Coming Corporate Tax Reform in Belgium offers new possibilities to do business from a Brussels office

Posted on 06/02/2017

In Europe’s changing political and economical landscape, Belgium is focussing on several opportunities to get on the radar of international companies re-evaluating their corporate footprint. To attract new investment – and, equally important, to retain and grow existing businesses – Belgium keeps working on reducing labor costs, dropping corporate tax rates, improving mobility and lowering the overall administrative burdens imposed on investors.

The anticipated corporate tax reform has yet to materialize, but the Belgian government is very aware that this topic is growing in importance and urgency for the business community. To become a competitive player and attract headquarters and decision centers, it is vital for Belgian’s corporate income tax rate to drop. It has to be seen if the government will reduce the corporate income tax rate from33,99% today to 20% or less by 2020 as recommended by many institutions, such als the American chamber of commerce (AmCham).

Meanwhile,  AmCham also said that symbolic business-unfriendly tax measures, such as the Fairness Tax, the additional tax of 0.412% on capital gains from shares and the 3% crisis tax, should also be abolished. They do not contribute meaningful sums to the budget, but are a burden for taxpayers and do not help creating a positive investment image for Belgium.

Fiscal stability and predictability is key. Existing tax incentives should be maintained, even if only to help build Belgium’s image as a reliable and stable investment destination. Indeed, retaining measures such as the Notional Interest Deduction, is strongly recommended, as Belgium still counts a significant number of treasury centers in its ranks, and such centers are traditionally an integral part of any headquarter operations.

Also, maintaining the – revamped – Innovation Box is seen as critically important to retain businesses that heavily rely on innovation and R&D. In addition, introducing a full (100%) exemption on dividends received (currently the exemption is limited to 95%) and a tax consolidation regime would make Belgium more competitive in retaining and attracting holding companies and the decision centers that may follow. Federal minister Johan Van Overtfeldt stated in various interviews that the agreement reached last week by the unions and the employers, means that he now can fully focus on the corporate tax reform.

If he can realize it as planned, this will surely make Belgium more attractive again for foreign investors. At HDS we are ready to help them with full professional services.