Stay up to date with tax reform in Belgium

Entities - Companies

Latest update:  31 July 2018

On 24 July 2018 the federal government reached a social and labor “summer agreement” (so-called jobsdeal) containing some tax measures, such as changes to employer’s tax reporting obligations of some equity incentives and the acceleration of the entry into force of the 30% EBITDA rule from 2020 to 2019.

At the end of 2017, the Corporate Income Tax Reform Act and the Program Act have introduced an important tax reform package. As key components of this package, the corporate income tax rate is being gradually reduced to 25% in 2020, and fiscal consolidation will be introduced. The reform takes effect over a three-year period (2018, 2019 and 2020).

On 1 March 2018, the Constitutional Court annulled the fairness tax going forward, specifically stating that the tax would be maintained for assessment years 2014 up to and including 2018. The Court ruled that, for instance, where dividends were redistributed in a manner falling within the scope of the Parent Subsidiary Directive, the fairness tax would be annulled retroactively.

Subsequently, on 19 July 2018 the Chamber passed a draft law amending and supplementing the Corporate Income Tax Reform Act and the Program Act (“Act on Various Income Tax Provisions”, hereinafter referred to as “the amending law”). The most important changes and technical improvements introduced by the amending law are included in the text below.

Corporate Income Tax Reform Act of 25 December 2017 (Official Gazette of 29 December 2017)

Corporate income tax rate

The standard corporate income tax rate of 33% is lowered to 29% in 2018 and to 25% as from 2020. Small and medium-sized enterprises (SMEs) will see a decrease in the rate to 20% as from 2018 for the first bracket of EUR 100,000 in profit. These rates are to be increased with the crisis tax, which is also lowered for 2018 and will be abolished in 2020. 

Measures for 2018

• The 95% dividends-received deduction (DRD) is increased to 100%, resulting in a full participation exemption.
• The separate 0.412% capital gains tax for multinational enterprises on qualifying shares is abolished, while the conditions to benefit from the capital gains exemption are brought in line with the DRD. This implies the application of a minimum participation threshold of at least 10% or an acquisition value of at least EUR 2.5 million in the capital of the distributing company.  
• Capital gains on shares whose dividends partly entitle to the DRD regime are also partially exempted (DRD-SICAVs/BEVEKs, SIRs/GVVs etc.). Specific rules apply to capital gains after a restructuring.
  
  
• In a nutshell, in 2018 and 2019, capital gains on shares are:
  • exempted provided that all the conditions are met;
  • taxed at 25.5% if the one-year holding period requirement is not met;
  • taxed at 29.58% if the participation condition or taxation condition is not met.
    
    
• As from 2020, capital gains on shares are:
  • taxed at the standard rate (25%) if one condition is not met.
  • also exempted when all the conditions are met

• The wage withholding tax exemption for scientific research personnel is extended to include holders of a bachelor’s degree. The exemption is applicable for up to 40% of this wage withholding tax as from 1 January 2018, and for up to 80% as from 1 January 2020.
• The notional interest deduction (NID) is maintained, but, as from 2018, it is calculated based on the incremental equity (over a period of five years) and no longer on the total amount of the company’s qualifying equity. Simplified, the incremental equity equals one-fifth of the positive difference between the equity as at the beginning of the taxable period and that as at the beginning of the fifth preceding taxable period. The current rules on equity formation and exclusions as well as on stock of carry-forward NID remain applicable. The rate is the rate of the financial year to which the tax return relates. An anti-abuse measure  is introduced by the amending law to tackle the contribution in capital made by an affiliated company by means of borrowed funds. Two other specific anti-abuse provisions are added in order to exclude from the calculation base the receivables from and the capital contributions by a non-resident taxpayer or a PE situated in a country that does not exchange information with Belgium, except if the company can prove that the concerned operations meet lawful financial or economic needs. Finally, the amending law provides for the application of the continuity principle in case of contribution of one or more branches of activity or universality of goods (as it is in case of mergers, demergers, etc.).
  
  
• To finance these new measures, a minimum tax charge is imposed on companies making profits of more than one million euros by limiting the number of corporate tax deduction items (“tax attributes”). Also a new order of deduction applies (see below). As from 2018, deduction items outside the basket are fully deductible. Deduction items within the basket can only be claimed on 70% of profits exceeding the one-million threshold. The remaining 30% of profits are fully taxable at the above new rate. The tax attributes concerned are the deduction of carry-forward tax losses (CF losses), carry-forward dividends-received deduction (CF DRD), carry-forward innovation income deduction (CF IID) and carry-forward notional interest deduction (CF NID) as well as the new incremental NID. Deduction for investments (whether general or innovation related) is excluded. 

The new rules do not apply to losses incurred by SMEs starters.

• The current limited deduction of prior-year losses in the framework of a tax-neutral reorganisation also applies to the CF DRD. The amending law provides that this provision is applicable to operations executed as from 1 January 2018.
  
  
• Minimum company director fee: SMEs can benefit from the reduced corporate income tax rate on the first bracket of EUR 100,000 if certain conditions are met. In this regard, the company must grant to at least one company director (natural person) a fee of minimum EUR 45,000 (instead of EUR 36,000) or possibly lower, depending on the taxable income. Exceptions are available for SME start-ups.
  
  In order to prevent any abuse, a distinct taxation of 5% (as from 2018) is due by each company (large or small) that does not grant the minimum fee. The amending law specifies that the director receiving the minimum fee has to be a natural person. The tax is due on the difference between the highest compensation actually paid and the required amount, and is deductible. For affiliated companies of which at least half of the directors are the same people, the total amount of the minimum director fee has to be EUR 75,000. Exceptions are also provided for SME start-ups.
  
  The above measure is applicable for corporate income tax purposes. The amending law, however, extends its application to non-resident income tax/companies.
  
  Moreover, the distinct taxation will be increased in the case of no or insufficient tax prepayments (amending law).

• SMEs benefit from an increase in the investment deduction from 8% to 20% for the next 2 years (assessment years 2019 and 2020) for asset acquired or created between 1 January 2018 and 31 December 2019.

• Reimbursements of paid-up capital: the reimbursement of capital is deemed to derive proportionally from paid-up capital and from taxed reserves (incorporated and non-incorporated into capital) and exempted reserves incorporated into capital. The reduction of capital will be allocated to paid-up capital in the proportion of the paid-up capital in the total capital increased with certain reserves. The portion allocated to reserves is deemed to be a dividend and becomes subject to withholding tax (if applicable). Share premium distributions are submitted to the same system. Exempted reserves not incorporated into capital continue to be outside the scope of the rule. Some elements, such as (but not limited to) revaluation surpluses, provisions for liabilities and charges, and unavailable reserves, have to be withdrawn from the reserves taken into account for the coefficient calculation. A sequence of allocation has been set for situations where the amount of the paid-up capital and sums being treated as capital are insufficient. This change is applicable to capital reductions decided by general meetings held on or after 1 January 2018

• Pre-paid costs have to be deducted in the year of payment in the proportion of the part of the charge that relates to this accounting year (application of the accounting matching principle). It is then no longer possible to shift costs that will only be made in the future to the current year in order to reduce the tax charge on the current-year profits

• Provisions for risks and charges are only deductible for tax purposes if:
  
  
  • they correspond to an existing and known obligation at year-end closing (in addition to the other conditions already existing)
  • they result from any contractual, legal or regulatory obligation (other than those resulting merely from the application of the law on accounting rules and annual accounts). This change does not apply to existing provisions created before assessment year 2019.

• Other measures to apply as from 2018 include (without being limited to) the removal of the investment reserve system and a change to the capital gains tax for which spread taxation was requested but for which the re-investment did not take place within the legal deadline or in compliance with the legal conditions: such capital gains will be taxed at the nominal rate applicable in the year in which the capital gain is realised.
  
  
• Further to the 100% DRD, the special Tate & Lyle withholding tax rate is replaced by a withholding tax exemption.

Compliance related measures (as from 2018)

• Tax supplements resulting from a tax audit will effectively become due, without the possibility to offset these supplements against, for instance, current-year losses. It will, however, remain possible to claim the DRD of the current financial year. Such tax supplements will constitute a minimum tax base. This measure only applies if tax penalties equal to or higher than 10% are effectively applied. In other words, questions of principle would normally be outside the scope of this new rule.

• Companies will be encouraged to make more tax prepayments. The basic interest rate increases to 3% (instead of 1%). The increase will always be applied as from 2018. The rate of the tax increase with regard to advance payments will be 6.75% in assessment year 2019.
  
  
• In the absence of a corporate tax return, the minimum taxable lump sum amounts to EUR 34,000 from 2018, and to 40,000 from 2020 (instead of currently EUR 19,000). It will be indexed on an annual basis. In the event of repeated infringements, the minimum taxable lump sum increases from 25% to 200% (from the fifth infringement). The taxpayer may always produce evidence to the contrary.

• The default interest and late payment interest system has been reviewed. Late payment interest amounts to minimum 4% (and maximum 10%). The default interest rate is 2% lower than the late payment interest rate. These rates are linked to the OLO interest rate and will then be adapted on an annual basis according to the latter rate. The default interest rate is due as from the first day of the month following the month of the formal notice and provided that the taxpayer has actually paid the tax.   

Measures for 2019

• For the first time in Belgian income tax history, tax consolidation will be introduced as from assessment year 2020, i.e. years starting 1 January 2019 or later. In practice, Belgian companies will be able to transfer taxable profits to other Belgian affiliated companies with the aim to offset these profits against current-year tax losses. This transfer has been coined “deduction of the group contribution”. In the end, the group companies will compensate each other for the tax burden of the group contribution, as a result of which the tax consolidation will be financially neutral.
  
  The scope of the consolidation regime is limited to certain qualifying companies:
  
  
  • a 90% direct shareholding between the companies (or via the EEA parent company) during the entire assessment year is required, limiting the scope to the parent, subsidiary and sister companies and their Belgian permanent establishments;
    
  • the measure is limited to group companies that have been affiliated for at least the last five successive calendar years;
    
    
  • some companies such as investment companies and regulated real estate companies (SIRs/GVVs) are excluded.
    
    In order to benefit from this new system of tax consolidation, the group companies concerned have to conclude a “group contribution agreement” that meets the following conditions (that have to be effectively put in place):
    
    
  • the agreement covers a specific assessment year;
  • it has to mention the amount of the group contribution;
  • the receiving resident company or permanent establishment (PE) commits to report the amount of the group contribution in its tax return (corporate income tax or non-resident income tax) as included in the profits of the assessment year (no deduction other than the current-year loss can be claimed against the amount of the group contribution; in this regard, the amending law provides that no deduction can be made on the part of the intragroup transfer that would exceed the current-year loss);
  • The taxpayer commits to pay the receiving resident company or PE a compensation corresponding to the additional tax that would have been due if the group contribution had not been deducted from the profits of the assessment year;
  • the agreement is filed together with the tax returns of the entities concerned (each entity is still required to file its individual tax return).

The group contribution is deductible from the taxpayer’s profits of the assessment year provided that the profit is effectively included in the tax return of the receiving company and provided that the compensation has actually been paid (proof should be provided if requested).

Under similar conditions it will in practice also be possible to deduct final losses of a foreign subsidiary under the consolidation regime. However, a recapture rule of the final losses is introduced when the activities are restarted within the period of three years in the foreign country.

The amending law provides for an anti-abuse measure in the case of reorganisation. According to this provision, a merged company can only qualify for the consolidation if all individual companies were qualifying companies before the merger.

• The Corporate Income Tax Reform Act implements the European Anti-Tax Avoidance Directives I and II (Council Directive EU 2016/1164 of 12 July 2016 and Council Directive EU 2017/952 of 29 May 2017). The implementation of the measures (i.e. CFCs, exit taxation, hybrid mismatches and the interest limitation rule) will take effect in 2019.
  
  
• Under the new CFC rules, certain non-distributed income of a CFC will become taxable in Belgium at the level of the Belgian controlling taxpayer. A CFC is a low-taxed foreign company (or foreign PE) of which a Belgian taxpayer (alone or together with its associated enterprises) holds directly or indirectly more than 50% of the voting rights or the capital or is entitled to receive more than 50% of the profits of that entity. In addition, the CFC either is not subject to income tax under the applicable rules of its residence State or is subject to income tax that is less than half of the corporate income tax of the CFC computed based on Belgian rules.
  
  Based on the so-called transactional approach, non-distributed income of the CFC arising from (a series of) non-genuine arrangements put in place for the essential purpose of obtaining a tax advantage becomes taxable. This is the case to the extent that the CFC would not own the assets or would not have assumed the risks that generate all or part of its income if it had not been controlled by a company where the significant people functions that are relevant to those assets and risks are carried out and are instrumental in generating the CFC’s income. Income that is not generated by assets or risks linked to the significant people functions carried out by the controlling company is out of scope. Measures to avoid double taxation are provided via a 100% DRD for distributed income or, as it is introduced by the amending law, for non-exempt capital gains when the CFC is transferred provided that the income has already been subject to tax under the Belgian CFC rules.
  
  The CFC rule will enter into force as from an assessment year 2020 that is linked to a taxable period that starts, at the earliest, on 1 January 2019.
  
  The amending law introduces an obligation for the taxpayer to report the existence of a CFC whose profits are taxable in its hands. The same reporting obligation is extended to the existence of a permanent establishment whose profits are not attributed to this permanent establishment.

• The exit taxation rules are further completed by covering all transactions referred to in the ATAD I Directive (e.g. transfers of assets from head office to PE) and by imposing a step-up in the case of an inbound transfer from another Member State or from third countries provided that the gain has been subject to tax in the exit State and Belgium has concluded with the exit State a bilateral treaty or a bilateral or multilateral instrument that allows for an exchange of information.
  
  The Act of 1 December 2016 already introduced the option to defer the exit taxation over 5 years and the possibility to request a guarantee (without interest) (see existing art. 413/1 of the Income Tax Code (ITC)).
  
  The new exit taxation rules will enter into force on 1 January 2019 for transfers taking place on or after 1 January 2019.

• A series of rules and definitions is inserted in Belgian tax legislation to tackle hybrid mismatches, tax residency mismatches and imported mismatches in line with the ATAD II Directive.
  
  These new hybrid measures will enter into force as from an assessment year 2020 that is linked to a taxable period that starts, at the earliest, on 1 January 2019.

• A new interest limitation rule is introduced on the basis of article 4 of the ATAD I Directive (“30% EBITDA rule”).
  
  
  • This new rule must be computed at the level of each taxpayer (Belgian company or PE). Three types of taxpayers are out of scope: financial undertakings, standalone entities, and public private partnerships. According to the amending law, the list of financial undertakings out of scope includes leasing and factoring companies (the latter must be operating “within the financial sector”), as well as companies which main activity is the financing of real estate through the issuance of real estate certificates.
    
    
  • The exceeding borrowing costs are computed on a net basis and they take into account payments economically equivalent to interest (exact guidance still to be communicated – based on the Directive). Three types of loans are outside the scope of the exceeding borrowing cost computation: loans granted before 17 June 2016 without “fundamental modification” (grandfathering rule – still subject to old 5:1 thin cap rule), loans in relation to public-private co-operation projects, and loans granted between Belgian entities that are part of the same group.
    
    
  • The law offers a mechanical rule to compute the tax EBITDA, which starts from the result of the taxable period after the first operation.
    
    
  • For each taxpayer, exceeding borrowing costs will be deductible up to the highest amount of 30% tax EBITDA or EUR 3 million (= de minimis/safe harbour rule – EUR 3 million to be allocated across Belgian group entities - exact guidance still to be communicated). Disallowed exceeding borrowing costs can be carried forward without time limit. Alternatively, the amending law provides for a transfer of “deduction capacity” to another Belgian group entity (while the current law provides for a transfer of exceeding borrowing costs). This must be analyzed in conjunction with the new consolidation regime. Disallowed exceeding borrowing costs are not part of the tax base as set in article 185bis, which means that the companies taxed on this basis (e.g. regulated investment companies or regulated real estate companies) are de facto out of scope.

Although this measure would only enter into force as from 2020, the Belgian government decided in July 2018 that it would advance the entry into force to 2019 (assessment year 2020 that is linked to a taxable period that starts, at the earliest, on 1 January 2019).

Measures for 2020

• Permanent establishments (PE):
  • The PE definition in Belgian legislation has been modified in line with the OECD/BEPS guidelines containing a more economic PE concept. Although the domestic PE definition is mainly relevant for non-treaty situations, this modification will ensure that national legislation does not create an obstacle if and when the new PE concept is introduced in Belgium’s double tax treaties. The definition of Belgian PE includes commissionaires or similar companies that act in their own name but which are closely connected with a foreign company. The PE definition will be further adjusted in line with BEPS Action 1 (Digital economy) and related ongoing EU actions.
  • The deduction of foreign PE losses by a Belgian head office will going forward only be granted for final PE losses from within the EEA. PE losses are final when the PE’s activities have been terminated and to the extent that these losses are not deducted from other income in the PE State (e.g. income from other entities or in the framework of a tax consolidation). The possibility of recapture is introduced for deducted final PE losses in the event that the Belgian company would restart activities in the PE State within three years after the PE’s closure.

• Discounts on long-term debts related to non-depreciable assets will no longer be deductible.

• Company cars: the tax reform also aims – once more – to strengthen the rules on the tax charge applied to company cars for Belgian companies. In general, under the current system, the deductibility rate of car costs for Belgian companies and Belgian PEs varies in a range of between 50% and 120% of the costs, depending on the type (fuel) and CO₂ emission of the company car. The deduction for fuel costs is set at 75%.
  
  These rules change as follows:
  
  
  • The deductibility rate of car costs is linked to the actual CO₂ emission level of the car and will range between 50% and 100% according to the following formula: 120% - (0.5% x coefficient x gr CO₂/km). The coefficient is 1 for vehicles running on diesel, and is 0.95 for vehicles with a different engine. For highly-polluting cars, the deductibility will be limited to 40%. A highly-polluting car is a car with a CO₂ emission of 200 grams or more.
    
    
  • Under the current rules, car costs for so-called ‘fake’ hybrid cars (rechargeable hybrid cars) can easily be deductible at 90 or 100% because of the posted low CO₂ emission level. According to the new rules, ‘fake’ hybrid cars are vehicles with a fuel engine and a rechargeable electric battery with an energy capacity lower than 0.5 kWh per 100 kg of vehicle weight, or with a CO₂ emission level of more than 50 gr/km. Under the new rules, the deductibility and tax charge on the corresponding benefit in kind are aligned to the tax treatment of its non-hybrid counterpart. By lack of corresponding car, the CO₂ emission value will be multiplied by 2.5. The current system continues to apply to hybrid cars acquired before 1 January 2018.
    
    
  • The deduction for fuel costs is no longer fixed (at 75%) but will also be linked to the CO₂ emission of the car.
    
    
  • Costs in relation to electric cars are only deductible up to 100% instead of 120%. 
    
    
  • Exceptions to the limited deductibility will be available for taxi services, rental cars with drivers, driving schools and vehicles leased only to third parties. The limited deductibility is also inapplicable to taxpayers who re-invoice the car costs to a third party.

• Limited deduction of other business expenses such as fines and taxes: all administrative fines imposed by a public authority become disallowed expenses even if they do not qualify as a criminal penalty or if they are related to deductible taxes. Increases related to social security contributions also become disallowed expenses. The distinct tax charge on secret commissions is no longer deductible. Hidden profits are no longer reincorporated into the corporate accounts, and the reduced rate applicable in this case is abolished. Other costs deductible at a rate of 120% are deductible up to 100%.
  
  
• Other measures that will only become effective in 2020 concern notably the possibility to convert exempted reserves (created before 2017) into taxed reserves at a favourable tax rate, and changes in the depreciation regime: the double-declining balance method will be abolished and, as with large enterprises, for the year of investment, SMEs will only be entitled to apply a prorated deduction.
  

Program Act of 25 December 2017 (Official Gazette of 29 December 2017) 

• Belgian tax on savings income (art. 19bis ITC): currently, capital gains realised on shares or units of capitalising collective investment funds investing more than 25% of their assets in debt claims are subject to a withholding tax of 30%. Under the new rules, the 25% threshold is reduced to 10% while the investment funds in scope are extended to alternative funds not only investing in securities. These changes are applicable to income paid in relation to fund shares/units acquired as from 1 January 2018.
  
  
• Contractual investment funds (FCPs/GBFs): the application of the Belgian tax on savings income (art. 19bis ITC) on contractual investment funds investing in investment companies that themselves fall within the scope of this tax is aligned to the tax treatment of a direct investment in such investment companies. This measure comes into force as from its publication in the Belgian Official Gazette.
  
  
• The threshold for the traditional withholding tax exemption on interest received on savings deposits is decreased from EUR 1,880 to 940.
  
  
• To stimulate investment in shares, the government provides a new withholding tax exemption for Belgian and foreign dividends up to a threshold of EUR 627, the so-called Michel-De Croo measure; most dividends can benefit from the measure. Dividends distributed by collective investment undertakings through investment funds and legal structures are excluded. The taxpayer can choose the dividends to which the exemption applies, and the exemption has to be applied for via the tax return. The amount is increased to EUR 800 (after indexation) for dividends paid as from 1 January 2019 (assessment year 2020) (amending law).

• Tax on stock exchange transactions: as from 2018, the rates increase from 0.09% to 0.12%, and from 0.27% to 0.35%.
  
  
• The Cayman tax has been amended at various levels so as to increase its effectiveness and close some existing loopholes. Changes are in place to target intermediate structures. Distributions made by legal structures without legal personality (e.g. trusts) become taxable except if they have been already taxed. This measure applies as from 17 September 2017. Some exclusions are better outlined, particularly the substance exclusion. ‘Fonds dédiés’ as well as ‘de facto’ associations (labour unions) having foreign investment income fall within the scope of the tax.
  
  The changes apply to income received, granted or paid as from 1 January 2018.
   

Act of 26 March 2018 Promoting Economic Growth (Official Gazette of 30 March 2018)

• Promotion of growth companies: The tax shelter for start-up companies providing for a tax credit is extended to growth companies under similar conditions. A growth company is a non-quoted small company in the meaning of article 15 of the Companies Code, aged between 5 and 10 years, and having at least 10 employees. To be in scope of the new measure, the turnover or the workforce of the growth company should have increased by at least 10% per assessment year in the last 2 assessment years preceding the investment. The qualifying investment is limited to EUR 100,000 per taxable period and per person, leading to a tax credit of 25%. Growth companies can only receive maximum EUR 500,000 on the basis of this measure (or EUR 250,000 if they have already received EUR 250,000 as a start-up). These thresholds are maximum amounts applicable for the tax shelter for growth companies and for start-ups combined. Subject to certain conditions, also non-residents could benefit from this measure.

• The regulatory framework of the private PRICAF has been reviewed and made more attractive, for instance, by relaxing the rules in terms of limited duration, control and management activity.
  
  Furthermore the minimum investment threshold of EUR 100,000 is decreased to EUR 25,000 (Royal Decree still to be published). Also in the Income Tax Code some provisions in relation to private PRICAFs are relaxed or clarified. For instance, to apply the capital gains exemption on private PRICAF shares, the condition regarding ‘additional or temporary investments’ is aligned with the concept as couched in the regulatory legislation. It is also clarified that the annuality principle (i.e. the year-on-year nature of tax) applies for the special corporate income tax regime of private PRICAFs. In addition, for private investors, a new tax credit of 25% is introduced to partly cover the capital loss realised upon liquidation of private PRICAFs constituted as from 1 January 2018. The eligible capital loss is limited to EUR 25,000 per taxable period. Furthermore, the reduced dividend withholding tax rates of 20% or 15% are made applicable to dividend distributions by private PRICAFs provided that the underlying shares meet the conditions of the VVPR regime.

Act of 7 February 2018 introducing an annual tax on securities accounts (Official Gazette of 9 March 2018) 

Holders of one or more securities accounts in Belgium or abroad with total assets equal to or exceeding EUR 500,000 are subject to tax at a rate of 0.15% of the average value of the total amount of taxable assets. The taxable assets are the following: funds, quoted or unquoted bonds, “kasbons”/“bons de caisse”, warrants, share and bond certificates, quoted shares and unquoted shares registered in securities accounts. Registered shares registered in the share register, pension savings accounts and life insurance are excluded. However, an anti-abuse rule has been introduced to include in the scope of the tax taxable assets that were converted into non-taxable assets on or after 9 December 2017. Another specific anti-abuse measure is introduced to tackle the contribution of securities accounts to legal entities. The average value will be calculated on the basis of a reference period (1 October to 30 September). In the case of joint ownership, the securities account is deemed to be held by the holders for equal parts. Corrections can be made on the basis of supporting documents. In principle, the tax will be collected by the financial institution that will also determine the value of the accounts concerned. The withholding is automatic when the holder has a securities account equal to or exceeding EUR 500,000 with a financial institution and when the holder who has securities accounts with several financial institutions has opted for the tax withholding to be operated by the institution because he may reach the taxable threshold. In other cases, it is for the holder to file the tax return, determine the tax amount and make the payment. The securities accounts will also have to be reported in the personal income tax return. Penalties will be applicable if the compliance obligations regarding the tax return are not met, in the case of late payment of the tax or if the holder does not provide the information requested by the tax authorities. This tax entered into force on 10 march 2018.

Act of 9 February 2017 introducing the Innovation Income Deduction (Official Gazette 20 February 2017)