excluding the beneficiary’s contribution) if the company covers the fuel costs (relating to private use).
This also applies to legal entities and companies subject to non-resident income tax.
The Program Act of 25 December 2016 does not yet include any provisions regarding the introduction of the so-called ‘mobility budget’, which would allow employees to convert their current company car into a ‘budget’ or to receive an ‘additional net salary’.
Internal capital gains
As previously announced, in the case of a contribution of shares by an individual in a holding company, there is no longer tax-free step-up: the difference between the fair market value of the shares and their acquisition value is considered as a taxed reserve (and no longer as fiscally paid-up capital). As such, in the case where the reserves are distributed to the shareholder, a withholding tax will apply.
This also applies in the case of gifts or inheritance. However, a sale of shares remains outside of the scope because they can be taxable on the basis of other Income Tax Code provisions. Contributions of shares to non-resident companies also fall within the scope of this measure. This change applies to the capital gains realised as from 1 January 2017.
Increase in withholding tax
- increase in the withholding tax rate from 27 to 30 % on investment income as of 1 January 2017;
- increase in the withholding tax rate from 17 % to 20% on the liquidation reserves created as of 2017 and distributed in the first 5 years.
Abolition of the speculation tax for individuals on the transfer of quoted shares as of 1 January 2017;
Recovery procedure for state aid
Recovery procedure for state aid derived from excess profit rulings granted (more details in our news flash of 23 December 2016);
Tax on stock exchange transactions
- the maximum tax amount due are doubled and the tax is extended to include transactions realised by Belgian residents through non-resident intermediaries;
- the Belgian resident giving the order is liable for the payment of the tax, except if he can prove that the tax has been paid;
- the delay for the payment is extended and penalties are changed (reduced penalties are provided between 1 January 2017 and 31 December 2017);
- before any transactions, the non-resident professional intermediary may appoint a responsible representative;
- these changes apply to the transactions carried out as from 1 January 2017.