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. The main change is undoubtedly the 'regionalisation' of the form. In addition, a number of changes have been made to the formal aspects, often without significant consequences for the taxpayer. Below, we discuss these formal changes compared to last year, item by item.

Regional forms
Until last year, the preparatory form for the personal income tax return consisted of a single form which was applicable to all Belgian inhabitants, regardless of the region in which the person was located. As a result, footnotes were used to identify the region to which certain codes applied or did not apply. By working with three different tax return forms from this year onwards, this will no longer be necessary. For example, the codes relating to the federal part are always the same in the different forms, but as regards regional matters, only the codes that apply to inhabitants of that particular region are shown. As such, codes that are only applicable in Flanders (e.g., the integrated home deduction) will not appear on the form which needs to be filled in by a Brussels resident.

Changes relating to Item II: Personal data and family dependencies
Whether you are unmarried, divorced or separated, the tax consequences are the same: you will be taxed as a single person. Whereas last year a different code needed to be filled in each time, from assessment year 2018 onwards, these situations are brought under the same code (code 1001-66). In addition, you no longer have to indicate whether you were separated during the 2017 income year, as again, the result will be the same for tax purposes. The result: 4 fewer codes!The same logic is applied for married couples and legal cohabitants: from assessment year 2018 onwards, they need to tick the same code (code 1002-66), meaning that another 3 codes are eliminated. Finally, code 1027-40 (a taxpayer who died in the income year and was neither married nor legally cohabiting, nor had become a widower or widow in that year) has also been eliminated as this information can be inferred from the other codes.

In addition to these changes, there will also be two new codes in item II. Given that, from assessment year 2018 onwards, additional benefits are provided for taxpayers who are taxed as single persons for tax purposes and who have dependent children, code 1101-63 has been added. With this code, the taxpayer confirms that no persons were part of the family other than (grand)children, (grand)parents, brothers or sisters, meaning that (provided that the other conditions are met) they may be entitled to additional tax benefits (increased tax-free allowance and increased reduction for childminding expenses). From assessment year 2018 onwards, certain maximum amounts for persons who were not resident in Belgium for the full year will be proportional to the number of months they were resident here. Finally, to be able to apply this pro rata amount, the taxpayer must indicate in the new code 1199-62 the number of months that they are considered to be a Belgian resident.  

Changes relating to Item IV: Wages, salaries, etc.
In the preparatory form as well as on sheet 281.10, share options are no longer mentioned separately. Consequently, the applicable codes (code 1249-12 and 1248-13) have been eliminated. This income is now simply indicated under code 1250-11. As regards overtime in the hotel and catering industry, a change to the text has been implemented, which has no effect on the substance. As from this year, reference is made to the category of employer (with or without a registered cash register system) instead of the maximum number of overtime hours for which the tax arrangement applies.

Several codes have been added to unemployment benefits with company surcharge (the former "bridge" pension). From assessment year 2018 onwards, there may a situation of arrears in relation to the period from 1 January 2016. To differentiate between ordinary remuneration, '(≠ achterstallen)' (arrears) has been added to the existing codes and codes 1339-19 and 1340-18 have been added, with the possibility to indicate arrears. Finally, foreign income is no longer reported as 'exempt by agreement' in order to implement the new internal legal exemption for remunerations paid or granted by 'international tribunals'.

Changes relating to Item V: Pensions
From this year onwards, item V no longer contains code 1425-30/2425-97 (early collection of the tax on long-term savings). This anticipatory levy of 1% per year between 2015 and 2019 was initially regarded as a deductible but non-reimbursable withholding tax. However, the legislator has decided that this early collection must be treated as an ordinary withholding tax, whereby the remaining amount can be indicated under the normal code 1225-36/2225-06 (and is therefore reimbursable).

Changes relating to Item VII: Income from capital and movable assets
From assessment year 2018 onwards, dividends from recognised cooperative companies on which no withholding tax on income from movable assets has been deducted, and the interest and dividends from recognised companies with a social purpose (after deduction of the exempted tranche of €190) no longer need to be reported separately. They will simply be included in the other income without withholding tax on income from movable assets. As such, 12 headings have been eliminated. Of course, the text has also been amended to take account of the increase in the general rate of the withholding tax on income from movable assets, from 27% to 30%.

Changes relating to Item IX: Interest, capital repayments, etc.
Since the 6th State Reform, housing taxation has been regionalised as regards taxpayers' own homes. The regions have all been able to introduce their own systems in this respect. As a result, there was a plethora of specific codes last year (including footnotes) to take advantage of all the different systems in a single form. Given that a regionalised form has been used this year, only the applicable codes are now shown in this item. The item always consists of 2 sections. The regional codes are shown in section 1. For example, the Flemish version refers to the 'geïntegreerde woonbonus' (integrated home deduction), the Walloon version to the 'chèque habitat' (housing cheque) and, in the Brussels version, there is no longer any deduction on offer for mortgages taken out in 2017.

The new codes in this part of item IX are usually requested in order to determine the correct system and tax basket. More information about housing taxation (including the correct new codes and boxes) can be found in the article "Uw woonlening in de aangifte personenbelasting aanslagjaar 2018" (Your mortgage in the personal income tax return 2018). The second section of this item relates to the non-own home (a federal matter) and is therefore identical in the 3 versions. There are no changes in this respect.

Changes relating to Item X: (Expenses giving entitlement to) tax reductions
This section also makes a distinction between regional tax reductions (heading 1) and federal tax reductions (heading 2). As a result, section 2 is again identical in the 3 different versions. Compared to last year, only 1 change has been included in this section as part of the federal tax reduction for acquiring new shares in start-ups. With the reversal of the previously obtained tax reduction (code 1328-30/2328-97) there is no longer reference to recoveries by the early transfer of shares. By eliminating this phrase, it is made clear that there are other situations where the previously enjoyed tax reduction can be recovered.

Changes relating to Item XI: Regional tax credits
Given that this is a regional matter, it will come as no surprise that this item also differs in the Flemish, Walloon and Brussels versions of the tax return. In Flanders, it is the 'winwinlening', (win-win loan) while in Wallonia it is known as the 'Coup de pouce' (helping hand). As there is currently no regional tax credit applicable in the Brussels-Capital Region, this item is empty in the Brussels version.

Changes relating to Item XIV: Foreign bank accounts, life insurance policies, legal structures and start-up loans
As regards legal structures, the form for the assessment year 2018 no longer refers to a 'third party beneficiary', as this concept has been eliminated. Instead, the taxpayer needs to indicate whether they, their partner or their children have received a dividend or any other benefit from a legal structure. Any payout from such structures will be taxed as a dividend on the part of the person receiving it.

Changes relating to Item XVI: Miscellaneous income
With regards to miscellaneous income, there are 3 changes. Here too, the increased general rate of the withholding tax on income from movable assets (30% from 27%) has been implemented. Subsequently, codes 1182-79/2182-49 and 1183-78/2183-48 for capital gains realised on the 'rapid' transfer of shares (the so-called speculation tax) have been deleted following the abolition of this tax.

Finally, codes in the context of the sharing economy are included (new codes 1460-92/2460-62 and 1461-91/2461-61). Income from the sharing economy will be considered as miscellaneous income, as long as it is less than €5,100. Above this threshold, the income (unless proven otherwise) will be considered as professional income.

Changes relating to Item XVII: Remuneration of company directors
As is the case in item IV, the separate codes for share options have been eliminated and this income must be included in code 1400-55/2400-25 from assessment year 2018 onwards. In addition, certain exclusions are provided for as regards the income which is eligible for the calculation of the 'tax credit for low activity income'. As such, it will no longer be the case that only the remuneration that a company director receives in employment is excluded, but also the income as a self-employed person in a secondary profession, or the income as a student-self-employed person. As a result, the text for code 1411-44/2411-14 has been changed.

Changes relating to Item XVIII: Profits from industrial, commercial or agricultural businesses
In line with the changes to Item XVII, the text of Code 1617-32/2617-02 has also been extended to income earned as a student-self-employed person for the correct calculation of the tax credit for low activity income.

Conclusion
Despite the various minor changes, we can see that the form is much more user-friendly this year. Many codes have been eliminated, while only a few have been added. This is a step in the right direction, providing several pointers in the labyrinthine personal income tax return, meaning that an accurate tax return can be submitted.

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