Bill of program law adopted in House of Representatives and law containing tax and financial measures published

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The following two important legislative initiatives in the field of taxation have reached or are near their final stage.

Bill of program law: adoption in House of Representatives – capital gains tax on shares (corporate tax)

The plenary meeting of the House of Representatives yesterday, 20 December 2012, adopted the bill of program law. The relevant tax and social measures in this bill were reported on in the Tax Alert of 18 December 2012 (click here  for the full text of this Tax Alert).

It should be noted that after the submission of the bill, provisions relating to the 0.412% capital gains tax on shares (including crisis surcharge) for corporate tax purposes were added by way of amendments. The new capital gains tax on shares will apply to all corporations, except SME's, where such realized capital gains are currently tax exempt. This capital gains tax will not be tax deductible and will constitute a final tax, i.e. no deductions or capital losses are to be imputed from it.

This tax will apply as from tax year 2014 (changes to the accounting period made as from 21 November 2012 are not opposable to the tax authorities).

A second amendment relieves taxpayers from having to report the interest on recognized savings accounts in excess of the exempt amount when their qualifying interest and dividend income of the taxpayer does not reach the threshold for the application of the solidarity levy. The government had forgotten to include this in the original bill.

Another amendment to the original bill modifies some unwanted effects of recent legislative changes on the application of the tax credit for people with dependent persons for personal income tax purposes.

Law containing tax and financial measures published

The Law of 13 December 2012 containing tax and financial measures was published in the Belgian Official Gazette of 20 December 2012.

As reported in an earlier alert, this law contains several tax measures in different fields (click here  for the full text of the Tax Alert of 13 November 2012 on the submission of the bill of law), among which:

Corporate income taxation

  • Changes to the notional interest deduction regime
  • Changes to the investment deduction
  • Non-deductibility of the solidarity levy borne by the debtor
  • Confirmation of the tax-neutral character of restructurings for the assessment of the holding period requirement for the taxation of capital gains on shares
  • Changes to the withholding tax regime on interest from regulated savings accounts for corporate and legal entities taxation purposes

Personal income taxation

  • Conversion of tax deductions into tax credits
  • Abolishment of additional municipality taxes on movable income
  • Changes to the tax on interest from funds investing in debt claims

Non-residents income taxation

  • Changes to the concept of permanent establishment
  • Measures relating to the permanent establishment in the construction sector and the service PE
  • Taxation of income for which taxing power is allocated to Belgium
  • Taxation of salary paid to non-residents

It should be noted that some minor changes have been made to the text of the original bill in the course of the legislative process. The most important to mention is the delay of the entry into application of the new measures relating to the permanent establishment and those relating to the taxation of income for which taxing power is allocated to Belgium.  The entry into force has been delayed from 1 January 2012 to 1 January 2013.

EY Tax Consultants wishes you great holidays and a prosperous and healthy 2013!