Belgium’s five political parties agreed on a coalition government program on 31 January 2025, which outlines various tax reform measures.
These reforms introduce tax measures to boost economic competitiveness by encouraging “green” investments while maintaining current research and development (R&D) tax incentives.
The key tax reforms are as follows:
Participation exemption reforms
- These reforms include converting the dividend deduction regime to a full participation exemption regime while maintaining the 10% shareholding condition;
- The minimum investment threshold has been increased from EUR 2.5 million to EUR 4 million;
- a 5% tax on capital gains has been established from shares sold by collective investment companies under the exemption.
Increased investment deductions for sustainable assets
- The investment deduction rate has been increased to 40% for assets focused on energy, mobility, and environmental sustainability;
- The option to carry forward unused investment deductions without any fixed timeframe has been introduced.
Revised liquidation reserve requirements
- The liquidation reserve requirements have been revised, which entails reducing the reserve period from 5 to 3 years;
- The withholding tax on distributions has been increased from 5% to 6.5%, with a 30% rate for early distributions.
Accelerated depreciation for R&D, defense, and energy investments
Depreciation for investments in R&D, defense, and energy, with large companies, will now be allowed to depreciate 40% of an investment’s value in the first year.
Digital services tax to be introduced by 2027
A digital services tax will be introduced by 2027 if no consensus is achieved on taxing digital services at the European or international level.
The tax reforms will apply from 2026 except for the digital service tax.
