Belgian tax reform: Impact of new government agreement

Stricter “minimum participation requirement” for large enterprises

Under the current rules, dividends received by a Belgian company are fully exempt from corporate income tax if the following cumulative requirements are met: 

• Minimum participation requirement: The recipient company holds a participation in the distributing company of at least 10% or with an acquisition value of at least EUR 2.5M;
• Minimum holding requirement: The recipient company holds, or commits to hold, said participation for an uninterrupted period of at least one year in full ownership; and,
• Subject-to-tax requirement: The distributing company and any underlying companies meet minimum taxation standards, and the transaction is not deemed abusive.

While the minimum holding requirement and the subject-to-tax requirement remain unchanged, the new government intends to tighten the minimum participation requirement by (1) raising the EUR 2.5M threshold to EUR 4M, and (2) requiring that a participation meeting the EUR 4M threshold qualifies as a “financial fixed asset” in the hands of the recipient company. This condition does not apply to participations of at least 10% as the Court of Justice of the EU has previously ruled that imposing additional requirements to the 10% threshold infringes the EU Parent-Subsidiary Directive (PSD). 

Please note that the stricter participation requirement would not apply to small or medium sized enterprises but only for and between large enterprises. 

Shift to a real exemption system

The government agreement also foresees a change in the nature of the application of the Belgian participation exemption regime for dividends received.

Currently, the application of the regime takes the form of a deduction of the qualifying dividends from the company's taxable basis (so-called Dividend Received Deduction or DRD). Qualifying dividends are, therefore, initially included in the company’s taxable basis, and then deducted at a later stage. The excess that could not be deducted creates a stock of qualifying dividends deduction that can, in certain instances, be carried forward to subsequent years. The Court of Justice of the EU has ruled multiple times that the way the Belgian DRD regime applies violates the PSD in certain circumstances. Another case concerning the interaction between the DRD and the group contribution regime is still pending before the Court of Justice of the EU (John Cockerill, C-135/24).

The new government intends to switch from the deduction to a real exemption of the dividends received. Under the new system, qualifying dividends will be immediately exempted from the company's taxable basis via an increase in the opening position of the reserves. In practice, this switch will result in changing the fiscal nature of the excess qualifying dividends. Indeed, since dividends will be immediately excluded from the taxable basis, any excess qualifying dividends will no longer generate a DRD stock. Instead, they will create carried forward tax losses.

This reform may have an important impact on the group contribution regime. Under the group contribution regime, a profit-making group company can transfer, subject to certain conditions and for tax purposes only, a part of its taxable profit (the so-called “group contribution”) to a loss-making group company. The profit-making group company may deduct the group contribution from its taxable profit, while the loss-making group company may offset its current year tax losses against the group contribution received. Since the switch to a real exemption regime may create more tax losses for the company receiving the dividend, it can be expected that a higher group contribution can be applied.

Capital gains on shares realised by private individuals in the framework of the normal management of their private wealth are currently not taxed. The new government agreement aims to put an end to this regime by introducing a tax on capital gains realised on financial assets, including cryptocurrency (the so-called “solidarity contribution”). The capital gains tax would only apply to increases in value as from the entry into force of this measure. Said otherwise, historical capital gains would remain in principle untaxed. Taxpayers concerned should seek to obtain a valuation report to substantiate the market value of their participations upon the entry into force of this measure. Capital losses on financial assets may be deducted from the capital gains realised in the same taxable period but would not be carried forward. 

Capital gains would become taxable at 10% with an overall exemption for the first EUR 10,000. For substantial participations (20% or more), the first million of capital gain would be exempt. Capital gains exceeding this amount would be taxed as follows: 

• EUR 1M to EUR 2.5M: 1.25%
• EUR 2.5M - EUR 5M: 2.5%
• EUR 5M - EUR 10M: 5%
• > EUR 10M: 10% 

It is currently unclear whether capital gains realised on participations below 20% would also benefit from the same progressive tax rates. It is also unclear whether capital gains realised upon contributions in kind would be targeted. 

Currently, dividends distributed by a so-called DRD-SICAV can benefit from the DRD regime provided that the following conditions are met:

• The DRD-SICAV is subject to Belgian corporate income tax, or to a foreign tax regime similar to it, but benefits from a tax regime that deviates from the standard tax regime in that country;
• The Articles of Association of the DRD-SICAV provide for the annual distribution of at least 90% of the income it receives, after deducting remuneration, commissions, and fees; and,
• The distributed dividends originate from qualifying dividends and capital gains that meet the subject-to-tax requirement under the DRD.

The Belgian government agreement now introduces two important changes regarding the DRD-SICAV, with the aim to further streamline the tax treatment while maintaining its attractiveness for Belgian corporate investors.

Firstly, a 5% tax would now apply to capital gains if any realised upon exit of a DRD-SICAV. 

Secondly, to offset any withholding tax against corporate income tax at the level of a corporate investor, the latter must allocate a minimum required remuneration for directors (which will be increased from EUR 45,000 to EUR 50,000), in the income year in which the distribution is received.

A transfer of seat is assimilated to a liquidation for Belgian corporate income tax purposes if and to the extent the assets and liabilities of the company do not remain allocated to a permanent establishment in Belgium. Consequently, all assets and liabilities are deemed to be realized upon the transfer of seat and any latent capital gains become taxable in Belgium (subject to the participation exemption regime or tax deductions, as the case may be). In line with the position of the Belgian Ruling Commission and recent case law, a transfer of seat operated in legal and accounting continuity does, however, not trigger a taxable dividend in the hands of the shareholders and hence no dividend withholding tax arises. 
 
It seems that this assimilation to a liquidation would be extended at the level of the shareholders, triggering a (deemed) liquidation bonus subject to 30% withholding tax (exemptions or reductions might apply). The modifications brought in the final version of the agreement, however, sow doubt, as the explicit reference to withholding tax has been discarded. The question arises whether such modification would be compatible with EU law. 

To boost technological evolutions and sustainable transition, the investment deduction regime and tax credit regime was amended last year. This amended investment deduction regime now foresees three options: the basic deduction, the increased thematic deduction, and the technology deduction. For more information, we refer to our previous article. The relevant lists have, in the meantime, also been published at the end of last year.

The Belgian government intends to further develop an investment climate attracting both domestic and foreign investors which is deemed crucial to achieve a more sustainable transition. The following main measures are, for example, announced:

• A taxpayer might have insufficient taxable basis to fully apply the above-mentioned deductions. The carry forward of unused investment deduction is limited for certain investments, but the government has now announced that the carry forward of unused investment deduction will be made available for all deductions without limitation.
• The increased thematic deduction, which applies - in short - to energy and environmental investments, will be simplified and the rates will be aligned at 40%.
• The existing obligation to request a certificate from the competent region regarding the environmentally friendly nature of the investment would be abolished for the technology deduction.
• Possibilities will be introduced to accelerate depreciations in certain investments. For large enterprises, a temporary system would be introduced allowing to depreciate 40% of the acquisition value in the first year. For small and medium-sized enterprises, the possibility for the declining depreciation method, which was abolished as from 2020, would be re-introduced. It is currently unclear what type of investments would become eligible, but it can be expected that green investments and investments in research and development are more in particular envisaged.  
• To avoid uncertainty for taxpayers applying e.g. the R&D professional withholding tax exemption, a spending review will be introduced as well as the possibility for companies to be recognised as a research centre.
• Based on the current law, the tax deductibility of the car expenses will become more stringent especially as of 2026 to accelerate the greening of the car fleet. However, the new government recognizes that the rules are too complex and that a longer transition period is necessary for hybrid cars. More flexible rules will therefore be introduced for hybrids. For example, the tax deductibility percentage will remain 75% until the end of 2027. 

Carried interest 

The new government announces that it will introduce a specific competitive tax regime, compared to Belgium’s neighbouring countries, for carried interest. The objective is to stimulate the activity of investment funds in Belgium.
 
The new regime would foresee the taxation of carried interest as moveable income, subject to a maximum tax rate of 30%.

Existing carry structures would not be impacted.

Private Privak/Pricafs Privées 

The new government intends to soften the regulatory framework applicable to the Private Privak/ Pricafs Privées with respect to:

• the limited lifetime: the current lifetime of the Private Privak is limited to 12 years. This term can be extended twice for a period of 3 years.
• the number of shareholders: to be incorporated, the Private Privak needs to have at least 6 (non-related) investors as from its inception.
• the “entry time”: it is not entirely clear what is meant by this and which changes to expect in this respect.
• the authorised investments: the Private Privak is only allowed to invest in financial instruments issued by non-listed companies, with only very few exceptions. The government agreement does not indicate how the list of authorised investments would be broadened.

A Digital Services Tax (DST) is a levy imposed on the revenues generated by certain digital services in a given jurisdiction, even when the company providing the services has no physical presence there. It is designed to ensure that large multinational firms pay tax where they generate revenue, rather than only in the countries where they are headquartered. DSTs typically apply to services such as online advertising, search engines, digital marketplaces and social media platforms.

Belgium remains committed to reaching a multilateral agreement on the implementation of Pillar One (Amount A), developed by the OECD Inclusive Framework. Amount A seeks to reallocate part of the residual profits of large multinationals to market jurisdictions.

However, if no agreement is reached on Pillar One, the government agreement states that Belgium will unilaterally introduce its own DST by 2027, at the latest.

The group contribution regime allows related companies to offset profits from one Belgian company against the current-year tax losses of another related Belgian company. This mechanism provides for a limited form of tax consolidation between Belgian related entities.
However, under the existing rules, strict conditions significantly limit its application. For instance, only companies with a direct 90% shareholding may qualify, and a five-year minimum participation period is required. As a result, few Belgian companies can benefit from the regime.
To address these limitations, the regime will be revised to increase its flexibility and appeal, making it easier for Belgian related companies to offset profits and losses within a group. The proposed changes include the following key modifications:

• The application of the group contribution regime would be allowed for both direct and indirect participations, and
• The requirement that companies must have been affiliated for at least five years before using the group contribution regime will be abolished. Newly affiliated or newly established Belgian companies will now immediately qualify. This change is particularly relevant for acquisitions structured through leveraged buyouts, where costs and financing are often centralised at the level of an acquisition vehicle.

These changes represent a significant improvement to Belgium’s group contribution regime, making it more accessible and beneficial for corporate groups. The inclusion of indirectly affiliated entities and the removal of the holding period would bring Belgium’s tax framework closer to a full tax consolidation model.

The transfer pricing documentation requirements will be simplified and limited to their essence, particularly for small and medium-sized enterprises.

However, the government agreement does not provide further details on how this simplification will be implemented. A re-alignment with the OECD standards on transfer pricing documentation would be a welcome development, as Belgium’s updated requirements - introduced last year - currently go beyond these standards.

For more information on these recent changes, we refer to our previous article.

Although previous versions of the government agreement pointed towards an increase in the tax rate of the annual tax on securities accounts (TSA), the latest version confirms that the rate remains unchanged (i.e., 0.15%).

The government will examine how avoidance of the TSA can be addressed, in alignment with the recommendations of the Court of Audit which published a report on the TSA in 2024.

Increase net salary

As of 2027, the government intends to increase the net salaries, with focus on the salaries under the median. The increase of the net salaries, in combination with other measures, should evolve to a financial difference between working and not working that exceeds EUR 500 per month. Basically, the net salary will be increased by increasing the tax-free sum. 

Tax deductions 

To simplify the personal income tax, various deductions, exceptions and exemptions will be abolished or adjusted. As an example, the tax deduction for gifts will be reduced from 45% to 30%.

Phase out of the marital quotient 

The marital quotient stands for the partial transfer of the income of the spouse with the highest income to the spouse with the lowest (or no) income, to mitigate the progressivity of the tax rates on the highest income. According to the government agreement, the marital quotient encourages a spouse to not work, given the tax benefit. The marital quotient will be halved for non-retirees by 2029. For retirees, the government agreement foresees a phase out over a longer period. 

Increased director remuneration

Under certain conditions, the ordinary corporate income tax rate of 25% is reduced to 20% on the first EUR 100,000 of profit. One of the conditions to benefit from this reduced corporate income tax rate is the minimum remuneration requirement of EUR 45,000 for (at least one of) the director(s). Said minimum remuneration requirement would be increased to EUR 50,000 and would henceforth be subject to indexation. 

It is not clear whether benefits in kind can be taken into account to determine if this threshold is met, as is currently the case.

Benefits in kind for directors

Maximum 20% of the gross annual remuneration of directors may consist of benefits in kind. Additional bonuses on top of the gross salary remain possible.

Harmonisation of the liquidation reserve and the VVPRbis-regime

The ordinary withholding tax rate on dividends amounts to 30%. Shareholders of a small or medium sized enterprise (SME) may under certain conditions benefit from reduced withholding tax rates based on the VVPRbis regime or on the liquidation reserve/VVPRter regime.
 
Under the current VVPRbis-regime, a reduced withholding tax rate of 20% or 15% applies on dividends from shares that have been issued in return for contributions in cash as from 1 July 2013. These reduced rates apply respectively as from the second and third financial year following the year of the contribution. 
 
Under the current liquidation reserve/VVPRter regime, shareholders of SMEs may allocate all or part of the profit of the year to a so-called liquidation reserve, triggering a 10% flat tax on the amounts so allocated. After a waiting period of 5 years, the liquidation reserve may be distributed with a reduced withholding tax rate of 5% (meaning a consolidate effective tax rate of 13,64%). If said 5-year waiting period is not fulfilled, a withholding tax rate of 20% would be due (meaning a consolidated effective tax rate of 27.27%). No withholding tax is due in case of distribution of the liquidation reserve (meaning an effective tax rate of 9.09%). 

The new government intends to harmonise the VVPRbis-regime and the liquidation reserve/VVPRter regime. With respect to the liquidation reserve, the waiting period will be reduced to 3 years instead of 5 years. The 5% withholding tax rate will be increased to 6.5% for liquidation reserves recorded as from 1 January 2026, resulting in a consolidated effective tax rate of 15%. Dividends distributed out of the liquidation reserve within 3 years would be taxable at a consolidated effective tax rate of 30%. 

Mobility budget – Accessible to everyone

The current mobility budget gives employees the opportunity to exchange their company car (or their entitlement to a company car) for a budget that corresponds to the total cost of ownership of the company car for the employer. They can allocate this budget across the following three pillars: (i) another electric or environmentally friendly company car, (ii) alternative means of transport, or (iii), if the budget has not been fully spent at the end of the year, the remaining budget is paid in cash.

Based on the government agreement, the existing mobility budget will be reformed to become a mobility budget for all employees (i.e., not limited to the employees entitled to a company car). It will be based on the employer providing a budget in which the car, as well as other modes of transport, are spending options based on their actual value. Additionally, the new mobility budget will replace the existing employer contribution schemes for commuting and private travel, with the aim of simplifying the current system. To ensure its attractiveness, the government agreement states that the new scheme will receive favourable tax and parafiscal treatment. 

Moreover, the mobility budget should systematically be offered by employers to employees as an option when they are entitled to a company car.

Meal vouchers – Increase in the employer’s maximum contribution

Currently, meal vouchers granted by the employer to an employee or director are considered tax-exempt if certain conditions are cumulatively met, including: (i) the employer’s or company’s contribution must not exceed EUR 6.91 and (ii) the employee’s or director’s contribution must be at least EUR 1.09 per meal voucher.

To improve consumer purchasing power, the maximum amount of the employer's contribution may be increased by two times two euros during the legislative term. This would allow the employer to provide a tax-exempt meal voucher worth 10 euros per working day (i.e., an employer or company contribution of EUR 8.91 euros and an employee or director personal contribution of EUR 1.09) and, in a second phase, a meal voucher worth 12 euros (i.e., an employer or company contribution of EUR 10.91 euros and an employee or director personal contribution of EUR 1.09). Other vouchers (i.e., eco vouchers, culture vouchers, etc) will gradually be phased out in consultation with the social partners. On the other hand, the spending options for meal vouchers will be expanded.

Finally, the tax deductibility of the employer's cost for meal vouchers will be increased accordingly. Currently, the tax deductibility is EUR 2 per meal voucher.

Costs proper to the employer – A framework

There is currently no legal framework to determine the amount of costs proper to the employer which may be reimbursed on a lump-sum basis to employees or directors (administrative guidelines from the social security administration exist for certain types of expenses). The government aims to introduce a legal framework to ensure clarity and consistency as soon as possible.

Special tax regime for inbound taxpayers – A more attractive regime

The government agreement outlines the following key adjustments to the special tax regime for inbound taxpayers:

• The tax-free and social security-exempt allowance will increase from 30% to  maximum 35% of the gross annual remuneration (including bonuses and benefits in kind) ;
• The existing cap of EUR 90,000 (i.e., the maximum allowance) will be removed; and
• The minimum gross annual remuneration required to qualify for the regime will be lowered from EUR 75,000 to EUR 70,000.

These changes aim to make Belgium a more attractive destination for skilled professionals, boosting the country’s competitiveness in a global talent market.

Flexible reward plan (Cafeteria plan) – Limitation of 20% of gross annual remuneration

Flexible reward plans, commonly known as "cafeteria plans", allow employees to exchange a portion of their remuneration for other benefits that better align with their individual needs and preferences, within a framework established by the employer. Inspired by the concept of a self-service cafeteria, this model gives employees the freedom to choose from a menu of benefits. There is currently no generally accepted definition of a cafeteria plan, which allows it to be flexible and offer a wide range of options.

Flexible reward plans will be legally regulated. The government’s goal is to reduce the pressure on gross remuneration by limiting the portion of remuneration that can be exchanged for benefits under a cafetaria plan to maximum 20% of the gross annual remuneration. Additional bonuses can still be awarded on top of the salary. A key focus will be to ensure simplicity in administration for both employers and employees.

Copyright regime – IT sector included

The current tax regime for copyrights provides for a favourable tax framework in which, under certain conditions, copyright income is partly offset with significant lump-sum based deductions and taxed as movable income at a rate of 15%.

Since 2023, the IT sector has been excluded from this regime. The Constitutional Court ruled last year that such exclusion was not contrary to the principle of equality. For more information, we refer to our previous article. The government agreement aims to make an end to this difference again. 

Non-recurring bonus known as CLA90 and share profit premium – Harmonisation and simplification

The government agreement aims to make it more attractive to reward employees in cash rather than with benefits in kind. Therefore, the existing collective bonus systems (i.e., CLA 90, share profit premium, etc.) will be simplified, and the scope will be more harmonised. In this regard, the government agreement also states that the reform should not result in an increase in the tax burden for either the employer or the employee.

The government agreement entails a significant number of measures that aim at reinforcing the taxpayer’s position and creating more clarity in the relationship between the taxpayer and the tax administration, while on the other hand also granting more tools to the tax administration.

For example, the government intends to create more legal certainty for taxpayers through uniform communications, a legal principle of legitimate expectations, a more transparent tax administration and a renewed “charter of the taxpayer” in view of harmonising procedural tax rules and a “right to honest mistakes” for the taxpayer. The position of the Ruling Commission would remain untouched, and the pilot project of horizontal review (cooperative tax compliance) would be reinforced.

The current tax mediation service would be reformed to a tax arbitrage, which could be a recourse for the taxpayer in lieu of a lengthy court procedure (and only after all administrative procedures have been finalised).

On the other hand, the government will reinforce the workforce of anti-fraud teams, notably including the special tax investigation brigade, and will focus on further specialisation of tax inspectors. The tax administration will also reinforce the use of datamining and IT support to carry out tax audits.

In addition to the above, the new government intends to implement the following measures.

Recently introduced extended investigation and assessment periods will be largely reversed

As of tax year 2023, the prior government had introduced significantly extended investigation and assessment periods, notably including:

• a four-year investigation and assessment period for tax returns that were filed late or formally incorrect;
• a six-year investigation and assessment period for “semi-complex” tax returns for taxpayers subject to country-by-country or local file obligations, tax haven reporting, foreign tax credit, certain information exchanges such as DAC6 or for withholding tax returns in which certain exemptions were applied; and
• a ten-year investigation and assessment period for “complex” tax returns that include hybrid mismatches or CFC-cases (corporate income tax) or the application of the cayman tax (personal income tax). The same ten-year period currently applies to cases of tax fraud (although subject to different procedural rules).

The new government intends to shorten these recently introduced extensive periods again, but to maintain the concept of a (semi-) complex tax return. It is currently unclear whether a “complex” or “semi-complex” return would cover the same topics as before. The new investigation and assessment periods would be as follows:

• standard: 3 years;
• complex and semi-complex cases: 4 years;
• tax fraud cases: 7 years (a prior version of the agreement referred to an 8-year period for fraud cases pertaining to (semi-) complex tax returns, however this was removed in the final version).

Abolition of the (quasi) automatic tax increase and cash tax for audit adjustments

Recent practice has shown that tax audit teams almost automatically apply a tax increase for audit adjustments that are made in the framework of a tax audit (usually 10% in case of an error committed by the taxpayer in good faith). Notwithstanding the recent decision of the Constitutional Court, the corresponding administrative position of the (former) Minister of Finance, and the legal possibility to waive such tax increase, the tax audit teams continue to systematically apply a tax increase for (almost) every offence. The consequences thereof can be severe for taxpayers: under the current rules, any additional taxable basis imposed at the occasion of a tax audit where a tax increase of at least 10% is imposed, constitutes a minimum taxable basis which cannot be offset with current-year or carried-forward deductions (the so-called “cash tax for audit adjustments” principle).

This automatic sanction mechanism will be abolished by the new government, in light of the abovementioned “right to make an honest mistake” and a first offence would no longer be sanctioned by a tax increase. The cash tax for audit adjustments principle will be amended, so that it only applies in case of repeated offences for which a tax increase of at least 10% is effectively applied. Mere administrative inaccuracies should not be subject to this sanction. However, a limit to this principle will be implemented: any audit adjustments would only be offset with current year losses, and not with tax losses carried forward (the agreement does not mention any other current-year or carried-forward tax deductions), regardless of the application of a tax increase. Hence, any additional taxable basis imposed after a first offence in good faith shall (i) not lead to a tax increase, and (ii) be offsetable against current-year losses, but not against carried-forward losses.

Furthermore, the principle would be codified that practices of taxpayers that are reviewed, but not amended at the occasion of a tax audit cannot be sanctioned if found incorrect at the occasion of a later tax audit (subject to changes in law).

Use of illegally obtained evidence and coercive fines  

There is a long-standing debate in legal practice whether illegally obtained evidence can be used by the tax administration to support a tax assessment. Although there are certain exclusion grounds for the use of such evidence (based on the so-called “Antigoon-doctrine” in criminal law, as extended to tax cases by the Supreme Court), the use of such illegally obtained evidence is often allowed in practice.

In the past, draft bills have been submitted to Parliament in view of introducing a formal legal framework for the use of illegally obtained evidence in tax cases. These were however never adopted. The new Government has now proclaimed its intention to provide an explicit legal basis for this “Antigoon” doctrine in tax cases, based on the Supreme Court case law in this matter, which should strike a fair balance between taxpayer and tax administration.

On a similar topic, the new government intends to abolish the recently introduced coercive fines (dwangsom / astreinte) for taxpayers that do not cooperate during a tax visitation. The coercive fine would be abolished and, if the tax administration would be hindered by such non-cooperation, the taxable basis can be determined on a lump-sum basis by reference to comparable taxpayers. Important to note is that this may have a significant impact on taxpayers: whereas a coercive fine requires the intervention of a court before it can be applied, the lump-sum taxation can be unilaterally imposed by the tax administration.

Real estate share deals and foundations

There is a longstanding practice in the Belgian market of transferring the economic entitlement to (commercial/operational) real estate through a share deal (whereby the shares in a special purpose vehicle holding the real estate are transferred), rather than transferring the asset itself. Only in exceptional cases, the Belgian courts have ruled in favour of the Belgian tax administration when such share deals were under scrutiny. The taxation of a share deal is significantly different from that of an asset deal, inter alia with respect to real estate transfer taxes which are only due in the case of an asset deal. Since real estate transfer taxes are a regional competence (and can thus not be regulated by the Federal government), the new government intends to aid the regions in combatting such real estate share deals if the regions would so desire. Any such measures would thus depend on the initiative of the regions.

Similarly, the new government also intends to counter the unintended use of private foundations under Belgian law, by clarifying for which altruistic objectives such foundations can be established. If a foundation would not have such altruistic objective, the Belgian tax administration could request its dissolution before the courts. These measures are aimed at countering the use of such foundation for e.g. estate planning purposes but may also hamper the use of such foundation for management participation plans (where a foundation could serve as an alternative certification vehicle to the Dutch Stichting Administratiekantoor). The wording of the draft law in this respect will need to provide further clarity.

Scope of the tonnage tax regime

The Federal government intends to improve and simplify the existing Belgian tonnage tax regime, without however further clarifying how it wishes to do so. The government agreement indicates that specific measures would be introduced to amend the scope of the tonnage tax regime for so-called “multi-purpose” vessels (e.g. dredging or pipe-laying vessels), which currently only have restricted access to the tonnage tax regime. This extension would however only apply to innovative companies with local substance in Belgium. These changes aim to create a level playing field within Europe.

Towards a greener and sustainable fleet

The government also wants to invest in the greening of the Belgian maritime fleet “by creating a level playing field for bareboat charter”. The new rules should allow for an exemption of withholding tax on bareboat charter fees, subject to greening the Belgian fleet, and to avoid tax optimisation through payments to affiliated companies. The wording of the draft law in this respect will need to provide further clarity on the exact measures that would be implemented to attain this purpose.

VAT

Although the government agreement does not bring major surprises, a number of measures are worth highlighting.

The note confirms the introduction in 2028 of e-reporting, intended to reduce fraud by automatically transmitting VAT data to the tax authorities in real time. This obligation complements the introduction of e-invoicing in 2026 and should be accompanied by the abolition of the (nihil) annual sales list.

In the real estate sector, the 6% rate applicable to demolition-reconstruction is again to be extended, and developers will continue to benefit from it. However, the surface area requirement will be limited to 175 square meters instead of 200. It is also expected that the notion of renovation, which gives rise to numerous uncertainties for the applicable VAT rate, will be clarified for VAT purposes.

The tendency to use VAT as an environmental lever seems to be confirmed, as the rate for the supply and installation of heat pumps has been announced at 6% for the next 5 years (instead of 21%), while the rate for gas and fuel oil boilers in the context of renovation should rise to 21%, as should that for the sale of coal. The government also announced the publication of a circular clarifying the lump sum right to deduct VAT on mixed-used company bicycles. 

Finally, from an administrative point of view, accounting simplifications are awaited, and a direct point of contact should be guaranteed between the taxable person and the competent tax officer. Last but not least, with regard to the current level of proportional fines, the administration is calling for a modern approach that would take into account whether or not the Treasury has suffered an actual loss as a result of the infringement.

Customs/excises

The government aims to enhance the competitiveness of Belgian ports and logistics centers by making customs processes faster, simpler, and digital. Key initiatives include improved 24/7 accessibility of customs services and better cooperation between customs authorities and other (regional) authorities for matters such as export controls. A real-time centralised digital platform will be created for all import and export operations.

For excises, the main initiative is the creation of a uniform excise duty code, modernising and codifying all different excise duties into one transparent and simple code. The new excise duty code will also adapt legislation to new market developments (e.g., electricity sharing) and address current legal deficiencies. Other notable reforms include the abolishment of excises on zero-drinks, tea, and coffee, and the lowering of the packaging tax.

Lastly, an important point for businesses is the reform of the prosecution policy for customs and excise violations. The government intends to reduce the criminal liability of market operators by further implementing the system of administrative fines for non-fraudulent violations.