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No incremental notional interest deduction for assessment year 2021 ?

The notional interest deduction (NID) has become less attractive after the corporate tax reform as the calculation is now based on the positive increase of the equity of the company (incremental notional interest deduction).

However, the same method is still used for the calculation of the notional interest deduction rate.
For an assessment year (e.g. AY 2021) the rate is calculated on the average return of the 10-year Belgian government bond in the months July, August and September of the penultimate year preceding the assessment year (e.g. 2019).

The average return for those months in 2019 is -0,092 %. As the NID constitutes a deduction, the NID rate for AY 2021 should be 0% for large companies. The rate is increased by 0,5% for SMEs, resulting in a rate of 0,408% for SMEs. The rates are subject to official confirmation.

As a reminder, the NID rate for assessment year 2020 is 0,726 % (1,226 for SMEs). 

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Jos Goubert
Director

Tax Knowledge Dept.
Brussels

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