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Tax Budget - What's in it for Multinationals?
Further to the agreement on the tax budget of 27 November, the proposed measures are generally formulated but law texts are still to be published. As a result, the precise application of the various measures remains to a certain degree, unclear. Taxand Belgium considers the new rules for individuals and also how they will affect multinational companies.
The new rules can be divided into three categories:
Taxation on a corporate level
- The benefit of the notional interest deduction will be decreased in various ways. The rate will be limited to 3% and 3,5% for small and medium enterprises. It will no longer be possible to carry forward the unused notional interest deduction. The actually remaining notional interest deduction to be carried forward will however remain deductible, although limited to a maximum of 60% of the taxable profit.
- The tax exemption for capital gains on shares, will no longer be granted when realised within one year as from the acquisition date. The tax rate in this respect will most likely be set at 25%.
- The 'thin cap' regulation will be made more stringent and a debt/equity ratio of 5:1 will be imposed. The interests on borrowing exceeding 5 times the net asset value, will no longer be tax deductible.
Taxation on an individual level
- No wealth tax and/or capital gains tax will be implemented.
- Taxation of interests and dividends. The tax rate on interest will be increased from 15% to 21%. An additional 4% tax will be levied when the amount of interests and dividends annually received exceeds 20,000 EUR, bringing the total tax burden on 25%.
- The tax rate of 10% on liquidation bonuses will remain unchanged.
- For the repurchase of shares, the rate will increase from 10% to 21% on all distributions above the paid up capital.
- Benefits in kind to company directors will be followed up on a more subsequent basis. Eg the benefit in kind relating to the free disposal of a housing facility will increase, as well as the benefit in kind for heating and electricity put at their disposal by a company.
- Taxes on company cars will increase. The CO2 emission and the value of the car will be taken into account to determine the new calculation of the benefit in kind.
- The beneficial taxation regime on stock options granted by employers to their employees will be amended.
Other taxation aspects
- Duties on tobacco and alcohol will be increased.
- Notaries and bailiffs will fall within the scope of VAT.
- Tax on stock transactions will increase with 30%.
- The 21% VAT regime will be levied on pay television.
The measures are most likely to enter into force as of 1 January 2012 unless it is stipulated otherwise above. Further details will likely be made public in the coming weeks as the measures will be implemented in Belgian tax legislation.
Your Taxand contact for further queries is:
T. +32 3 238 9291