Federal government specifies tax repercussions of EU-list of non-cooperative jurisdictions as part of traditional year-end tax package

The government has submitted 3 draft laws to Parliament containing several tax measures. As a headliner, the tax impact of the EU list of non-cooperative jurisdictions is written into law. The new measures are expected to be approved before year-end.

EU-list of non-cooperative jurisdictions

Since 2017, the EU regularly updates a list of non-cooperative jurisdictions. It currently contains the following jurisdictions: American Samoa, Anguilla, Barbados, Fiji, Guam, Palau, Panama, Samoa, Trinidad & Tobago, US Virgin Islands, Vanuatu and the Seychelles.

The presence on the EU-list will now have repercussions for Belgian tax purposes:

Cayman tax: any entity with legal personality established in a jurisdiction on the EU-list at the end of the taxable period is deemed to be a legal construction – as from AY 2021
A foreign company on the EU-list at the end of the taxable period can be considered as a CFC regardless of the participation and taxation conditions – also as from AY 2021
Dividends from companies established in a jurisdiction on the EU-list at the end of the taxable period will not qualify for the dividends-received deduction – applicable to dividends paid/attributed as from 1/1/2021
The reporting obligation for payments to tax havens is extended to payments to persons established in a jurisdiction which is on the EU-list at the moment of payment – applicable to payments as from 1/1/2021

Exemption of payment of wage WHT – training employees

As from 1 January 2021, an exemption of payment of wage WHT will apply to the salary of employees which have followed (formal and informal) training for at least 10 days during an interrupted period of 30 calendar days provided that the training is not required by law, regulation or collective labor agreement.

The number of uninterrupted periods is limited to 10 for the same employee with the same employer. The exemption is calculated on the salary of the calendar month in which the training is completed. It equals 11,75% of a taxable salary of maximum 3.500 EUR.

Interest deduction limitation (“earnings stripping rules”)

Companies issuing real estate certificates and leasing and factoring companies are no longer excluded from the earnings stripping rules, as from AY 2021. Some technical changes regarding the calculation of excessive borrowing cost and EBITDA are also made.

Investment deduction SMEs

The rate of 25% is extended until 31/12/2022. A carry-forward of the unused deduction is possible for 2 years (instead of 1 year) related to investments in 2019-2021

Miscellaneous

The scope of the reduced VAT rate of 6% for the demolition and reconstruction of real estate will be broadened during the period from 1 January 2021 until 31 December 2022 (cfr. our earlier flash).

Bank account balances will be transferred to the Central Point of Contact within the National Bank as from 31/12/2020

Some Covid-19 measures are also prolonged until 31 March 2021, such as: