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House Finance Committee modifies loss carry-back, and approves reconstruction reserve and stimulus package

Yesterday, the House Finance Committee has approved two draft laws, one narrowing the temporal scope of the loss carry-back and implementing a stimulus package, and another introducing a reconstruction reserve. The House of Representatives must still vote on the drafts in plenary session before they become law.

Loss carry-back

The scope of the loss carry-back has been narrowed to accounting years closing between 13 March 2019 and 31 July 2020 (instead of 31 December 2020). For more details about the loss carry-back, we refer to our earlier flash.

Reconstruction reserve

The House Finance Committee has approved the reconstruction reserve. For 3 years following income year 2020, companies will be able to allocate part of their profit to an exempt ‘reserve fund for equity reconstruction’ in order to help them regain the equity they lost due to the corona crisis. For more details about the reconstruction reserve, we refer to our earlier flash.

Stimulus package

The Committee has also approved a series of tax measures in order to stimulate the economy, such as:

- exemption of payment of wage withholding tax for employers which have resorted to temporary unemployment for at least 30 days until 31 May 2020: exemption in June, July and August 2020 of 50% of difference in wage WHT compared to May 2020 (maximum of 20 MEUR)

- exemption for the employee and deduction for the employer of consumption voucher

- 100% deduction of reception costs between 8 June and 31 December 2020

- investment deduction: increase of rate from 8 to 25% for investments between 12 March and 31 December 2020 (only for small companies), carry-forward of unused investment deduction possible for two instead of one year for investments in 2019

- tax reduction for acquisition of new shares of small companies of which the turnover dropped by more than 30% between 14 March and 30 April 2020

- tax reduction for donations by individuals: increase of rate from 45 to 60% and of maximum amount from 10 to 20% of net income for donations in 2020

- extension of the tax deduction and reduction and of the VAT exemption for donations of computers to schools from 30 June until 31 December 2020

- exemption of payment of VAT advance in December 2020

- confirmation of Royal Decree introducing temporary reduced VAT rate of 6% for restaurant and catering services (excluding alcoholic drinks)

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Jos Goubert

Tax Knowledge Dept.

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