Belgium

Market overview

Belgium has seen a great deal of change in its tax system in recent years and the market has faced heightened uncertainty from these reforms. As part of the BEPS measures, Belgium has introduced country-by-country reporting (CbCR), including the requirement for master file and local file documentation. This is a major change because Belgium has historically been one of the European countries without a formal standard of TP documentation.

Since the BEPS measures came to the fore, Belgian tax authorities have intensified their focus on transfer pricing. There has been an increase in auditing, and the authorities have become much more aggressive. This has increased the amount of compliance work for TP practitioners. It is expected that the number of disputes will also increase over the next couple of years.

Recently, the Belgian government has been looking to cut the corporate tax rate from 34% to 25%, and possibly further down to 20%. However, it appears that this reform is unlikely to pass this year. It is also the case that, as the 2019 election approaches, the government may not want to implement a major tax reform. Reforms could be diluted or dropped altogether.

Even in the absence of domestically-driven changes, Belgium still faces considerable upheaval due to international trends. Since July 2016, the Belgian government has been committed to the EU's Anti-Tax Avoidance Directive (ATAD), and to adopting these measures into domestic law. Some observers were surprised by this, as they expected Belgium to drag its heels on ATAD, but this was not the case.

"The way Belgium implemented the recent anti-abuse measures of the Parent-Subsidiary Directive was extensive and we now have quite comprehensive rules against certain types of aggressive tax structuring, such as conduit companies," said Jean-Michel Degée, head of transfer pricing at Liedekerke. "What we expect is that Belgium will probably adopt a quite aggressive attitude at first, and when they can, they will adopt the more conservative provisions of ATAD."

The increased focus on avoidance has seen a rise in audits and this in turn has led clients to take more steps to protect themselves against large assessments, and to become more transparent. These trends are likely to continue into the years ahead.


Tax authorities

Federal Public Service Finance
Rue de Fragnée 2, 4000 Liège
Tel: +32 357 938 66
Email: info.biztax@minfin.fed.be
Website: finance.belgium.be/fr


Tax rates at a glance

(As of July 2017)

Corporate income tax 33.99% (a)
Capital gains 0/0.412/25.75/33.99%
Branch tax 33.99%
 
Withholding tax
 
Standard rate of 27%, however several exemptions and reductions exist – see below
Dividends 0/1,6995/5/10/15/17/20/27%
Interest 0/15/27%
Royalties 0/15/27%
Branch remittance tax n.a.
 
Net operating losses (years)
Carryback 0
Carryforwards Unlimited

  1. Surcharge of 3% on income tax makes effective corporate tax rate 33.99%.

Source: AB Taxand, Taxand Belgium


Firm contact details

Loyens & Loeff
T/A Economics