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Budget control 2015

The tax measures

Last updated 13 April 2015

At the end of March 2015, the Federal Government reached an agreement on the budget control. The package includes a number of tax measures which are outlined below.

BUSINESS TAX

Better use of information regarding 183 day-rule

The government intends to connect the social security and tax databases, as well as implement rules regarding the exchange of information between the social security and the tax authorities relating to foreign employees working in the construction sector.

The goal of this measure is to enable the tax authorities to better detect foreign employees working in the construction sector and whose presence in Belgium exceeds 183 days.

Expected revenue for 2015: EUR 1.3M.

Fight against online fraud

The Belgian Internet Service Center (BISC) will be “modernised” in order to reinforce the fight against online fraud.

Expected revenue for 2015: EUR 3M.

Expansion of data mining projects of Special Tax Squad (BBI|ISI)

The government plans to further invest in data mining in order to be better equipped to detect fraud mechanisms.

Expected revenue for 2015: EUR 3.2M.

Spontaneous reporting of untimely declared income

In January 2015, the Special Tax Squad (BBI|ISI) issued a new internal instruction in view of a consistent and uniform treatment of spontaneous tax regularisations across the country.

Based on the “una via” principle, such files will follow either the criminal procedure or the administrative procedure. When the administrative procedure is followed, a tax increase of at least 50% will be applied.

Expected revenue for 2015: EUR 70M.

Abuse of corporate structures

The government intends to fight abusive company structures, which are specifically used for money laundering purposes. Such abuse typically implies tax fraud (VAT fraud, fictitious invoicing, cash companies, etc.).

Expected revenue for 2015: EUR 22.5M.

Increased fight against tax fraud

The government intends to introduce a special tax regime for companies active in the diamond sector. The taxable base will be calculated on their turnover (rather than their profit). The regime will first be notified to the European Commission in order to get an upfront approval on its compatibility with the EU State Aid rules.

Expected revenue for 2015: EUR 50M (on top of current income tax revenue generated by the diamond sector).

Special tax regime for diamond sector

To compensate for the increase of the withholding tax to 25% on liquidation bonuses as of 1 October 2014, the previous government introduced a transitional regime allowing companies to distribute dividends originating from profits approved by the shareholders’ meeting no later than 31 March 2013, provided that these dividends were re-incorporated into the company’s paid-in capital before 1 October 2014.

Further to the Program Law of 19 December 2014 (Dutch | French), the possibility to pay a 10% tax on liquidation distributions has been formalised via the so-called “liquidation reserve” regime, applicable as of tax year 2015. Further to this regime, and subject to certain conditions, current year profits that are allocated to an unavailable equity account are subject to a final “anticipative” 10% tax upon their allocation.

The government now plans to extend the liquidation reserve regime to the profits that could not benefit from the transitional regime described above, i.e the profits realised during financial years 2012 and 2013, respectively in 2015 and in 2016.

Expected revenue: EUR 236M in 2015 and EUR 236M in 2016.

Extension of liquidation reserve regime

Tax shelter

A start-up will be defined as a company qualifying as a “micro-company” under the EU accounting directive (definition still to be included in Belgian legislation). The measure targets start-ups younger than 4 years. Possibly, a threshold will be introduced, depending on the budgetary margin and the potential revenue of the measure.

Physical persons will benefit from an income tax reduction of 45% on the amount invested in new shares issued by a start-up and held for a period of at least 4 years. The tax reduction will be partially recaptured in cases where the shares are alienated within this 4-year period.

When the investment is made in a start-up qualifying as an SME according to Article 15 of the Companies Code, the same rules will apply except that the income tax reduction will be limited to 30%.

The tax reduction is not transferable nor refundable.

Company directors (bedrijfsleiders/chefs d’entreprises), whether working as an individual or through a management company in the start-up, will not be entitled to this tax reduction.

Dividends paid by the start-up will be subject to the withholding tax rules applicable to SME’s, subject to certain conditions, as of 1 July 2013 (20% or 15% reduced rate).

Payroll tax exemption

A partial payroll tax exemption will be implemented for start-ups as defined above (20 / X% for micro-entities and 10 / X/2% for SME’s).

Individuals/independents who mutatis mutandis meet the requirements for micro-entities or SME’s will also be able to benefit from such tax exemption.

The measure would enter into force as of 1 July 2015 and would also be available to existing companies provided they are younger than 4 years. It will be possible to combine this exemption with other payroll tax exemptions.

Expected cost: EUR 23M.

Crowdfunding

The tax shelter for start-ups will also apply to qualifying investments (see "Tax shelter" section above) raised through a regulated crowdfunding platform.

In addition, the government intends to introduce an exemption from withholding tax on interest paid or attributed on new interest-bearing loans (for a maximum amount of 15K Euro over a 4-year period), granted as of 1 July 2015 by individuals to start-ups through a regulated crowdfunding platform. The loan needs to have a minimum duration of 4 years in SME’s of less than 4 years.

Expected cost: EUR 1.875M as of 2016.

New incentives for start-ups

 

SME’s investing in digital assets can benefit from a one-time investment deduction. Qualifying investments will be determined by royal decree.

Expected cost: EUR 5M in 2015.

Investment deduction for digital investments

 

A withholding tax of 1.69% will be introduced on dividends paid by Belgian companies to companies established in the European Economic Area which hold a participation of less than 10% but with an acquisition value of at least EUR 2.5M.

Expected revenue: EUR 10M in 2015.

Implementation of CJEU’s Tate & Lyle decision

INDIVIDUAL TAX

As already announced back in October 2014, the government will introduce a "look-through" or transparency tax (often referred to as the “Cayman tax”) on income derived from assets owned by certain foreign legal structures (e.g. trusts). New legislation will allow the tax authorities to put aside such structure, attribute the income directly to the founders and/or beneficiaries, and tax it according to the Belgian tax rules. The measure is set to apply as of tax year 2016, but part of the income will already be collected in 2015 through advance tax payments on professional income earned through foreign legal structures.

Expected revenue for 2015: EUR 50M.

Look-through tax

A start-up will be defined as a company qualifying as a “micro-company” under the EU accounting directive (definition still to be included in Belgian legislation). The measure targets start-ups younger than 4 years. Possibly, a threshold will be introduced, depending on the budgetary margin and the potential revenue of the measure.

Physical persons will benefit from an income tax reduction of 45% on the amount invested in new shares issued by a start-up and held for a period of at least 4 years. The tax reduction will be partially recaptured in cases where the shares are alienated within this 4-year period.

When the investment is made in a start-up qualifying as an SME according to Article 15 of the Companies Code, the same rules will apply except that the income tax reduction will be limited to 30%.

The tax reduction is not transferable nor refundable.

Company directors (bedrijfsleiders/chefs d’entreprises), whether working as an individual or through a management company in the start-up, will not be entitled to this tax reduction.

Dividends paid by the start-up will be subject to the withholding tax rules applicable to SME’s, subject to certain conditions, as of 1 July 2013 (20% or 15% reduced rate).

Tax shelter

The tax shelter for start-ups will also apply to qualifying investments (see "Tax shelter" section above) raised through a regulated crowdfunding platform.

In addition, the government intends to introduce an exemption from withholding tax on interest paid or attributed on new interest-bearing loans (for a maximum amount of 15K Euro over a 4-year period), granted as of 1 July 2015 by individuals to start-ups through a regulated crowdfunding platform. The loan needs to have a minimum duration of 4 years in SME’s of less than 4 years.

Expected cost: EUR 1.875M as of 2016.

Crowdfunding

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