A year of discussions, pressure and tension has been necessary to conclude the current corporation tax reform. The plan eventually adopted by the federal government anticipates a separate rate for SMEs and other businesses.
The nominal rate of corporation tax is 33.99%, although this is on the whole effectively lower owing to the large scope for deductions, offered by the Belgian tax regime. Next year, the rate will be reduced to 29% and then subsquently 20% on the taxable portion of €100,000 for SMEs, before being further reduced to 25% in 2020. The 20% rate for SMEs is retained where this applies.
The reform will be neutral from a budget perspective. This assurance has been given by the Minister of Finance, Johan Van Overtveldt (New Flemish Alliance), who highlighted the historical nature of the measure. The system of deductions will be simplified. Notional interest – which almost disappeared in the first draft of the policy – is retained but adapted in a way which will cost the state budget less.
Capital gains tax had been considered in the context of this reform, but changes were vetoed by the New Flemish Alliance and the Open Vld. A compromise was found by means of the subscription tax on share accounts. This will operate via a levy of 0.15% being applied when the account is valued at more than €500,000.