The fairness tax is introduced as a separate taxation in the corporate income tax and is independent of and comes, where applicable, on top of the other taxation(s) in the corporate income tax.
The separate taxation is, like the corporate income tax itself, not deductible.
The separate taxation is due in all cases: no deductions or compensation of the loss of the taxable period can be made on the taxable base of the separate taxation.
The rate amounts to 5,15 % (5 % to be increased with 3 % crisis surcharge). The taxpayer should make tax prepayments. Otherwise, there will be an increase due to no or insufficient advance tax payments
The fairness tax is levied for the taxable period for which dividends are distributed. The concept of ‘dividends’ also includes the repayments of the company’s capital, issue premiums and participation certificates (if they qualify as dividends), but not the liquidation gains, repurchase gains and requalified interest. The dividends which are taxed at 10% in the context of the transition regime for liquidation gains must also not be taken into account for the application of the fairness tax.
In order to calculate the taxable base of the fairness tax, three steps are foreseen:
a. Firstly, the positive difference is determined between the gross amount of distributed dividends and the final taxable result which is subject to corporate income tax. The fairness tax will only be due if the amount of distributed dividends is higher than the final taxable result. The final taxable result is the amount that is subject to tax, after application of all available tax deductions.
b. Secondly, the taxed reserves constituted no later than for assessment year 2014 are excluded. The result of the first step is reduced with the distributed dividends originating from previously taxed reserves, no later than for assessment year 2014. The LiFo-method is used so that the previously taxed reserves are first taken from the last reserves.
c. Finally, the link with the reduction of the taxable result through “harmful” tax attributes (i.e. previous tax losses and the NID of the year) is made. The result achieved after the first and second step will hence be multiplied with a percentage reflecting the proportion between on the one hand the ‘harmful’ tax attributes and on the other hand, the taxable result of the taxable period (result after the first operation: sum of reserves, disallowed expenses and dividends, excluding exempt write-offs, provisions and capital gains). Thus, the final taxable base for the fairness tax is calculated. It cannot be limited or reduced in any way.
The fairness tax will also be due in cases where the parent-subsidiary directive applies (participation of 10% or more). The government has submitted the fairness tax to the European Commission.
The fairness tax does not apply to small companies. The separate taxation only applies to medium-sized and large companies according to the criteria of art. 15 of the Companies Code (to be determined on a consolidated basis and for the taxable period for which the dividends are distributed).
The fairness tax also applies to non-resident companies (i.e. companies with a Belgian permanent establishment). By ‘distributed dividends’ one must understand the part of the dividends distributed by the company in proportion to the positive share of the accounting result of the Belgian establishment in the global accounting result of the company.
The fairness tax enters into force as of assessment year 2014. Each change made as of 28 June 2013 to the closing date of the financial year will be disregarded for the application of the fairness tax.
The law containing miscellaneous measures also contains other tax measures such as:
- Introduction of the obligatory mention in the individual tax return of the existence of a “legal construction” which the taxpayer, his spouse or dependent children has either established or of which he is the (potential) beneficiary – as from assessment year 2014;
- Adjustment of the exempt amount of the non-recurrent results-linked benefits to the maximum amount which is applicable for social security purposes since 1 January 2013 – as from 1 January 2013;
- Increase of the general exemption of payment of wage withholding tax for SMEs (in the meaning of article 15 of the Companies Code) – percentage to be determined by Royal Decree – as from 1 January 2014;
- Capital gains realized at the repurchase of shares in undertakings for collective investment (more than 25% invested in fixed income products) without European passport will also be subject to a withholding tax of 25% (now already applicable on such undertakings with European passport) – as from 1 July 2013;
- The withholding tax of 25% borne by Belgian investment companies on their received Belgian dividends will no longer be creditable and repayable with the exception of compartments of investment companies which are exclusively held by organisms for the financing of pensions – as from assessment year 2014;
- Abolition of the VAT exemption for lawyers – as from 1 January 2014;
- Adjustment of several taxes on the financial sector.