Belgium: New Tax Reform in Belgium - Tax Shift at a glance
A tax shift – literally, a shifting of taxes. In order to cut back the budgetary deficit and to reduce the historical high domestic labor costs, Belgian government has been actively searching for different measures to lower the expenses, increase the government income, reinforce the competitiveness and increase the purchasing power of the population.
Recently, the 2016 Budgetary Agreement has been reached by the Federal Government. Here we will have a quick look at the new measures. Please note that the clarification of the different measures as described below, is based on a draft text of law, meaning future changes cannot be excluded.
- Increase individual income tax allowance and change of the tax rates
The basis individual income tax allowance amounts to 7.090 EUR in 2015. This allowance will increase to 8.400 EUR as from 2019.
Additionally, the tax rates and - brackets will be modified. The tax rate of 30% will disappear and the rate of 45% will be reformed.
Removing the 30% rate will take place in two phases. In 2016, the minimum amount that is subjected to the 30% rate will increase from 8.710 EUR to 10.800 EUR. As from 2018, the 30% rate will fully disappear. With the implementation of this measure, a larger amount of income will be taxed at 25%.
In certain circumstances, tax payers will not benefit from the removing of 30% tax rate. In these cases, tax payers will be compensated with a redeemable tax credit.
That part of the taxable income that is subject to the rate of 45% will also be reformed. In 2018, the minimum amount that is subjected to the 45% rate will increase from 20.660 EUR to 21.290 EUR. A second increase (to 21.880 EUR) will take place in 2019.
Please find here below, an overview of the modifications of the tax rates and – brackets.
|
|
2015 |
2016 |
2018 |
2019 |
|
25% |
0 – 8.710 |
0 – 10.800 |
0 – 12.400 |
0 – 12.400 |
|
30% |
8.710 – 12.400 |
10.800 – 12.400 |
|
|
|
40% |
12.400 – 20.660 |
12.400 – 20.660 |
12.400 – 21.290 |
12.400 – 21.880 |
|
45% |
20.660 – 37.870 |
20.660 – 37.870 |
21.290 – 37.870 |
21.880 – 37.870 |
|
50% |
> 37.870 |
> 37.870 |
> 37.870 |
> 37.870 |
- Increase of withholding tax on movable income
Withholding tax on dividends, interest and royalties will increase from 25% to 27%. The more beneficial withholding tax regimes for certain types of companies will remain mainly unchanged. The beneficial regimes which allow shareholders to receive dividends at a 15% WHT rate will be slightly altered where the rate will increase to 17% instead of 15%. Only the favorable tax regime for dividend distributions by residential property funds will disappear. Consequently a 27% WHT rate will apply to these companies as well.
- Speculation Tax
As from January 1st, 2016, realized capital gains on publicly traded shares, warrants and options will be subject to a speculation tax of 33%. Speculative capital gains imply capital gains realized within 6 months after the initial acquisition. We are awaiting a Royal Decree which will provide more specifications regarding this new tax. Note that this tax will only apply for shares, warrants and options acquired as of January 1st, 2016.
This measure will only apply to natural persons.
- Increase investment allowance for SME’s
Belgian SME’s can profit from the investment allowance measurement (4% for the years 2014 and 2015). As from 2016 the investment allowance will increase to 8%.
Alongside the traditional investment allowance, a new increased investment allowance of 20,5% was introduced for investments in the production of high-tech products. This measure is also applicable for big companies (non SME’s).
Other previous increased investment allowances, for energy conservation investment, patents, environmental friendly investment in R&D and safety and security will remain unchanged.
- Decrease of employers social security contribution
The employers social security contribution will decrease from 33% to 25%. This decrease will be realized in different phases.
In 2016, the employers social security contribution on the employees’ wages and salaries will be reduced between 1% and 2%.
As from 2018, the employers social security contribution on wages and salaries of € 3.000 or more, will amount to 25%. For lower wages and salaries, the employers can enjoy an additional deduction.
In the final phase (2019), there will be an additional deduction of the employers social security contribution on wages and salaries below € 3.000.
With these three phases , Belgian government wishes to create more domestic job opportunities and unburden the Belgian companies with respect to employment.
- Other measures
Furthermore, besides the aforementioned measures, the Agreement has listed other measures to increase the government’s fiscal income and combat tax fraud. These measures include:
- introduction of permanent fiscal regularization (subject to discussion);
- working bonus for employees with low income;
- decrease social contribution of SME’s and self-employed persons;
- exemption on wage tax for night and shift work;
- increase VAT on electricity from 6% to 21%;
- introduction of “Cayman Tax” on the foreign juridical construction;
- increase of duties and introduction of health tax
- increase of certain pension.
VGD Tax Team can help you to calculate the impact of tax shift on you and your company. If you have any queries, please do not hesitate to contact us.
Contact:
VGD Tax / Chinese Desk
+32 52 45 87 41
Hanxun.su@vgd.eu / Anthony.meul@vgd.eu
vgd_panchina_newsletter_january.pdf (462.26Kb)
