Over the last couple of years, Belgium tax law with respect to the standard investment deduction has been amended on many occasions. One of the numerous corona measures consists of allowing taxpayers to benefit from a 25% investment deduction. What are the conditions?
According to Belgium tax law, reception costs are only 50% deductible for direct tax purposes. However, when reception costs are incurred between 8 June 2020 and 31 December 2020, they are 100% tax-deductible.
Traditionally, when persons proceed to a gift of movable goods (mostly cash or shares) the gift is registered in front of a Dutch notary. The reason is obvious: no Belgium or Dutch registration tax is thus due whereas the gift transaction has a “fixed date”. This is important, because if the person making the gift does not pass away within 3 years (possibly, this may become 4 years in Flanders as of 2021 …) as of this fixed date, no Belgium succession tax is due anymore on the gift when that person passes away afterwards. However, the Belgium legislator plans to close the so-called “cheese route” as of 1 December 2020. Does that mean that a tax-free gift is thus no longer possible?
The corona crisis has forced the Belgium Government to take various support measures to sustain the economy. Hereafter, you can find a brief summary of initiatives that may have a substantial impact on your liquidity situation of 2020.
There is a Belgium income tax exemption for compensation received as a result of the corona crisis with the aim to financially support the taxpayer at hand. Such financial compensation was generally granted by either the Belgium Regions, Communities, provinces or local cities or towns. Both the hinderance premium and compensation premium are typical examples. In summary: this exemption applies for both personal tax and corporate tax purposes. The scope is however limited to compensation amounts received during 15 March 2020 – 31 December 2020. Needless to say that the taxpayer will need to duly report these compensations received in his personal or corporate tax return to be able to actually benefit from such income tax exemption.
Since about 5 years ago, individuals have the opportunity to invest in the shares of small and medium-sized enterprises (“SME”) that qualify as start-ups or scale-ups. The individual may thus be eligible for a tax credit for personal tax purposes. The current tax shelter tax rules have now been temporarily extended to SME’s in distress because of the corona crisis. How does it work?
As of 1 January 2020, companies are exposed to a new thin cap rule in Belgium. In summary, the corporate tax deduction of net interest expenses is limited in function of one of the following limitation rules: either 30% of the company’s fiscal EBITDA or EUR 3.000.000. However, the new thin cap rule does not apply if the company at hand is eligible for a transition rule. To what extent does the corona crisis impact such transition rule?
Taking into consideration the significant increase to 6,75% of the tax increase when insufficient advance tax payments were made during the financial year, a company’s advance tax payment policy has become much more important than before. However, due to the corona crisis you may be facing a liquidity issue. The good news is that the Belgium Government has relaxed the rules relating to advance tax payments to be made by 10 October and 20 December 2020.
In the Dong Yang Electronics case (C-547/18) the Court of Justice has clarified whether a subsidiary can for VAT purposes qualify as a fixed establishment of its parent company.
The Belgium Government has already taken numerous measures to give financial oxygen to Belgium enterprises and families taking into consideration the ongoing corona crisis. One of the most remarkable measures is the exceptional possibility of a one-off carry-back of tax losses. You can already apply this option in the tax return that is to be filed in the course of 2020. A similar rule is foreseen for Belgium personal tax purposes. How does it work?