Notional Interest Deduction

Rate expected to further decrease

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As from tax year 2014, the Notional Interest Deduction (NID) rate is based only on the 10 year Belgian government bond rate (bond rate) of the third quarter (the months July, August and September) of two years prior to the tax year (1), instead of the bond rate for the entire year.

The rates for July and August 2014 amount respectively to 1.757% and 1.578%, resulting in an intermediary average of 1.6675%. With only one more month to take into account to determine the final NID rate, it looks like the NID rate for tax year 2016 will be considerably lower than the NID rate of 2.630% (+ 0.5% for small companies) for tax year 2015.

Taxpayers should take this evolution into account while assessing their tax position and consider taking appropriate action. Do not hesitate to get in touch with the contact persons listed here or with your regular contact at EY Tax Consultants for more information or assistance in this matter.

(1) A tax year refers to the year following the financial year if the financial year ends on 31 December. If the financial year ends before 31 December, then the tax year refers to the year in which the financial year closes. Consequently, the 2015 tax year relates to a financial year ending between (including) 31 December 2014 and (including) 30 December 2015.