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Corporate Taxation

Corporate Tax Rate

Belgian companies (including the Belgian subsidiaries of foreign companies) are subject to a standard tax rate of 33% plus a 3% crisis tax, resulting in a total nominal rate of 33.99% regardless of the source of the income. This fixed rate acts as a deterrent for both current and future investors, certainly when compared to countries such as the Netherlands, the UK and Ireland which have corporate tax rates of 25%, 23% and 12.5% respectively. Continue reading...

Notional Interest Deduction

A big challenge – and great opportunity – for multinational companies today is effectively managing local and foreign taxes in a way that aligns with their overall business objectives and operations. On June 22, 2005, the Belgian parliament passed into law the notional interest deduction (NID) to replace the coordination center regime and counteract the country’s high nominal corporate tax rate. Applicable since the start of the tax year 2006 (assessment year 2007), the NID has transformed the Belgian taxation system and has helped to preserve the overall attractiveness of doing business in Belgium. Continue reading...

Financial Transaction Tax

While some European countries, including Belgium, believe that the new Financial Transaction Tax (FTT) will discourage speculative trading and bolster debt-laden public finances, it could in fact sink the eurozone into deeper economic trouble. Well-judged regulation is important. Ill-judged regulation, as is the case with the EU’s proposed FTT, can do immense economic damage. Continue reading...

Fairness Tax

In July 2013, the federal government introduced yet another element to the corporate income tax regime for large companies in Belgium: the Fairness Tax. Under pressure from the European Union to meet their deficit targets, the tax was devised in late night negotiations to trim billions off the country’s budget. It is estimated that the new tax will raise €140 million in 2013 and €165 million in 2014 and has an appealing ring of justice to it – for some. “The fairness tax is a matter of equality,” said Prime Minister, Elio Di Rupo, upon revealing the news. “We ask that companies which pay out dividends, but don’t pay taxes, pay a minimum contribution toward the good functioning of our society.” Sound fair? No, as the new tax is independent of, and comes, where applicable, on top of other taxes, in a country which already has one of the highest nominal corporate tax rates in Europe, the Fairness Tax does not live up to its name. Continue reading...

Base Erosion and Profit Shifting (BEPS)

In early October 2015, the OECD presented its final package of measures to combat corporate tax avoidance to G20 finance ministers in Lima, Peru. As the outcome to the OECD’s so-called Base Erosion and Profit Shifting (BEPS) project, these anti-avoidance measures are aimed at fixing the kinks in the incoherent and oftentimes opaque international tax system. Together with complementary actions taken at the EU level, the measures put forth in the BEPS project are expected to have significant implications for how multinational companies do business in the future. Continue reading...