Belgium

Details

  • Service: Tax & Legal
  • Type: Business and industry issue
  • Date: 14/05/2013

"Update" Budget control – more details available on tax measures 

e-tax flash
At the end of March the federal government agreed on several tax measures in the context of its budget follow-up. As the government is now turning these measures into draft legislation, more details have become available. Please note that the following may still be subject to change.

No double use of DRD and NID

Shares would be excluded from the calculation base of the notional interest deduction (NID) when their dividends may benefit from the dividends-received deduction (DRD), as from assessment year 2014.

 

Liquidation gains

Liquidation gains paid or attributed as from 01/10/2014 would be subject to a 25% withholding tax (WHT).

 

As from 1 July 2013, it will be possible to distribute taxed reserves approved by the general assembly at the latest on 31/03/2013 with a 10% WHT, provided the received amount is immediately incorporated into capital, in the last accounting year closed before 01/10/2014. Those dividends must not be taken into account to consider whether the reduced corporate tax rate can apply.

 

A further capital decrease would be considered as first impacting (decreasing) this capital contribution.

 

At later capital decreases, those incorporated reserves will be taxed at following rates

 

 Tax rates  SME (art 15 Company Code)*  Other companies
 15%  In year 1 and 2  In the 4 first years
 10%  In year 3  In year 5 and 6
 5%  In year 4  In year 7 and 8
 -  As from 5th year  As from 9th year

 

* At the time of capital contribution

 

When a company shows an accounting profit in the taxable period during which it distributes its taxed reserves and when the company has distributed dividends during at least one in the five taxable periods preceding this distribution a separate taxation (non-deductible) of 15% will be levied on the positive difference between

 

1° the product of:

  • the profit in the taxable period during which it distributes its taxable reserves and
  • the proportion between the sum of the dividends distributed during the five preceding taxable periods and the sum of the results of these taxable periods;

and


2° the dividends which have actually been distributed as profits of the taxable period during which its taxed reserves have been distributed.

 

As a consequence, to the extent that the dividend policy during the five preceding taxable periods is not continued in the year of distribution of taxed reserves, an extra tax of 15% will be due on the shortfall.

 

Any changes to the closing date of the accounting year made as from 1 May 2013 will be without effect.
 
Reduced WHT on dividends on new shares in SME’s

A reduced WHT will be introduced on dividends on new nominative shares in SME’s representing contributions in cash made as from 01/07/2013. Contributions originally resulting from the distribution of taxed reserves as meant in the previous point are excluded.

 

Only dividends on new shares in SME’s can benefit. SME’s are defined with reference to article 15 of the Companies Code. The distributing company must only be an SME at the time of the contribution of cash. Companies with no minimum capital may not benefit from the measure except in case the capital after the contribution is at least equal to the minimum capital of a limited liability company (BVBA/SPRL).

 

The WHT tax rate is

 

  • 25% on dividends distributed out of profits realized in the first accounting year following the contribution;
  • 20% on dividends distributed out of profits realized in the second accounting year following the contribution;
  • 15% on dividends distributed out of profits realized in the third and any subsequent accounting year following the contribution.

 

The shares must be held uninterruptedly in full ownership since their creation until the distribution of the dividend in order to benefit from the reduced WHT. Neutrality in this respect will be provided in case of inheritance, donation or tax-neutral reorganizations.

 

Any changes to the closing date of the accounting year made as from 1 May 2013 will be without effect. Several other anti-abuse measures will also be introduced such as:

 

  • capital increases following capital decreases done after 1 May 2013 do not benefit from the reduced WHT rate except in case and to the extent the capital increase exceeds the capital decrease;
  • sums resulting from a capital decrease done after 1 May 2013 by a company which is affiliated or associated with persons (including spouses, parents and dependent children) reinvesting those sums into the capital of another company cannot benefit from the reduced WHT rate either;
  • the capital increase must be fully paid-up;
  • no preference shares can be created.
     

Registration duties

The fixed registration duty will be increased from 25 to 50 EUR as from 01/07/2013 (date of registration of deeds). The duty on “erfpachtrecht/droit d’emphythéose” and “opstalrecht/droit de superficie” would be increased from 0,2 % to 2% (0,5% for non-profit associations) (official deeds made as from 01/07/2013).

 

Finally, excise duties on tobacco would again be increased (entry into force: 10 days after publication in the Belgian Official Gazette).

 

 

 

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