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Flemish Government Agreement 2014

Announced regional tax measures

Last updated 12 September 2014

The political parties involved in the Flemish Government coalition reached a Government agreement on 23 July 2014. The below is an overview of the announced tax measures with which the Government hopes to improve the tax system and economic engine in Flanders.

The information is obtained from the official agreement. It is the Government’s ambition to avoid tax rate increases and to eliminate tax discriminations. At this stage, no further detail other than what is specified below is available.

BUSINESS TAX

  • Cooperation with federal government to reduce taxation of researchers and new tax measures to promote innovation (tax shelter, patent deduction, etc.)
  • Advocate with federal government extension of basis and scope of application of R&D tax incentives to a broader group of knowledge workers and SME’s
  • Prolongation of temporary investment deduction for machinery & equipment for additional investments, subject to positive evaluation

Employment and investment incentives

  • Development of coherent tax regime for taxpayer’s residence to promote acquisition of residential property
  • Provinces can no longer levy surcharges on real property withholding tax; these provincial surcharges are included in the basic real property tax
  • Adjust the real property withholding tax exemption for unproductivity to the vacancy levy for business spaces

Immovable income

  • Monitoring of tax and administrative burden for enterprises
  • Work towards transparent and simplified tax legislation
  • All Flemish tax rules are codified in the Flemish Tax Code
  • Make inheritance, registration, gift and mortgage taxes as much as possible accessible online through the personal tax file on the Flanders tax portal

Simplification

INDIVIDUAL TAX

  • Maintain price & tax deductibility of service vouchers
  • Maintain housing bonus for existing loans but limited reform for future loans: existing loans: maintain tax amounts for tax year 2015 – new contracts as of 1/1/2015: reduce basic amount for tax year 2015 with the amount of the 10-annual increase; this increase of EUR 760 above basic amount is maintained during 10 years; tax benefit calculated at 40%; maximum 2 housing bonuses for same real estate.
  • Examine possibility (within budgetary limits) of introducing option between housing bonus and reduced registration duties
  • Maximum integration of tax reductions, exemptions and incentives to make government subsidies more unambiguous and more transparent

Tax reductions

  • Development of coherent tax regime for taxpayer’s residence to promote acquisition of residential property
  • Provinces can no longer levy surcharges on real property withholding tax; these provincial surcharges are included in the basic real property tax
  • Adjust the real property withholding tax exemption for unproductivity to the vacancy levy for business spaces

Immovable income

WITHHOLDING TAX

 
  • Advocate with federal government withholding tax exemption on movable income for entities within the perimeter of the Flemish Government and investing in Flemish treasury bills

Movable income

INDIRECT TAXES

  • Development of coherent tax regime for taxpayer’s residence to promote acquisition of residential property
  • Examine possibility (within budgetary limits) of introducing option between housing bonus and reduced registration duties
  • Budget-neutral simplification of registration duties – convert existing incentives for family dwelling into global lower rate / take along principle maintained
  • Cost-benefit analysis to introduce tax incentives for (immovable) heritage care
  • Modification of distribution duty such that couples breaking up pay maximum 1% duty

Registration duties

  • Examine (taking into account federal changes to succession law) how to modernise inheritance taxes and adjust them to contemporary ways of cohabitation
  • Simplification of gift duties for real estate (simple rates to stop tax avoidance constructions)
  • Extension of temporary reduced gift duties for building sites as well as the link to the obligation to build within a certain timeframe

Gift and inheritance taxes

  • Introduction of mileage tax on freight transport as of 2016 – rate should take into account competitive position of enterprises and economic gateways (such as harbours) compared to our neighbouring countries
  • Examine for private cars if and under which conditions mileage tax can be introduced in the future and in budget-neutral manner (if introduced, fixed taxes – putting into traffic tax and annual road tax- abolished); in meantime road sticker can already realise “user pays” principle (cooperation with other regions necessary on this matter)
  • Greening annual road tax in budget-neutral manner
  • Relate car taxation to impact on air quality
  • Impact analysis by 2015 of the introduction of deposit on (plastic) bottles and cans
  • Greening of taxation in particular, to discourage and punish pollution and to reward and promote care for environment

Environmental taxes

  • Encourage local authorities to develop enterprise-friendly strategy
  • Revisit vacancy levy to equitable levy with flexible procedures and sufficient legal protection; avoid double taxation (local + regional tax)

Other indirect taxes

OTHER MEASURES

  • Revisit myriad of measures to reduce salary cost and limit incentives to 3 target groups (i.e., young employees, employees aged 55 or older, people with labour handicap - after consultation with social partners)
  • Measures focusing on subsidised employment are converted into employment instruments in private and public sector, stimulating inflow and flow-through of job-seekers

Salary cost reduction

  • Monitoring of tax and administrative burden for enterprises
  • Work towards transparent and simplified tax legislation
  • All Flemish tax rules are codified in the Flemish Tax Code
  • Make inheritance, registration, gift and mortgage taxes as much as possible accessible online through the personal tax file on the Flanders tax portal
  • Revisit tax incentive regimes for (semi-)public institutions (towards simplification)

Simplification

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