Belgium Information: Low-Tax and Incentive Regimes

Belgium Tax-News.com Coverage

- 19/06/2013 Switzerland Withholds EUR615m In 2012 In EU Interest Tax
- 18/06/2013 Belgian Revenue Rise Overshadowed By Soaring Expenditure In 2012
- 13/06/2013 Belgium Unveils Details Of Tax Regularization Bill
- 11/06/2013 ECJ Slams Belgium's 'Discriminatory' Savings Tax Perk
- 10/06/2013 Belgian Royals Face First Tax Bills

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Belgium Tax Treaty Updates from TreatyPro

Treaty Update: Belgium - Antigua and Barbuda
5/6/2013
Belgium's Council of Ministers on May 31, 2013, approved a law to ratify the TIEA signed with Antigua and Barbuda on December 7, 2009.

Treaty Update: Belgium - Various
5/6/2013
Belgium's Council of Ministers on May 31, 2013, approved two laws to ratifying the DTA and an accompanying Protocol signed with the Seychelles, and a Protocol to the nation's DTA with the Czech Republic.

Treaty Update: Belgium - Liechtenstein
23/4/2013
According to preliminary media reports, the Belgian Government on April 19, 2013, endorsed the pending TIEA the nation signed with Liechtenstein and forwarded it to parliament for ratification.

More Belgium Tax Treaty Updates from TreatyPro »

Belgium Knowledge Base

- Belgian Co-Ordination Centres
- Belgian Special Expatriate Fiscal Regime
- Belgian Holding Companies

Belgium has a corporate income tax rate of 33.99% (including a 3% so-called 'crisis surcharge') and has never been considered a financial center. However in order to attract the headquarters of foreign multinational companies Belgium accorded favorable tax treatment to entities known as "co-ordination centers" (these have now been phased out). Belgium offers a low-tax regime to expatriate employees with specialist skills, and has a relatively benign holding company taxation regime.

A 'notional interest deduction', introduced in January 2006, effective in tax year 2007, allows all companies subject to Belgian corporate tax (including Belgian branches of foreign companies) to deduct from their taxable income an amount equal to the interest they would have paid on their capital in the case of long-term debt financing.

The calculation of the tax deduction begins with the ‘equity capital’ as stated in the company’s opening balance sheet of the taxable period. Based on Belgian accounting law, ‘equity capital’ includes capital, share premiums, revaluation gains, reserves, carry-forward of profits or losses and capital investment subsidies. The notional interest rate was set in the 2012 budget at 3% for large companies and 3.5% for SMEs. The new rates will apply from January 2013. Prior to this the rates were 6.5% and 7% respectively.

The notional interest deduction does not discriminate between companies and complies fully with existing Belgian and EU law. Discussions with EU authorities have taken place and the measure is compatible with EU State Aid rules and the Code of Conduct.

The 2012 Budget

Determined to cut its budget deficit to below 3%, the newly formed Belgian government announced a number of measures in the 2012 budget to help achieve this aim. Provisions to reduce spending and increase certain taxes are contained in the budget:

• Capital gains exemption is now subject to a minimum one year holding requirement;
• The reduced withholding tax rate on dividends is increased from 15% to 21%;
• Notional interest deduction reduced from 6.5% to 3% for large companies and from 7% to 3.5% for SMEs;
• The 7:1 debt ratio is replaced by a 5:1 debt equity ratio from 1 July 2012.

The budget also introduced a 4% tax in addition to the usual withholding tax on income derived from interest and dividends that exceeds the threshold of EUR20,020.

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