The Generally Accepted Accounting Principles (GAAP) financial statements in Belgium indicate that Corporate Income tax must be determined on an actual basis. This consist of a worldwide income less allowed deductions. Companies and Permanent establishment are bound by these rules such that all kinds of income received falls under the business income.
General rate
There has been uniformity in taxation rate of Belgian companies and Belgian Permanent establishment of foreign companies. At the financial year ending of 31 December 2018 and later, the Corporate Income tax was at a rate of 29% plus 2% crisis tax as a surtax, which sums up to a rate of 29.58% (prior effective rate amounted to 33.99%). When these companies fail to meet up with the one-year holding requirements, the capital gain realized upon qualifying shares are taxed at 25.50% (25% plus a 2% crisis tax, often offset against available tax losses) provided that certain conditions are met. Whereas, the company’s non-qualifying shares are subjected to the 29.58% rate.
However, the standard corporate income tax is reduced to 25 %. This is done without any outcry. if all conditions are met, no tax will apply to capital gain on qualifying shares realized. Moreover, a 25% tax rate is applicable to non-qualifying shares.
Fairness Tax
A fairness tax is a separate assessment in the Belgium Corporate Income tax at a rate of 5.15% on part or all dividends distributed by large Belgium companies only. This applies if the National interest deductions or tax carried forward are offset against the taxable basis for the respective taxable period.
However, in the Judgement of the Court on March 1, 2018, the fairness tax violates the Belgium constitutional law and therefore annulled. Only in a specific situation does it have little effect when companies received dividends which have been redistributed. But in the case when companies have not received distributed dividends, the constitutional Court maintained the effect of the annulled provisions for 2014 – 2018 yearly assessment.
Reduced Rate
SMEs (according to article 15 of the Companies code, provided that several conditions are met) based on the tax year statement for 2019, companies will be able to benefit from a tax decrease rate of 20.40% on the first bracket of 100,000 Euros profit. This rate will then sum up to 20% after the crisis tax is ended.
Surcharges
A surcharge is an extra fee or tax added on the cost of a good or service beyond the actual charge. This charges are due to the Corporate Income tax but could be avoided upon consistent advance tax payment. A surcharge of 2.25% exists for the tax year 2018 (financial year ending 31 December 2017 and later) and 6.75% for the tax year 2019.
Secret Commission tax
Existing business not reported in the account is subject to a so-called tax on Secret Commission which amounts to 100% of the undisclosed income. However, the rate is reduced to 50% if the undisclosed income was spontaneously reintegrated in the accounting profit of the company in the subsequent financial years.
Minimum Tax Base
Any business Corporation that does not file her Corporate Income tax return as at when due could be taxed by the tax authorities based on a minimum taxable basis. This equals 34,000 Euros as from the assessment year 2019 (financial year ending 31December 2018) and will increase to 40,000 euros as the assessment year 2021(financial year ending 31December 2020). This amount will be indexed annually as from 2021.
Taxable Income of Nonresident
Nonresidents are taxed only on Belgian earned income instead of the worldwide income even though the tax rate is the same for everyone. Nonresident are exempted from paying tax on housing, tax equalization, and school cost.
