Tax reform in Belgium 2014/2015

New Belgian tax measures announced

The following new tax measures have been announced in the framework of the Belgian government formation and the budget for 2015, on which an agreement was reached in the second week of October 2014:

Entities - companies - corporate income tax

  • Secret commission taxation: the so-called secret commission tax of 309% (due on account of lack of proper filing of salary slips and fee forms) would be limited to 103%. The tax would be further limited to 51.5% if the beneficiary is subject to corporate income tax. Furthermore, the tax would only be applicable if the beneficiary is not known. The measure would be effective from tax year 2015 (financial years ending between 31 December 2014 and 30 December 2015, both dates included).
  • Intermunicipal entities, currently subject to legal entities tax, would become subject to corporate income tax as from 1 January 2015.

Individuals - personal income tax

  • "Look-through" tax (or "Cayman tax"): the shareholder or beneficiary (Belgian individual) of certain low-taxed entities or trusts would be taxed on the income of the low-taxed entity or trust, even if the income was not (yet) distributed to the individual.
  • Lump-sum amount of professional expenses: the lump-sum amount would be raised.
  • Tax reductions: various tax reductions, such as pension savings, exemption for savings deposits, gifts etc., would no longer be subject to indexation.
  • Taxation of certain pension savings would be modified. Currently, the tax is set at 10%. The tax would be partly collected early, meaning that a 1% tax would be levied during each of the next 5 years and, when the beneficiary reaches the age of 60, the tax due would be limited to 3%.

Withholding taxes - liquidation boni

The current transitory measure limiting the taxation of liquidation boni (i.e. liquidation surpluses) would become a permanent measure. This would allow SMEs, under certain conditions, to pay only 10% withholding tax (in advance) upon liquidation, instead of 25%.

The 10% rate would be a final rate, unless a distribution of reserves takes place before liquidation. If the distribution takes place within 5 years, an additional tax of 15% would be due. If a distribution takes place after 5 years, an additional tax of 5% would be due.

Social security

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

Excise duties

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

VAT

  • Plastic surgery (of a non-therapeutic nature) becomes subject to 21%.
  • Certain e-commerce transactions become subject to VAT.
  • The current VAT rate of 6% for the renovation of private dwellings older than 5 years would only be applicable to private dwellings older than 10 years.

Tax on stock exchange transactions

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

Fight against fraud

The current fight against fraud would continue.

 

The details of the above measures are not yet clear and are still subject to change.

For more information, you can contact your regular PwC contact.