On 26 July 2017, the federal government of Belgium announced various tax measures for the 2018 budget.
Corporate income tax rate
The rate of corporate income tax would be gradually reduced. Currently, the normal rate is 33.99%. This will be reduced to 29% in 2018 and 2019, and will further decrease to 25% in 2020. Small and medium-sized enterprises will be entitled to a reduced tax rate of 20% from 2018 on that part of the taxable profit not exceeding 100,000 EUR.
Tax exemption on capital gains
If certain conditions are satisfied, companies will benefit from a full tax exemption on capital gains realized on shares. This tax exemption will apply if a share participation is held for at least 1 year and amounts to at least 10% or has a value of at least 2.5 million EUR.
Starting from 2020 a fiscal unity will be possible for corporate income tax purposes. As a result of such fiscal unity the tax results of the various companies that are part of the same group will be consolidated for tax purposes, and will lead to one unified tax result for the entire group.
According to an IRS announcement on its website, the competent authorities of U.S. and the Belgium have concluded an arrangement on the exchange of Country-by-Country Reports. The competent authority arrangement (CAA) for exchange of country-by-country reports is on the basis of a double tax convention (DTC). The agreement was signed on 20 July 2017.
Under the arrangement, both countries intend to increase international tax transparency and improve access of their respective tax authorities to information regarding the global allocation of the income, the taxes paid, and certain indicators of the location of economic activity among tax jurisdictions. The CbC report is one element of a standardized approach to transfer pricing documentation which is intended to provide tax administrations with relevant and reliable information to perform an efficient and robust transfer pricing risk assessment analysis. The report includes information regarding the group’s activities in each country in which it operates, including, revenue, and profit before tax, taxes paid, taxes accrued, number of employees, and other information on economic activity. The country-by-country report is typically filed in the parent’s country of residence and then shared with other countries.
The first fiscal year for which the U.S. and Belgium intend to exchange CbC Reports is for the fiscal years of MNE Groups commencing on or after January 1, 2016. The CbC report is intended to be exchanged as soon as possible and no later than 18 months after the last day of the fiscal year of the MNE Group to which the CbC Report relates. CbC Reports with respect to fiscal years of MNE Groups commencing on or after January 1, 2017 are intended to be exchanged as soon as possible and no later than 15 months after the last day of the fiscal year of the MNE Group to which the CbC Report relates.
The Competent Authorities intend to exchange the CbC Reports automatically through a common schema in Extensible Markup Language (XML). The Competent Authorities intend to work toward deciding on one or more methods for electronic data transmission including encryption standards.
On 3 July 2017, the Belgian government has tabled a draft bill, implementing rules of Directive 2015/2376/EU and Mutual Assistance Directive and partial implementation provision of Directive 2016/881/EU amending Directive 2011/16/EU as regards mandatory automatic exchange of information related to taxation in so far as it concerns the exchange of country-by-country (CbC) reports.
On 6 July 2017, the Parliament of Belgium has approved the Bill to implement the OECD’s Agreement on the exchange of CbC reports that Belgium had signed on 27 January 2016.
On 19 May 2017, the Belgian Federal Public Service for Finance issued new country-by-country (CbC), local file and master file forms along with guidelines to file CbC reports under BEPS Action 13. The report submission deadline was 31 December 2016, but the tax authority has allowed a once only delay until 30 September 2017.
On 30 March 2017, Belgium and Moldova signed an amending protocol to Double Taxation Agreement (DTA) for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, in Brussels. Once in force, the 2008 treaty and 2017 protocol will replace the existing DTA of 1987 between Belgium and former USSR in relations between Moldova and Belgium.
According to a press release of 23 March 2017, the government of Belgium announced that the Council of Ministers had approved, on that date, a bill implementing the OECD Automatic Exchange of Financial Account Information Agreement and the bill will soon be submitted to the parliament.
According to Official Gazette of 14 March 2017, the rates of the investment allowance for the tax year 2017 (assessment year 2018) are following:
|Type of investment||Rate of allowance (%)|
|Patents; environmentally friendly investments for research and development (R&D); energy saving and smoke suction and fresh air systems in hotels, restaurants and bars||13.5||13.5|
|Seagoing vessels by resident companies earning only profit from ocean shipping||30||–|
Specific rules: Individual taxpayers who on 1 January 2017 (assessment year 2018) employed fewer than 20 employees may opt to spread the investment allowance for investments made over the depreciation period of the relevant investments. In this case, the maximum allowance is equal to 10.5% of the depreciation on the investments.
With respect to investments in environmentally friendly investments for R&D and investments in production means for high-tech products for which the European Commission has indicated that the measure does not constitute incompatible State aid, the rate for the spreading of investment allowances for individuals and companies is 20.5%, regardless of the number of employees.