Belgium

Details

  • Service: Tax & Legal
  • Type: Business and industry issue
  • Date: 06/04/2012

Program law published in Belgian Official Gazette 

E-Tax Flash
On April 6, 2012 the program law was published in the Belgian Official Gazette. Compared to the draft program law on which we reported earlier (see e-tax flash of 27 January), a few small changes have been made. Please find hereafter a summary of the most important tax measures.

Benefit in kind for company cars

 

The benefit in kind resulting from the private use of a company car is, as from 1 January 2012, calculated in function of the catalogue value and the CO2 emission based on the following formula:

 

Benefit in kind = 6/7th x catalogue value x C02 coefficient

 

The catalogue value corresponds (in all cases) to the catalogue price of the vehicle in new condition in case of a sale to a private individual, options and actually paid VAT included, without taking any discounts, reductions, rebates or refunds into account.

 

The catalogue value will be adjusted in function of the age of the vehicle. Starting as from the date of the first registration of the vehicle, the catalogue value will be multiplied by a factor:

 

Period elapsed since the first registration (a started month counts as a full month)  Percentage
 From 0 to 12 months    100% 
 From 13 to 24 months  94% 
 From 25 to 36 months  88% 
 From 37 to 48 months  82% 
 From 49 to 60 months  76% 
 As from 61 months      70% 
    
With regard to the wage withholding tax, this ageing coefficient will only be applicable as from 1 May 2012.

 

Capital gains on shares

 

The corporate tax exemption of capital gains on shares will as from assessment year 2013 be subject to the additional condition that the shares were held in full ownership for an uninterrupted period of at least one year. In case this condition is not fulfilled, the capital gains will be taxable at a rate of 25,75%.

 

Capital gains realized by companies subject to the accounting decree for banks and investment entities, on securities that are part of their trading portfolio, will be taxable at the normal tax rate of 33,99%. Write-offs and capital losses on these securities are fully deductible.

 

General thin cap rule

 

The deduction of interest on loans will be disallowed in case, and to the extent of the excess, the total amount of these loans is higher than five times the sum of the taxed reserves at the beginning of the taxable period and the paid-up capital at the end of this period.

 

The deduction limitation is applicable if the beneficial owners of the interest

  • are established in a tax haven; or
  • are part of a group whereto the debtor belongs.

 

The term “loans” does not include bonds issued by public offering and loans granted by financial institutions.

 

The beneficial owners of the interest will be deemed to be established in a tax haven if they are not subject to income tax or, in respect of that interest income, are subject to a substantially more favorable tax regime than the Belgian common tax regime.

 

The term “group” refers to the whole of affiliated companies within the meaning of article 11 of the Companies Code.

 

In case of loans guaranteed or eventually funded by third parties, the latter will be deemed to be the beneficial owners of the interest of the loan, if that guarantee or funding has tax avoidance as its main purpose.

 

The thin cap rule is not applicable to loans contracted by:

  • companies engaged in movable leasing and companies with factoring or real estate leasing as their main activity, and this within the financial sector and to the extent that the sums borrowed are effectively used for leasing and factoring activities;
  • companies of which the main activity consists of the execution of a public-private partnership project won by public tender.

 

Entry into force: date yet to be fixed by Royal Decree, but no later than July 1, 2012 (meanwhile a solution for cash pooling and intra group financing companies will be sought).

 

General anti-abuse provision

 

The general anti-abuse provision as laid down in article 344, §1 BITC 1992 and article 18, §2 Registration Tax Code has been rewritten. Legal acts cannot be opposed to the tax authorities, when it can demonstrate tax abuse based on objective circumstances.

 

There will be tax abuse when the taxpayer through his legal acts

  • either puts himself outside the scope of a legal provision contrary to that provision’s aims
  • or claims a tax benefit offered by a legal provision and granting that benefit would be contrary to that provision’s aims and the taxpayer essentially aims to obtain that benefit

 

The taxpayer can deliver counter-proof by demonstrating that the choice for his legal acts is justified by other motives than tax avoidance.

 

If the taxpayer cannot deliver, the taxable base and the tax calculation are restored in such a way that the transaction will be subject to taxation as if that abuse had not taken place.

 

Entry into force:

  • Art. 344, §1 BITC: as from assessment year 2013, and on legal acts during the taxable period closing no earlier than April 6, 2012 and which is linked to assessment year 2012. Any change to the closing date since November 28, 2011 has no effect.
  • Art. 18, §2 Registration Tax Code (and art. 106 Inheritance Tax Code): legal acts as from June 1, 2012.