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Notional interest deduction rate for assessment year 2020: 0,726%

Following the corporate tax reform, the regime of the notional interest deduction was adapted. As from assessment year 2019, the deduction is calculated on the increase of equity over a period of 5 years, and more specifically, on the difference between the corrected equity at the beginning of taxable period X and the corrected equity at the beginning of taxable period X-5 (“incremental” notional interest deduction). Any changes during the taxable period to the equity (and to its corrections) must no longer be taken into account.

However, the new regime of the “incremental” notional interest deduction still uses the same calculation method to define the interest rate that must be used.

The notional interest deduction rate for an assessment year (e.g. 2020) is calculated on the average return of the 10-year OLO in the months July, August and September of the penultimate year preceding the assessment year (e.g. 2018).

The average return for those months in 2018 is 0,726% meaning that the NID rate for AY 2020 will be 0,726% (1,226% for SMEs) (subject to official confirmation).

As a reminder, the NID rate for assessment year 2019 is 0,746 % (1,246 for SMEs) (officially confirmed in the Belgian Official Gazette of 5 September 2018).

 

About the author

Jos Goubert

Jos Goubert

Head of tax knowledge and research center at KPMG

Director of the tax knowledge and research center. Author of "De wet tot invoering van een belastingaftrek voor risicokapitaal" (Kluwer 2005) and other articles on the notional interest deduction and belgian and international taxation.

Member of the Fiscal Committee of the Confederation Fiscale Européenne
Vice Chair of the Direct Tax Subcommittee

Email: jgoubert@kpmg.com

 

 

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Jos Goubert
Director

Tax Knowledge Dept.
Brussels

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