From now on, also 'high' fixed cost deductions for self-employed and other changes
The new personal income tax return form for assessment year 2019 was published on 7 April, the starting shot for the annual tax return race. For the Flemish tax return, "only" 6 codes have been added, and for the Walloon and Brussels tax returns, "only" 7 codes each. However, don't celebrate too soon, because there are a lot of new measures that will come into play as of this year. Fortunately, with the scrapping of 'old' codes, the increase in the number of new codes is limited. Below is an overview of the most important new codes/changes.
Additional tax reductions
In 2018, the federal government introduced a number of new tax reductions, most of which therefore received a new code.
Pension agreement for self-employed persons 'POZ' (code 1342/2342)
Since 2018, in addition to the existing private supplementary pension for the self-employed (Vrij Aanvullend Pensioen voor Zelfstandigen), self-employed persons can also build up additional pension savings through the pension agreement for self-employed persons (POZ). However, not all self-employed people can do this, only self-employed people not in a company (self-employed people with profit or with income and assisting spouses) are eligible in this respect. In order to limit the increase in new codes, it was decided to include this under 1 code with the tax reductions.
In this code, self-employed people need to include the amount paid for their new POZ, which entitles them to a tax reduction of 30%. At the end of their career, self-employed people pay 10% tax on their POZ capital.
Shares in growth companies (code 1334/2334)
In 2015, a tax reduction was introduced for investments in shares of starting SMEs ("tax shelter") and since last year it has also been possible to invest in so-called "growth companies", in a tax-efficient way, if these companies issue new shares as a result of a capital increase. An SME is a starter for the first four years after its incorporation, and for the subsequent six years it will be a 'grower'. In addition, growth companies are required to increase their workforce or annual turnover by at least 10% per annum on average over the previous two years. The investment (for start-ups and growth companies combined) is fiscally capped at €100,000 per year and per person. Investing in a growth company gives the right to a 25% tax reduction, i.e. a maximum of €25,000 tax advantage (provided that a given amount in taxes is paid, at the normal progressive tax rate). The tax return must include the amount of the investment, and the tax authorities will then calculate the tax reduction.
Privak-pricaf losses (code 1329/2329)
This code will be used exceptionally if a loss or depreciation is incurred in the event of the complete liquidation of a privak-pricaf set up after 2017. This loss can be deducted up to a maximum of €25,000, and 25% of it can be recovered.
Adoption costs (code 1341)
In the year that an adoption procedure was terminated (completed or terminated prematurely), a tax reduction of 20% can be claimed for adoption expenses incurred since 1 January 2013. This relates to costs incurred in connection with the eligibility procedure, paid to the recognised adoption service, administrative expenses, travel expenses to and from the country of origin of the adopted child, and subsistence expenses in that country.
The tax reduction is limited to €6,150. The calculation of the tax reduction must be made by the taxpayer and the result must be included in code 1341.
New tax exemption for dividends (code 1437/2437)
This exemption, introduced to activate the savings of Belgians, is limited to the first tranche of €640 on share dividends. This exemption is not applied at source and must therefore be claimed via the personal income tax return. The withholding tax which was unduly withheld on this first tranche must be included in these codes. Since there is no standard tax certificate to support the exemption, the documents and bank statements relating to the payment of the dividends and the withholding tax withheld must be kept up to date so that they can be presented in the event of an inspection.
New notification requirements (code 1072/2072)
The first new notification requirement is that, in codes 1072/2072, you need to notify if you were the holder of more than one securities account during the course of 2018. This notification requirement has been introduced as a result of the new tax on securities accounts with an average value of €500,000 or more. If you have several securities accounts with a lower amount, you need to make a return for this tax on your own initiative. Such notification will enable the tax authorities to carry out more targeted checks in this area.
The second notification requirement, which applies to more people compared to last year, concerns foreign bank accounts. Individuals who are managers of the foreign bank accounts of a de facto association, must now also report this in their tax return (and also include the taxable movable income obtained on those accounts in their tax return).
Untaxed additional income (code 1460 and 2460)
Although at first sight it may seem contradictory to include income within the framework of the system of "untaxed additional income" in the tax return, this is only required if the monthly limit (€510.83) or the annual limit (€6,130) for untaxed additional income is exceeded. If that is the case, professional or miscellaneous income taxes come into play.
New fixed costs for self-employed people making profit
From 2018, 'self-employed people making profit' (trade, industry, agriculture, etc.), who declare their professional income in box XVIII, can enjoy the same statutory fixed costs as employees. The fixed amount is 30% of income, with a maximum of €4,720 for 2018. For self-employed persons in their secondary occupation with limited professional costs, this can be an attractive alternative to proving their actual professional costs.
Given that the fixed costs are calculated automatically by the tax authorities, the items that are first deducted from the gross profit (social security contributions, goods sold and raw materials) for the application of the fixed amount must be known. For the social security contributions, that is via the introduction of the new codes 1632 and 2632, but there is no new heading for the deduction item 'goods sold and raw materials'. This is solved by explicitly stating in the official explanatory note to the tax return that the gross profit to be declared is the amount AFTER deduction of the purchase price of goods sold and raw materials (which in most cases corresponds to the gross margin). This purchase price is therefore not part of the professional costs in the tax return; it is simply not a part of the gross profit to be declared.