A government agreement has recently been reached. At this stage, it is only a statement of intent, and we will have to wait to see how these measures will be transposed into the legal texts that still need to be drafted.
By Lida ACHTARI, Counsel Tax Law
Here are the main measures regarding direct taxation and wealth taxation in 10 points.
- Taxation of capital gains for individuals
The government intends to tax capital gains on financial assets and crypto-assets at a rate of 10%, while exempting historical capital gains accumulated before the entry into force of the measure.
Losses realized on this same category of assets would be deductible in the year, without the possibility of carrying them forward to subsequent years.
The first tranche of 10,000 euros in capital gains would be exempt.
However, specific measures would be provided for so-called “significant” participations, meaning participations of at least 20%. These would benefit from an exemption on the first tranche up to 1 million euros and would then be subject to a progressive scale per tranche up to 10 million euros. Beyond this threshold, the full 10% tax rate would apply.
Some parties have diverging interpretations of the agreement on this point, and we will have to wait and see how this is reflected in the legal texts.
- IPP, copyright and limitation of certain tax advantages
The tax-exempt portion of income would be increased. The marital quotient would be gradually reduced by half.
Taxation for people wishing to work after a full career of 45 years or reaching the legal retirement age would be alleviated.
The tax regime for copyright would again apply to the IT sector, also targeting the transfer or licensing of computer programs.
Several limitations on existing tax deductions and reductions are planned. For example:
- The federal interest deduction for housing other than the main residence would be abolished. It is unclear whether this unfavorable measure will also apply to acquisitions made in the past.
- The deduction for alimony payments would gradually decrease from 80% to 50%. Payments to countries outside the European Economic Area would no longer be deductible.
- The tax reduction on donations (donations of a minimum amount of 40 euros to certain approved organizations) would be reduced from 45% to 30%.
- Expat workers regime
The specific regime for expatriate workers would be made more favorable by increasing the tax-exempt portion from 30% to 35%, removing the 90,000-euro cap, and lowering the minimum remuneration condition from 75,000 euros to 70,000 euros per year.
- Withholding tax in case of company emigration
The government plans to strengthen the exit tax in the event of the emigration of a Belgian resident company abroad (without maintaining a permanent establishment in Belgium).
This emigration, considered as a fictitious liquidation of the company, would now result, in addition to the exit tax for the company, in a fiction of the distribution of the liquidation bonus, leading to the withholding tax being charged to the shareholders. If this measure is confirmed, it could therefore have a very significant impact on Belgian resident individual shareholders but also on Belgian resident corporate shareholders who do not meet the conditions to benefit from the RDT/DBI-regime.
- Liquidation reserve
Liquidation reserves distributed after a waiting period of 3 years would be taxed at a rate of 6.5% (in addition to the 10% contribution paid when the reserve was established) instead of a waiting period that is currently 5 years and a tax rate of 5%. This measure remains attractive in cases where it is not possible to benefit from the VVPR bis regime (which would remain unchanged).
- Corporate tax: dividends / capital gains received by companies and the issue of non-deductibility of certain tax assets in case of tax increases of 10%
The RDT/DBI-regime would become an exemption regime (and no longer a deduction). As for the conditions, a distinction would be introduced between SMEs and large companies.
For SMEs, the conditions would remain unchanged: there must be a minimum participation of 10% in another company or a participation with an investment value of 2.5 million euros (participation condition), this participation must be held in full ownership for at least one year (duration condition), and the dividend-distributing company must be subject to a normal tax regime (taxation condition).
For large companies, the participation condition would be strengthened: if the 10% threshold is not reached, the participation must have an investment value of 4 million euros and be recorded as a financial fixed asset, which would de facto exclude participations held for treasury investment purposes.
These new conditions would apply to both dividends and capital gains.
Furthermore, the government announces its intention to ease the current prohibition on applying a series of corporate tax deductions in cases of tax increases of at least 10%. Such an easing would be welcome given the problematic nature of the current measure.
- Minimum remuneration of company directors
The minimum remuneration to be paid to a company director for the company to benefit from the reduced tax rate of 20% on the first tranche of 100,000 euros would increase from 45,000 to 50,000 euros and would be indexed annually. In addition, benefits in kind received by a director would be capped at 20% of their annual gross cash remuneration.
- Investment funds – Sicav RDT/DBI-beveks, carried interest, and private pricafs/privak’s
Investments in Sicav RDT/DBI-beveks would be subject to a 5% tax on capital gains at the time of exit.
Furthermore, surprisingly, the withholding tax would only be creditable against corporate tax to the extent that the beneficiary company grants, in the same year, the minimum remuneration (in principle 50,000 euros, to be indexed) to its company director.
Regarding investment fund managers (Sicav RDT/DBI-beveks or other funds), a specific tax regime would be introduced for carried interest with a maximum tax rate of 30% on investment income.
The regulatory framework for private pricafs/privak’s should be eased, and certain rules should be abolished (limited duration, number of shareholders, filing deadline, and authorized investments). However, the tax reduction for capital losses related to the total distribution of a private pricaf’s/privak’s share capital would be abolished.
- Central Contact Point (PCC/CAP) and permanent tax regularization procedure
Crypto-accounts should be declared to the PCC with the National Bank of Belgium, and data would automatically be added (data from exchanges of information between states, for example). Moreover, access to this PCC would be eased for the tax administration.
A permanent tax regularization procedure should also be introduced with an increase in rates, except for taxpayers who can demonstrate their good faith.
- Stock exchange transactions tax (TOB) and tax on securities accounts
The TOB and the tax on securities accounts will not see their rates increase, contrary to what was once considered.
* * *
We will closely monitor the possible implementation of these measures into law and remain at your disposal to assist you during this transition.