On 11 October, the Belgian federal budget for 2023 and 2024 was approved. The new budget agreement will have a tax impact for individuals and companies established or operating in Belgium. Below is an initial discussion of the tax measures announced in this context.
A. Measures mainly affecting individuals
- Curtailment of scope of copyright regime. The current tax regime under which copyright income is subject to withholding tax of 15% after deduction of lump sum expenses up to 50% will be curtailed. A transitional period of two years would apply.
- Abolition of tax relief for second homes. From 2024, tax relief for second homes will be abolished.
- Extension of the scope of flexi jobs and increase in hours for student jobs.
B. Measures mainly affecting companies
- Reduction of employer contributions on indexed wages for quarters one and two of 2023. So that the index jump in January can be absorbed by companies, the employer contribution on indexed wages will be largely removed next year during the first two quarters.
- Limitation on offsetting of carried forward tax losses. Tax losses from previous taxable periods are only deductible to a limited extent if the profit of the current taxable period exceeds EUR 1 million. For income year 2023, large companies would be able to offset only 40% instead of 70% of profits higher than EUR 1 million against carried forward tax losses. The basket of EUR 1 million will be retained.
- Restriction of deduction for risk capital. From financial year 2023, the application of the deduction for risk capital will be restricted.
- Profits tax for energy producers. This will be retroactive. Between 1 January and 1 November, excess profits above EUR 180 per MWh will be taxed (retroactively). From November to June, excess profits above EUR 130 per MWh will be taxed additionally. It is worth noting that these proposed measures are stricter than those proposed by the European Union.
- Additional contributions for the gas grid operator and companies in the petroleum sector. The announced annual contribution for each of these two categories would amount to EUR 300 million per year.
- Financial institutions will no longer be able to deduct the bank tax. Moreover, there will be an additional tax on insurance companies.
C. Indirect taxes
- Increase in the excise taxes on tobacco and the introduction of excise taxes on electronic cigarettes. However, the envisaged new rates have not been announced.
- Extension of the eco-tax on polluting packaging.
The budget agreement has not been finalised at this stage. We expect additional information on this to be provided soon and we will keep you informed.
For more information on Belgium's budget for 2023 and 2024 and how this budget might affect your business, contact your CMS client partner or local CMS experts.
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