Draft Programme Act submitted: some tax-related topics highlighted

There has been a great deal of hullaballoo in the media in recent months concerning the possible overhauling of the corporation tax system, and for many this was a tense time as they waited to see whether or not these comprehensive reforms would be introduced together with the new year.

But it is now evident from the draft Programme Act, which was published on 7 December 2016, that the thorough overhaul has been put on ice for now.

The major changes to corporation taxes as of 1 January 2017 involve the increase of withholding tax, which we already covered in our last edition, the adjustment to the tax on inter-group profits on shares, increased taxation for company vehicles, the scrapping of the speculation tax and the wider scope of the taxes on stock exchange transactions. We shed light on these changes below.

1. Company vehicles to be more expensive as of 1 January 2017

40% taxable benefit in kind in the non-deductible expenses for reimbursing fuel costs

As of 1 January 2012 a new non-deductible expense was introduced, equal to 17% of the benefit in kind added for use of company vehicles for private purposes.

After 1 January 2017 this non-deductible expense will be increased to 40% of the benefit in kind for those vehicles for which fuel expenses are reimbursed by the company. The draft act does not specifically address fuel cards, which means that other means of reimbursement, such as expense claims, are also being targeted. Moreover, the 40% rate will also apply if the employer only covers a part of the fuel expenses.

Just like the current 17%, the 40% of the benefit in kind is the minimum taxable base for the company, given that no tax deductions can be applied. This means that even loss-making companies could see their corporation taxes head northwards.

Own contribution benefit no longer relevant

Originally it was only those benefits that were reported in form 281 or in the wage certificate that were targeted, and those benefits that were wholly or partially reduced by means of an own contribution did not have to be subjected to the 17% rate, either in their entirety or for part thereof.

This distinction is now set to end, with all benefits henceforth to be subjected to the 17% or 40% rate, irrespective of whether or not an own contribution has been paid. Examples include those benefits that are processed through the current account or that are offset by means of invoicing or through salary payments.

Reference CO2 emissions for 2017

For cars powered by a petrol, LPG or natural gas engine, the reference CO2 emissions is to decrease to 105 g/km. For diesel-powered vehicles the figure stands at 87 g/km.

This decrease will in turn also result in an increase when it comes to taxable benefits in kind.

Company vehicles are just getting costlier for companies

The above tax measures are only the first step towards the overhaul of the mobility budget. It is moreover looking like becoming a general trend that the approach to company vehicles by the tax authorities will become a permanent feature for making up the budget deficit. This means that CO2 emissions and the taxable benefits in kind with regard to these vehicles will in the future be even more significant factors when it comes to deciding on the composition of a company fleet.

In light of these new changes, we believe this is a good time to analyse your company’s current fleet and to take these new factors into account when buying or leasing new vehicles.

2. Tax on inter-group profits on shares

In terms of the contribution of shares from one company to another company by a natural person acting within the framework of the normal management of their private capital, the increase to the fiscally paid capital resulting from such a contribution is to be reinterpreted.

As of 1 January 2017 only that part that is equal to the purchase price of the contributed shares will be deemed to be fiscal capital. This means that the fiscal capital will no longer be equal to the actual value of the shares at the time of the contribution.

The difference between the purchase price and the actual value of the shares will henceforth qualify as a taxed reserve in the capital. When the capital is distributed at a later stage, that portion that pertains to the taxed reserves will then be subject to 30% withholding tax or to a corresponding once-off rate as part of the personal income tax.

The clear intent of the authorities is to use this restriction to prevent inter-group profits being paid out tax-free to the contributor by means of a future capital decrease.

The draft act does not distinguish between contributions to Belgian and foreign companies.

3. Speculation tax to go, while taxes on stock exchange transactions to be extended

The speculation tax that was introduced last year as a levy on the fast sale of listed shares is to be scrapped, after a very short existence indeed.

But the scope of the tax on stock exchange transactions is to be widened to include investments abroad, while the current ceiling for the tax is to be doubled.

Starting on 1 January 2017 the following maximum sums will be applicable under the draft act:

  • €1,300 for the sale and purchase of bonds
  • €1,600 for the sale and purchase of other securities
  • €4,000 for the sale and purchase of capitalisation shares

In principle, the above changes have to be published by the end of this month in order to take effect from 1 January 2017.

We will keep you updated.

Quickly detect system risks
Without a Legal Entity Identifier your company will not be trading on the stock market in 2018
  As from 3 January 2018, every legal entity that buys or sells financial instruments must have a Legal Entity Identifier or LEI. Legal Entity Identifier A LEI is a 20-digit alpha-numeric code enabling quick identification of legal entities that are active on the (international or local) financial markets. The LEI enables regulators to quickly detect system risks. Registrati
A summary of the main points
Immovable property leases to include VAT
  Although currently there is just a draft bill on this issue, which obviously can be subject to change in the meantime, we would like to summarize the main points of the upcoming revolution in the VAT landscape: immovable property leases may become subject to VAT. History Until recently, immovable property leases have – in principle – been exempt from VAT (section 44, paragr
UBO = Ultimate Beneficial Owner
The UBO register: new disclosure requirements planned for your company’s administrative body
As a result of the insertion of sections 14(1) and 14(2) into the Belgian Companies Code all companies must in the future obtain adequate, accurate and current information about their ‘ultimate beneficial owners’ (UBOs) and record the data in the new ‘UBO Register’, a central register containing data about companies and the natural persons behind them. In view of the unwavering atte
Introduction of the matrimonial property law
Is it the end of the final set-off clause or is it getting new life?
  Much has been said about the final set-off clause in recent years. After the Court of Cassation in 2017 ruled in favour of the tax payer that the claim was deductible in the scope of the payable succession duties, the Flemish regulator decided to come to the aid of the tax authorities by changing the law. What is a final set-off clause and how does it work? Many spouses married un
Also the unequal treatment gets reviewed
Benefit in kind for housing: how to anticipate the higher or lower scenario?
Discrimination as regards the benefit in kind for housing has been highlighted on several occasions. Specifically, it relates to the unequal treatment of the same benefits, whether in terms of provision by a sole trader or provision by a legal person. In the most common cases, the benefit arising from being a limited company is almost four times more expensive taxation-wise than the benefit arisin
To reduce the financial burden
Start-up reduction on social security contributions for self-employed persons
The start-up reduction was part of the 'Summer agreement' and took effect on 1 April 2018. With this initiative, the government intends to reduce the financial burden of self-employed persons in start-ups, who often have low incomes at the start of their activity, thereby stimulating entrepreneurship.  Which self-employed persons are eligible?  The reduction measure applies to all se
A full overview
Your mortgage in the personal income tax return assessment year 2018
The new tax return form for personal income for tax assessment year 2018 has recently been published, so it is high time to examine how you can correctly fill in your mortgage in your personal income tax return. The biggest change in 2017 occurred in the housing taxation system of the Brussels-Capital Region. The other regions have all maintained a status quo compared to last year. A full overview
The labyrinthine of the personal income tax return made more user-friendly
Personal income tax return: changes to the form for assessment year 2018
On 6 April 2018, the model for the personal income tax return form relating to assessment year 2018 was published.
we will analyse the guidelines related to this reform
After the new inheritance law comes the ‘drastic’ reduction in inheritance tax… or not yet?
Further to the inheritance tax reform and the changes planned in the matrimonial property law, the Flemish government has also announced a change to inheritance tax. The aim was not only to simplify, relax and reduce this grief-related tax, making it more in tune with the new inheritance law, but also to create more alignment with new family relationships. There was talk of a ‘drastic’ change
Revolutionary decree
Belgian Tax Administration rebuffed: exit “subject-to-tax clause”?
On 25 January 2018, the Court of Cassation reached a remarkable decision in the context of allocation of taxing rights for professional income earned within an international context. The dispute In concreto, the case pertained to professional income earned by a professional cyclist. During the period 2007-2009, said cyclist was engaged by a Belgian employer and participated in numerous races a

Subscribe to our newsletter