On 5 May 2020, the tax authority of Belgium published Circular No. 2020/C/62 providing new clarifications on the “grandfathering” rule, under the interest deduction limitation rule, loans made before 17 June 2016 are excluded from the scope of “excess borrowing costs” whose deductibility is limited for corporate income tax purposes.
Some conditions are required to be fulfilled to rely on the circular and the granting of specific payment terms for loans made before 17 June 2016 should not be considered a fundamental change, as follows:
- The taxpayer can demonstrate payment issues due to the impact of COVID-19 measures;
- The new payment terms are documented in a request approved by the lender or are included in an additional agreement; and
- The new payment terms are granted before 30 June 2020 and apply until no later than 31 December 2020.
However, previous clarifications on the applicability of the grandfathering rules, declared on Circular No. 2019/C/89 of 11 September 2019 remain applicable.
