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Tax Specialist Group
Corporate Tax Guide: Belgium
Belgium

Members:

The information is valid for the entire country except where indicated. For example, in the case of Malaysia, Labuan is part of Malaysia but has a special tax regime, so this is noted.
Belgium.
The corporate tax rate shown is the typical corporate tax rate that a domestic corporation owned by non-resident persons would pay. The tax rate does not include withholding tax on dividends, but does include a distribution tax shown separately if applicable. Certain countries have a low corporate tax rate, but charge an additional tax when a dividend is distributed. Because this tax is paid by the corporation, and not deducted from the amount of the dividend itself, it is not a dividend withholding tax. As a result, it typically cannot be reduced by an international tax treaty.
24.98% to 33.99%, including 3% surcharge and depending on bracket of net taxable income (33.99% rate applies to net taxable income of 322.501 Euro and over).
The basis of taxation for a corporation will typically be one of:
  • World income (i.e. income from all sources)
  • Territorial (i.e. only income from within the jurisdiction)
  • Territorial and remittance (income earned within the jurisdiction and income remitted into the jurisdiction)
Other basis of taxation are possible, and, if applicable, they are noted.
World income.
Where non-resident corporation carries on business in a country, business profits may be subject to corporate tax. In addition, a branch profits tax may apply in lieu of dividend withholding tax. This branch profits tax applies to the after tax profits, typically at a fixed percentage. An international tax treaty may reduce the rate of branch profits tax, typically to the rate provided for dividend withholding.
No.
The common forms of business entity are noted. In addition, the entities which are flow through entities for U.S. tax purposes are indicated.
Most commonly-used forms of corporations are: the Public Limited Liability Company (“Naamloze Vennootschap”/“Société Anonyme”) and the Closely Held Limited Liability Company (“Besloten Vennootschap met Beperkte Aansprakelijkheid”/“Société Personelle à Responsabilité Limitée”).

Different forms of partnerships exist, such as the “Factual partnership” or “Feitelijke Vereniging”/“Assocation de Faits”), the Undisclosed Partnership or the Temporary Partnership. In most cases, these partnerships are treated as look-through entities for corporate income tax purposes.
Capital gains may be fully taxed, partially taxed or not at all. In certain countries, an exemption, called the participation exemption, will apply to exempt from tax a capital gain from disposition of a substantial holding of shares of a subsidiary. Where a participation exemption is applicable, it is noted together with a summary of the main conditions.
Generally capital gains are included in income, so taxed at the same corporate income tax rate. Capital gains realised on the sale of tangible or intangible fixed assets held for more than five years in the company’s business, and gains resulting from involuntary dispositions of tangible or intangible fixed assets, are eligible to benefit from a tax deferral regime, provided that the sale price or the insurance or expropriation indemnity is reinvested in the business and the “intangibility” condition is respected.

Capital gains realised on the alienation of shares that qualify for the dividend-received deduction are fully exempt from corporate tax provided the shares have been held for at least 12 months and provided the so-called “subject to tax” test is met.
Certain countries allow group taxation, otherwise known as consolidated tax filing. Here the tax returns of a group of corporations in the country may be combined together, which can be useful. If group taxation is permitted, it is noted along with the main conditions.
Not permitted.
Countries offer various kinds of special exemptions and incentives. Examples are a reduced tax rate, a tax holiday, a tax credit on the purchase of equipment, special accelerated deductions for deprecation, incentives for R&D, and various others. Here the major items are noted.
  • Notional Interest Deduction (NID): This is a deemed interest deduction calculated on the basis of the risk-bearing adjusted net equity of the company or Belgian permanent establishment. The basic rate for tax year 2017 is 1.131% with an increased rate of 1.631% for Small and Medium Enterprises (SMEs).
  • Investment Deduction: This is a certain percentage of the acquisition or investment value of qualifying assets that can be deducted from the taxable basis in addition to the amount of depreciations. The kinds of investments that qualify for this are investments in energy saving equipment, so-called “Green investments”, investments in certain security devices, investments for the recycling of packaging material and investments in certain sea-going vessels, etc. The basic rate ranges from 3% to 30% depending on the nature of the investment.
  • Innovation Deduction: Enterprises doing their own R&D may benefit from a tax deduction of up to 85% on the future profits generated by intellectual property rights (resulting in an effective tax rate of 5.1% on qualifying profits).
  • Tonnage Tax: Taxable profits from sea vessels (i.e., from the exploitation of sea vessels for the transportation of goods and/or passengers in international traffic on the sea, or from the exploration of natural resources on or in the sea, etc.) can be determined on the notional basis of the tonnage per sea vessel and per day.
  • Carat Tax: This is a clear-cut and predictable fiscal regime that applies to diamond trading companies. The regular corporate tax rate is levied on taxable income that is calculated on the basis of a lump sum margin instead of on the actual margin that is realized. The gross margin used for taxation purposes is 2.1% of the turnover. Subsequently, expenses and tax deductions may be deducted from that gross margin, but the net taxable income cannot be lower than 0.55% of turnover (0.65% for accounting year 2016).
Many countries have thin capitalization rules which limit or deny the deduction of interest expense in certain circumstances. For example, if debt exceeds three times equity, a proportionate amount of interest expense may not be deductible. Limitations take various forms, restricting the interest expense deduction to a percentage of profit, deeming the debt to be equity and the interest to be a payment of dividends, and various other rules which may blend of these principles. Where a country has thin capitalization rules, they are briefly described.
Yes. 5:1 debt-to-equity ratio for interest on debt from so-called “off shore” beneficiaries or from beneficiaries that are part of the same group of companies (affiliated companies - generally 20% shareholder).
Many countries have transfer pricing rules. They very often follow the OECD guidelines and the arms length principle. Some countries have specific rules which apply in certain cases. In addition, some countries allow for a selection of the most appropriate transfer pricing methodology in the circumstances, while other countries follow a hierarchy of methods, with the CUP method (comparable uncontrolled price) often ranking first. The transfer pricing rules are briefly explained.
Yes. OECD Guidelines.

Due to this increased awareness, the Belgian tax authorities have become more skilled in the field of transfer pricing in the last couple of years. This has resulted in the tightening of the statutory rules on transfer pricing and especially the introduction of a specific provision on transfer pricing in 2004 (article 185 §2 BITC), the adoption of a number of administrative guidelines in the form of circular letters on the issue of transfer pricing, and the putting into place of a special transfer pricing squad and knowledge centre that focuses on transfer pricing issues for companies belonging to a multinational group. Specific TP documentation requirements have been introduced since 2016 and contain a three-tier documentation approach as provided under OECD’s BEPS Action Point 13.
Many countries tax passive income earned in controlled foreign corporations (CFC’s) on an imputation basis while active income is not taxed. Such CFC rules are usually complex and vary significantly in what is considered passive income, and how foreign tax paid is taken into account. Some countries approach CFC rules on the basis of whether or not the foreign corporation is resident in a low tax jurisdiction or a tax haven. This may be done through a black list of countries.
The general overview of CFC rules is described in simple terms.
Yes. Referred to as the “Cayman Tax”.

The Cayman tax is a tax charge on certain income from certain legal constructions, in the hands of Belgian individuals (and Belgian entities subject to legal entities income tax). Legal constructions within the scope of the Cayman Tax are deemed to be tax transparent. A distinction is made between two categories of legal constructions:
  • trusts and other structures without legal personality;
  • foreign entities (with legal personality) that are subject to an effective tax rate lower than 15%; within the European Economic Area (EEA), only the types of entities listed in a Royal Decree are in scope.
The taxpayer has to mention in his/her yearly tax return the existence of (and details about) a legal construction of which he/she (or his/her spouse or children) is the founder or the third-party beneficiary.

The measure is applicable to income that was obtained, attributed or paid by a legal construction as from 1 January 2015.

Under these new provisions, the income from certain legal constructions becomes taxable for the private individual before actual distribution of the income. Consequently, the owner (founder, beneficiary) may be taxed on income that he/she has not yet received.
Profits repatriated by way of dividends from a subsidiary to a parent company are typically taxed in one of three ways:
  • The dividends are exempt of tax.
  • The dividends are deductible from taxable income, but not fully (90%, for example, of the dividend is deductible).
  • The dividend is taxable, grossed up to the pre-tax amount, and a foreign tax credit claimed for foreign taxes paid.
The applicable method is noted.
Dividend distributions are generally subject to a 30% withholding tax in Belgium.

Certain domestic law reductions or exemptions apply:
  • Reduction to 15% applies to small and medium-sized companies that have been incorporated as from 1 July 2013 by cash contributions or that have implemented a share-capital increase by way of cash contributions after said date. A number of other conditions apply. In the case of increase of share-capital, the reduction to 15% applies gradually over a three-year period.
  • Reduction to 1.6995% to the extent the Belgian withholding tax cannot be recovered by the receiving company in its state of establishment and provided the following cumulative conditions are met:
    • the parent company and the Belgian subsidiary have one of the legal forms listed in the Annex to the EU Parent Subsidiary Directive, or an equivalent legal form in another EEA country, or an equivalent legal form to those of countries with which Belgium has concluded tax treaties;
    • the parent company holds, at the moment the dividend is declared, a participation in the share capital of the Belgian subsidiary of less than 10% but with an acquisition value of at least EUR2,500,000;
    • the parent company has held or will hold the full ownership of the participation referred to under the previous bullet point for an uninterrupted period of at least one year; and
    • the parent company provides the Belgian subsidiary with an affidavit confirming that the required conditions are met.
  • Full withholding tax exemption applies to:
    • dividends paid by a Belgian resident company to a non-resident legal entity that does not exercise a business or professional activity and is exempt from income tax in its state of residence (e.g., a foreign pension fund);
    • dividends paid by a Belgian resident company to a parent company resident in another EU Member State, that holds a stock participation of at least 10% in the capital of the former for not less than twelve months; and
    • dividends paid by a Belgian resident company to a parent company resident in a jurisdiction with which Belgium has concluded a bilateral tax treaty, subject to the same participation requirements as for parent companies resident in the EU (see above), provided that this treaty (or another separate treaty) provides for the exchange of information for purposes of applying domestic tax law between the treaty states.
Generally, most bilateral tax treaties concluded by Belgium provide for a reduction of the Belgian dividend withholding tax rate to 15%, and even 10% or 5% in the case of a substantial participation in the capital of the Belgian company (often 25%), held by a company resident in the other contracting state. Most recent treaties (e.g., the treaty with Hong Kong and with the U.S.) and the Belgian Draft Model Convention provide for a 0% rate for dividends on such substantial participation.
Most countries allow a foreign tax credit based on a formula, typically net foreign income over the net income times taxes payable. This limits the foreign tax credit to roughly the domestic tax otherwise applicable to the foreign income. There are numerous variations and technical rules in the details of foreign tax credit calculations. Where a foreign tax credit is allowed, the general principles are described.
Only applies to foreign source dividends, as well as foreign source royalty income that is taxed at the progressive rates. The foreign tax credit is limited to a lump-sum amount equal to 15/85 of the amount of the net foreign source income, after foreign taxes, irrespective of the amount of the foreign taxes actually paid. This system of lump-sum FTC is generally referred to as the FBB/QFIE system (“forfaitair gedeelte buitenlandse belasting” – FBB / quotité forfaitaire d’impôts étrangers - QFIE) and will be referred to hereinafter as the Standard Foreign Tax Credit system or SFTC.

The amount of the SFTC itself must be included in the taxable basis (grossing up). The SFTC can be credited only against effectively net taxable income of the same tax year (i.e., there is no carryforward or carryback of excess SFTC). Nor is the SFTC refundable.

With respect to foreign source interest income, a system of actual foreign tax credit is applied. The foreign source interest income, less foreign taxes, is included in the overall taxable income with a tax credit corresponding to the actual amount of the foreign tax paid, with a maximum of 15%. The actual foreign tax credit or AFTC amount is calculated as a fraction whereby the nominator is equal to the amount of foreign tax actually paid (expressed as a percentage) with a maximum of 15 and the denominator equals 100, less the amount of the nominator. If the foreign debtor has paid the foreign tax for the account of the creditor, the denominator is equal to 100. The AFTC must be included in the taxable basis of the Belgian beneficiary of the interest income (grossing up). The AFTC can only be credited against effectively net taxable income of the same tax year during which the interest was earned (i.e., there is no carryforward or carryback of any excess AFTC) and the AFTC is not refundable.
14. Losses
Losses typically can be carried forwards for a period of years, and sometimes can be carried back. Losses may be segregated into capital losses and non capital losses.
A Belgian resident company can carry forward its net losses to offset the taxable base of later years without time limitation.

There is a specific successive order for setting off losses against profits depending on the origin of the losses (i.e., from tax treaty countries, from non-tax treaty countries or from Belgium itself). In 2000, the ECJ found this rule to be incompatible with the freedom of establishment of Art. 43 of the EC Treaty (De Baeck), but the decision has not yet been implemented in Belgian tax law.
Losses may be carried forward indefinitely, but they may not be set off against profits derived from abnormal or gratuitous advantages (Art. 207 ITC).

Moreover, a company loses its right to carry forward its tax losses if control of the company is acquired or changed during a tax year, unless the change of control meets the business purpose test (i.e., the change of control can be justified by legitimate financial and economic reasons). It is possible to apply for an advance ruling on the issue of whether the change of control is justified by legitimate financial and economic reasons.

In the case of domestic mergers and spin-offs, recoverable losses may be partially transferred.
It is not practical to list all of the tax treaties which a country has in a simple guide like this. Accordingly, a link is provided in each case to the tax treaties.
Some countries have entered into Tax Information Exchange Agreements (TIEA).
Treaties are more and more containing provisions that limit benefits (LOB provisions).
Yes.
  • Income Tax: approx. 100
  • TIEA: 11
  • LOB provisions: a very limited number of treaties contain LOB or principal purpose test, most do not.
Withholding tax rates vary considerably from treaty to treaty, and countries may have domestic exemptions applicable in certain circumstances (for example copyright royalties, interest paid to arm’s length persons, etc.). A table shows the typical rates but cannot adequately summarize all of the details. The applicable treaty should be consulted.
TreatyNon-Treaty
Interest0% - 10%30%
Dividends5% - 15%30%
Royalty0% - 15%30%
Some countries allow for the selection of year-end while other countries specify a particular year-end which all business entities must have. Normally the taxation year cannot exceed 12 months. Where it can exceed 12 months, this is noted.
Any year-end is available by choice. Cannot exceed 24 months.
This is the due date for filing a tax return. Where extensions are available, this is noted.
Due seven months after year-end. Extensions possible.
The typical tax instalment requirements are noted.
Yes, typically quarterly based on provisions for current year.
This is the date when the corporate tax owing for the year must be paid. It may be different from the tax return filing due date.
Due two months after receipt of tax assessment.
This is the period after which the tax department cannot in normal circumstances reassess a taxation year. It is sometimes referenced to the end of the taxation year and sometimes to the date of the first assessment of that taxation year.
The statute of limitations for income tax is normally three years. However, the three-year period is extended by four years (total of seven) if the tax authorities have reason to believe that the taxpayer has, with fraudulent intent or the intent to harm the interests of the treasury, not declared his or her income.
If a country has exchange controls, this is noted, together with the main requirements.
No.
23. VAT
A VAT tax system typically provides that the supply of goods and services is classified as taxable, tax exempt, or zero rated. Where a business is engaged in an activity which is taxable, it must charge VAT on its revenue, and can claim a refund of VAT on its expenditures. Where the activity is exempt, it does not charge VAT on its revenue, and cannot claim back VAT paid. Where the entity is engaged in activities which are zero rated (typically agriculture, food services and exports), then it can claim back VAT which it has paid on its expenditures, and does not charge VAT on its revenue.
If a country has a typical VAT system, this is noted. If a country has no VAT system but a sales tax system, this is indicated. Some countries may have a mixture, and taxes may apply at different levels (federal and state for example).
Yes. Belgium has adopted a VAT system in conformity with the relevant EU Directives.

The standard VAT rate is 21%, with reduced rates of 0%, 6% and 12%. The 0% rate applies to daily and weekly publications and certain recycled goods; the 6% rate applies to most basic goods, such as food items, water supply and pharmaceuticals; and the 12% rate applies to items such as housing and restaurant services.
Stamp duty, or land transfer tax, can apply on such things as the transfer of shares, land, or the issuance of bonds or debentures. This is described together with the applicable rates.
Applies to any transfer of full ownership on land and/or constructions, buildings etc. Rate varies by region (e.g., Flanders 10%; Brussels Region: 12.5%, Walloon Region: 12.5%).
If capital tax is payable, this is described. Capital tax may apply in specialized industries, such as banking and insurance, even if a country does not generally apply a capital tax to corporations.
Generally none.
Where significant, other taxes are noted.
Payroll taxes, other levies such as worker compensation (for injury).
Anti-Avoidance Rules take many forms, the most common ones are a general anti-avoidance rule, treaty shopping limitations, the requirement for economic substance (or a business purpose in carrying out transaction) and specific anti-avoidance rules for particular purposes. A very brief overview of the anti-avoidance rules is described.
Yes. GAAR.

Under article 344, §1 BITC, tax abuse will arise where a taxpayer carries out a transaction whereby it avoids tax or claims a tax benefit that would be contrary to the legislative intent of the law. A taxpayer can avoid the application of the anti-abuse provision by showing that the transaction is justified by motives other than tax avoidance. This test implies proof that the taxpayer’s choice was “essentially” motivated by non-tax reasons. If the taxpayer fails to demonstrate one or more sufficient non-tax based motives, the tax authorities can “restore” the taxable base and tax computations in such a way that taxation in accordance with the legislator’s objectives is possible, as if there was no abuse.
GAAR applies for income tax, VAT and gift and inheritance tax purposes.
There is no legal obligation to disclose anti-avoidance schemes in advance of the company’s tax return being submitted, but companies can still choose to do so in order to obtain an advance ruling from the Belgian Ruling Committee.
Where a non-resident person holds shares of a corporation established in the country listed, the capital gain which results may be taxable or not taxable depending on the circumstances and, possibly, the existences of an international tax treaty. The general rules are noted.
Sale of shares by non-resident not taxable unless the non-resident is an individual owning more than 25% of the share-capital of the Belgian company.
Where a corporation is acquired through the purchase of shares, sometimes a step up is allowed so that the cost of its assets can be revalued. The main rules are briefly summarized.
Yes, unless the acquisition is a result of a tax-free merger, splitting or other type or tax-free corporate reorganisation.
In some countries, rulings are commonly used (and sometimes even required). In other countries the system is either unavailable or not commonly used except in special circumstances.
Following the creation of the Ruling Commission, taxpayers can apply for an advance decision on the application of direct or indirect tax laws to a particular situation or transaction. However, the Ruling Commission cannot grant any tax exemptions or reductions on the general tax rate, given that it doesn't have the authority to rule on tax rates and tax increases.

The Belgian tax authorities are bound by the ruling. They can, however, set aside the ruling if the taxpayer had not correctly described the facts or does not follow the conditions set forth in the ruling.
31. Other
Other important aspects of the tax system are noted.
N/A