The deduction for investment: an illustration of the options

The deduction for investment allows companies and natural persons who earn profits or benefits to reduce their taxable profits by placing part of the acquisition or investment value of investments in new tangible and intangible fixed assets.

Depending on the size of your business and the nature of your activities, you can generally apply the regular, one-off deduction for investment of 20% (temporarily), or the increased deduction for investment of 13.5%.

In principle, the deduction is applied in the taxable period of the investment. However, in certain cases, you can decide to spread the deduction for investment over the depreciation period of the assets.

Bear in mind, however, that the deduction for investment cannot be cumulated with the application of the notional interest deduction. Given the ever decreasing rate of the latter, as well as its recently limited calculation basis, the deduction for investment can provide you with a greater tax advantage in certain situations.

Basic conditions

The following are eligible for the application of the deduction for investment:

  • Investments in depreciable tangible and intangible assets,
  • Which are acquired or established in new condition,
  • During the taxable period,
  • If these assets are used in Belgium for the professional activity.

Basic formalities

To obtain the deduction for investment, taxpayers need to:

  1. attach a completed, dated and signed form (Declaration 275 U for the corporate income tax return; Declaration 276 U for the personal income tax return) to their income tax return for the taxable period in which the fixed assets were acquired or established;
  2. for each category of fixed assets, keep a statement available for the Administration indicating for each asset the date of acquisition or establishment, the correct name, the acquisition or investment value, the normal useful life and the depreciation period.

1. The standard deduction for investment: rate

Whereas the standard, one-off investment deduction was de facto abolished in 2006, since 2014 it has once again become possible for small companies to reduce their taxable base with a standard deduction for investment of 4% of the acquisition value of investments in new tangible and intangible fixed assets.

From 1 January 2016, following the 'tax shift', the deduction for investment was increased even more and a new basic percentage of 8% was introduced. In addition, the scope of the deduction was extended to natural persons who earn profits or benefits.

Finally, following the 'Summer Agreement' (Law of 25 December 2017 on the reform of corporation tax), it was decided to introduce a temporary increase in the rate for natural persons who earn profits or benefits or companies that are considered small pursuant to Article 15 of the Companies' Code. The rate increased from 8% to 20%, for fixed assets acquired or established between 1 January 2018 and 31 December 2019.

2. The increased deduction for investment of 13.5%

In derogation to the standard deduction for investment mentioned above, investments in certain assets give the right to an increased deduction for investment. In principle, this deduction is open to all companies and self-employed persons - regardless of their size or the scale of their activity - with the exception of the increased deduction for investments in digital assets. Indeed, the latter is reserved for entrepreneurs who qualify as small companies within the meaning of Article 15 of the Companies' Code.

The assets which need to be invested in:

  • patents;
  • fixed assets used to encourage research and development of new products and future-oriented technologies that have no impact on the environment, or which are intended to reduce the negative impact on the environment as much as possible;
  • fixed assets which are used to rationalise energy consumption, improve industrial processes for energy purposes and, in particular, recover energy in industry ('Energy-saving investments');
  • smoke extraction or ventilation systems in a smoke chamber of a catering establishment;
  • digital fixed assets which are used to integrate and operate digital payment and invoicing systems, and systems which are used to secure information and communication technology.

For the listed investments, an increased one-off deduction for investment of 13.5% can be applied for assessment year 2019.

However, if the rate of the increased deduction of 13.5% is lower than the temporarily increased rate of 20% of the standard deduction for investment, the taxpayer can choose to use the rate that is most favourable for them, provided that the conditions for the application of the standard deduction for investment are met.

Additional formalities

Patents
To obtain the increased deduction on investments in patents, applicants must also substantiate their statement of assets via a copy of the contract on the basis of which the company acquired the patent or the right to exploit it, and proof that the patent or the right to exploit it has never been used by another company in Belgium in the exercise of its professional activity.

Fixed assets used to encourage research and development of new environmentally-friendly products or future-oriented environmentally friendly technologies.
To be eligible for the increased deduction on environmentally-friendly investments in research and development, a justification document must be kept showing that the fixed assets meet the conditions laid down, or a request must be made for recognition of the assets as necessary for the establishment of a scientific research programme.

In addition, the research purposes for which these assets are necessary must be defined by their purpose, their principles or assumptions, their technical difficulties, their innovative character, their technical and economic advantages and the characteristics of the fixed asset.

Finally, in order to prove that the investment is environmentally-friendly, a certificate must be obtained from the competent Regional Government demonstrating that the new products and future-oriented technologies resulting from the research and development for which the fixed assets in question are used have no impact on the environment, or are intended to minimise the negative impact on the environment.

The form to obtain this certificate can be requested from the Flemish Region at:

Environment Departement,
Partnerships with governments and society department f
Graaf de Ferraris building
Koning Albert II – laan 20, box 8
1000 Brussels
(tel. 02/553.85.03; fax 02/553.80.55)
www.lne.be

Energy-saving investments
For this deduction, a certificate must also be obtained from the competent Regional Government, which demonstrates the energy-saving aspects of the investments. To get an idea of what can be considered as energy saving, you can use the 'Handleiding Verhoogde investeringsaftrek voor energiebesparende investeringen' (Manual for the increased deduction for investment for energy saving investments) issued by the three Regions.

The certificate must be requested by the taxpayer within 3 months after the last day of the taxable period in which the fixed assets were acquired or established, under penalty of expiry.

To request this certificate, the Flemish Region can be contacted at:

Flemish Energy Agency
Ferraris building
Koning Albert II-laan 20, bus 17
1000 Brussels
(tel.: 02/553 46 00; fax: 02/553 46 01)
contact: investeringsaftrek@vea.be
www.energiesparen.be/verhoogdeinvesteringsaftrek/aanvraag

The increased deduction for investment of 20.5%
For investments in tangible fixed assets that are used to secure professional premises or their contents, and to secure commercial vehicles, natural persons and companies that qualify as small within the meaning of Art. 15 of the Companies' Code can benefit from an increased deduction for investment of 20.5% for assessment year 2019.

The deduction for investment in maritime shipping
Domestic companies or Belgian establishments of foreign companies that are exclusively active in the shipping industry can reduce their taxable base with a deduction for investment of 30% of the acquisition price of new or second-hand maritime vessels that are acquired by a Belgian taxpayer for the first time.

The spread deduction for investment
As indicated, the deduction for investment is in principle made in the taxable period of the investment, but can also be spread over the depreciation period of the assets. The deduction is then calculated on the annual amount of depreciation of the new investment.

  1. The standard spread deduction for investment
    Natural persons who employ fewer than 20 people may apply a spread deduction equal to 10.5% of the depreciation of the assets for investments made during the taxable period linked to assessment year 2019.
     
  2. The increased spread deduction for investment
    Both natural persons and companies (regardless of size) can opt for the increased spread deduction for investment equal to 20.5% of the depreciation of environmentally-friendly investments in research and development.

    This spread deduction is therefore reserved for investments in assets used to promote research and development of new products and future-oriented technologies that have no impact on the environment, or which are intended to reduce the negative impact on the environment as much as possible.  

Rates for assessment year 2019

Investments in    Natural persons Companies
Patents 13,5%
20%
13,5%
20% (*)
Assets for R&D for environmentally-friendly products 13,5%
20%
13,5%
20% (*)
Assets for more rational energy consumption 13,5%
20%
13,5%
20% (*)
Smoke extraction and ventilation systems in catering establishments 13,5%
20%
13,5%
20% (*)
Certain digital assets 13,5% (*)
20% (**)
13,5% (*)
20% (*)
Securing of company premises or company cars 20,5% (*) 20,5% (*)
Maritime shipping 30% 30%
Other investments made between 01/01/2018 and 31/12/2019 20% 20% (*)
Standard spread deduction for investment 10,5% /
Increased spread deduction for investment 20,5% 20,5%

(*) on condition that the criteria of a small company as set out in Article 15 of the Companies' Code are fulfilled.

(**) In principle, the natural person must be considered as 'small' to apply the increased deduction for investment for investments in digital assets. However, due to the temporary increase of the standard deduction for investment to 20% - which does not require the natural person to meet that criterion - a deduction of 20% can be obtained for digital investments in 2018 and 2019, regardless of size.

The new rules for VAT processing of vouchers
The wonderful world of VAT and vouchers
Vouchers are a very popular marketing tool. There are various types of vouchers: discount vouchers issued by a manufacturer, redeemable at any sales outlet in Belgium, discount coupons issued free of charge by retailers, vouchers where you can get a newly launched article free of charge, gift vouchers that can be redeemed for a whole range of products or services, electronic vouchers, etc. Are yo
A showpiece, or rather a sticking plaster for a broken arm?
The Belgian fiscal consolidation regime
The general intention with the introduction of a fiscal consolidation regime was clear, namely to put the Belgian tax system back in a positive light. After all, many of our neighbouring countries have had a system of fiscal consolidation in place for many years, and Belgium consequently scored badly on this point when international groups were looking to choose an investment location. The ques
The long-term lease revival
Superficies as stealth usufruct?
A noteworthy judgement was recently handed down by the Court of Appeal of Brussels regarding the taxation of overly cheap accession in the case of superficies (23 January 2019). In the past, a number of rulings had already been made on this subject (see, inter alia, Court in Ghent of 31 October 2017). The tax authorities are clearly keen to see the end of the right of superficies, and the two judg
'Paulian claim' to the rescue
Thwarting the taxman by rejecting an inheritance: is it possible?
In inheritance law, multiple heirs can have a statutory inheritance claim. As such, they are entitled to a minimum share of the inheritance. Since the new inheritance law, it is possible to freely dispose of half of one's assets. This is called the available part. If the available part is exceeded by donations, the statutory heirs may request the reduction. Through the reduction, the statutory hei
Appointing a Belgian fiscal representative is necessary
BREXIT: Important VAT news for UK companies with a Belgian VAT number
The Belgian VAT authorities confirmed that UK companies with a direct Belgian VAT registration need to appoint a Belgian fiscal representative for VAT purposes before 30/03/2019. This is in case of a no-deal Brexit on that date. The VAT administration will allow these UK companies to maintain their current Belgian VAT number, also after appointing a fiscal representative for VAT purposes. 
Legally most correct solution
Successive usufruct: The Flemish Tax Office (Vlabel) confirms the method of levying the registration duties
On 10 December 2018, a remarkable position was published on the Vlabel website (Position no 18083 of 26 November 2018). The real estate tax system is becoming more and more sophisticated with more (tax) advantages. The question must therefore be asked whether the well-known "simple" usufruct will not be partially replaced by transactions with a double or successive usufruct. In the area of registr
From 1 January 2019
New Flemish Lease Decree
On 24 October 2018, the Flemish Parliament approved the new Flemish Lease Decree. In our newsletter of 26 October 2017, we already hinted at the changes that this new decree will bring about. One of the most important changes remains the decree's broad scope. On the one hand, extensive regulations are provided for the rental of a house intended as a main residence. What is new here is that the ter
Confirmed in writing to our office
Confirmed: both usufructuary and bare owner are to be included in the UBO register
The Belgian Ultimate Beneficial Owner (UBO) register went live on 31 October 2018. On the basis of the legal texts and the explanatory notes, as ultimate beneficiary/ies of companies, the natural person(s) who directly or indirectly hold(s) a sufficient percentage of the voting rights or of the ownership interest in this company must first be notified. A holding of at least 25% is an indication of
The advantage is a taxable benefit
Fiches and withholding tax on benefits granted by foreign companies
Should payments received from a foreign company be subject to withholding tax and should this be declared on a fiche? At the moment, the answer to this question is negative in most situations, but this is set to change. A new draft law dated 18 December 2018 provides for the introduction of a tax fiction that requires the (Belgian) employer of the beneficiary employee not only to withhold withh
The requirement to register gets a broader scope
More entrepreneurs must register with the Crossroads Bank for Enterprises (CBE)
Under the aim of creating a more attractive business climate, changes were made to the existing company law. In that context, the legislator has done away with the ‘trader’ concept, replacing it with the umbrella term ‘enterprise. Besides forming the basis for the rules of the Code of Economic Law, the Judicial Code and the Civil Code, the new enterprise concept also has consequences for reg

Subscribe to our newsletter