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New tax measures to be introduced following 2013 budget control
On 30 June 2013, the Belgian government reached an agreement on various tax measures to be implemented following the June 2013 budget control. Taxand Belgium discusses they key tax highlights to be introduced.
The government has decided to impose a so-called fairness tax or minimum tax on large companies in Belgium. In an effort to increase tax equity and to ensure that everyone in Belgium contributes according to their financial means, the government plans to levy a minimum contribution on companies that distribute dividends, but that do not effectively pay taxes.
Dividends received deduction
Dividends received by Belgian companies or permanent establishments are 95% tax exempt provided certain conditions are met, ie the so-called dividends received deduction. Currently, dividends on shares not representing a 10% participation but with an acquisition value of at least EUR 2,500,000 can also benefit from the dividends received deduction, which represents a 95% tax deduction on the dividend amount received by a corporate taxpayer. In the future, the dividends received deduction will only apply if the minimum participation threshold of 10% is reached, irrespective of the acquisition value of the shares.
As of 1 January 2014 the currently existing VAT exemption for lawyers will be abolished, meaning that the services rendered by lawyers will be subject to VAT (at the standard rate of 21%). On the other hand, they will be able to deduct the input VAT.
Dividends attributed by SMEs will again be able to benefit from a reduced withholding tax rate of 15% when certain conditions are met. Only companies with the minimum paid-in capital may benefit form these withholding tax rates. If, through the new cash contribution, the paid-in capital equals at least the minimum paid-in capital of a BVBA/SPRL, the new rules will apply as well.
As a result of all these measures, the Belgian fiscal landscape has become even more complex and challenging. They consist of a combination of additional cost savings and new tax measures (including new taxes, as well as tax increases). Multinationals will have to stay afresh of all developments in order to remain compliant.