Government De Croo has taken office: what is in store on taxation?

After almost 500 days, an agreement has finally been reached to form a federal government with 7 political parties. In this flash, we give a summary of the main tax measures from the coalition agreement. Reflecting the high-level tax policy intent of the new government, the agreement already announces some specific measures.

Supporting recovery in a pandemic

The government agreement contains some concrete, short-term measures to stimulate the economic recovery.

• In order to strengthen their solvability, companies will be allowed to exempt part of their profits for financial years linked to assessment year 2022, 2023 and 2024 by recording an exempt ‘reconstruction reserve’.
• To stimulate business investment, the increased investment deduction of 25% (for SMEs) will be extended with two additional years (2021 and 2022).
• With Brexit approaching, businesses must be optimally supported in their international activities, customs controls should have a minimal impact on trade with the UK. Whilst Brexit is now very near, the specific actions that the government wants to take in this respect remain unclear.

Government plans regarding income taxation

The new government also states its tax intentions on the longer term:

• The corporate income tax reform by the previous government will be maintained, including the rate reduction to 25% (20% for SMEs).
• The government sets the principles for an individual income tax reform by 2024: a reduction of taxes on labor, a broadening of the taxable base, a simplification of the tax system and a gradual shift from alternative rewards to rewards in euros.
• Regarding estate planning, the government agreement contains no mention of a capital gains tax or securities tax. On the other hand, the new government will strive for "an honest contribution by people who can carry the heaviest burden, with respect for entrepreneurship". The tax regularization will end on 31 December 2023. Tax savings by registration of notary deeds abroad will be prevented, and balances of Belgian bank accounts will be communicated to the Central Point of Contact.
• On mobility, all new company cars must be emission-free by 2026. Employers will be able to award a mobility budget to employees who cannot qualify for a company car.
• Employers will also receive a tax incentive for training their employees.

Position of Belgium on international tax developments

The ongoing efforts at OECD and European level to reform international taxation will be supported:

• According to the new government, there must be a form of digital tax, preferably by international agreement. If such an agreement is not possible, Belgium will introduce a digital services tax but only as from 2023.
• Belgium will support the implementation of a minimum tax (Pillar Two of BEPS 2.0).
• The government supports the implementation of the OECD recommendations in EU law.

In the weeks to come when more developments and concrete proposals become available, we will inform you in more detail of these measures and the potential impact for you and your organization.