• Service: Tax, Global Indirect Tax, International Executive Services, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 7/19/2013

Belgium - “Fairness tax” on corporations, other changes receive approval 

July 19: The Belgian Parliament on 18 July 2013 passed tax law measures under the budget control proposals, including the “fairness tax.”

The law is expected to be enacted and published soon in the Belgian official gazette. The fairness tax will be effective as of assessment year 2014.

Fairness tax

The fairness tax is introduced as a separate tax under the Belgian corporate income tax system and is independent of―and is to be applied, when applicable, in addition to (i.e., on top of)―other corporate income taxes. The fairness tax:

  • Is not deductible
  • Will be due in all situations
  • Will be imposed at a rate of 5.15% (5% to be increased with a 3% crisis surcharge)
  • Is to be made in pre-payment estimated remittances
  • Applies for the tax period for which dividends are distributed (for these purposes, the term “dividends” has specific definitions)
  • Is determined (i.e., the fairness tax base) under a three-step formula
  • Does not apply to small companies
  • Applies to non-resident companies (i.e. companies with a Belgian permanent establishment)

Other tax measures

The law containing miscellaneous measures also contains other tax measures, including:

  • A reporting requirement for individual income tax purposes when there is a “legal construction” established by the taxpayer, spouse, or dependent children
  • Changes to exempt amounts for social security purposes
  • Increase of the general exemption of payment of wage withholding tax for SMEs (small and medium-size entities)
  • Changes to taxation of capital gains realized at the repurchase of shares in undertakings for collective investment
  • Amendment to the withholding tax rules for Belgian investment companies on their received Belgian dividends (i.e., withholding tax no longer to be creditable and repayable with the exception of certain investment companies exclusively held by entities for pension-financing purposes)
  • Repeal of a value added tax (VAT) exemption for lawyers
  • Changes to several taxes imposed on the financial sector

Read a July 2013 report prepared by the KPMG member firm in Belgium: Legislation on ‘fairness tax’ and other tax measures following the budget control has been approved by Parliament

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