Auteur: Sandrine Schaumont (PwC)
The program law regarding the budget statement of 2021 has recently been issued by the Belgian Vivaldi government. Again an opportunity for the PwC tax reform news room to highlight the most important tax measures that have been introduced from a personal, corporate and indirect tax perspective.
Non-indexation of fiscal amounts
For the income years 2020 to 2023 the annual indexation of certain tax reductions and tax exemptions will be frozen. Consequently, the maximum amounts for a number of tax reductions will not be indexed during these four years and will remain at the same level of income year 2019. As from income year 2024, the annual indexation will take place again. As an exception, there will be one further indexation in 2020 for the maximum amount for pension savings.
- Tax reduction for childcare: As from income year 2020 the maximum amount per childcare day and per child will be increased from EUR 11,20 to EUR 13. The age limit will be raised from 12 years to 14 years (and from 18 years to 21 years for heavily disabled children). Expenses for professional home care of sick children will become eligible. As from income year 2021 the maximum amount per childcare day and per child will be further increased to EUR 13,70 and it will be indexed every year. In order to benefit from this tax reduction, a certificate will be required.
- Tax free amount for informal care: Any taxpayer who takes in a family member to take care of, will be able to benefit from an increased tax-free amount, if it concerns a (grand)parent, brother or sister older than 65 years who is in need of help. To determine whether or not someone is in need of help, their degree of self-reliance is taken into account. A reduced self-reliance of at least 9 points is required.
The tax and social regularization system will end on 31 December 2023. Taxpayers who want to rectify an illegal tax situation can still do so spontaneously until the end of 2023. Afterwards, this will no longer be possible and fraudsters will become subject to administrative or criminal prosecution.
The Central Contact Point (CAP), managed by the National Bank, contains the bank account numbers and certain financial contracts that are held by private individuals and legal persons, whether or not established in Belgium, which are held with Belgian financial institutions. Going forward, the CAP will also include data on the balance of those same accounts and contracts. This should enable the tax authorities to better expose and combat tax fraud.
Increased investment deduction
With the increased investment deduction, the Belgian government clearly intends to further encourage certain investments by small and medium sized enterprises. Under the normal investment deduction regime, small and medium sized enterprises can deduct 8% of their investment from their taxable income. Due to the COVID-19 crisis, this basic percentage has been increased to 25% for investments done in the period between 12 March 2020 and 31 December 2020. The program law has now extended this measure to investments carried out until 31 December 2022.
Support for training of employees
The government wants to emphasize and encourage lifelong learning for employees. Therefore, employers will be able to receive financial support if they organise at least 10 additional days of training for each employee (on top of what is legally required). More specifically, if all conditions are met, employers will be able to benefit from a partial exemption for transfering Belgian wage withholding taxes. As a result, employers will be entitled to a subsidy of 11,75% calculated on a part of the salary in the month during which the training took place. Note that the employee must work for at least 6 months for the employer and that not all training will qualify for this measure.
VAT / Indirect tax
VAT of 6% on demolition and reconstruction of private residences
Apart from the rules that are already applicable to the reduced VAT rate of 6% regarding demolition and reconstruction of private residences in one of the 32 urban areas, it will be possible as from January 1, 2020 to apply the 6%-rate for demolition and reconstruction in the entire Belgian territory. This extension to the entire territory is however a temporary measure until December 31, 2022.
In addition, these new rules are only applicable to residences:
- used as the only and own home during a period of minimum five years and
- with a maximum habitable surface of 200 m².
Taxation increase in excise duties on tobacco products
In the year 2021 the excise duties on cigarettes and smoking tobacco will increase. An additional increase of these excise duties is planned for 2022, 2023 and 2024. The increase of excise duties is part of the government’s proactive policy to discourage tobacco consumption.