Global Tax Alert | 28 June 2013

Belgium issues final Budget 2013 bill containing miscellaneous tax provisions

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On 28 June 2013, a bill containing miscellaneous tax provisions related to Budget 2013 was published in the Belgian Gazette.1 This Alert covers the most significant provisions.

Research and development

The tax incentives relating to research and development have been enhanced in the final bill. The payroll tax exemption for R&D employees has been increased from 75% to 80% as of 1 July 2013. This will significantly reduce the related labor expense. In addition, the requirement to have a research center in order to qualify for the favorable patent income deduction (Belgian’s patent box) has been abolished for small and medium sized enterprises (SME’s). The provision is applicable as of tax year 2014 (accounting years ending between (and including) 31 December 2013 and 30 December 2014.

Notional interest deduction

The bill slightly modifies the calculation method for determining the rate for the notional interest deduction (NID rate). For tax year 2014, this means that the NID rate will be 2.742% (+0.5% for SME’s).

The maximum cap of 3% (3.5% for SME’s) remains applicable (but does not apply this year since the NID rate is below the cap).

Tax shelter for European audiovisual works

Several modifications are made to the rules regarding the tax shelter for European audiovisual works, further increasing Belgium’s attractiveness as a location. Modifications include a reduction of the budget % that that must be spent in Belgium from 150% to 90%. In addition, the period for incurring expenses may be extended from 18 to 24 months. The modifications are effective for framework agreements regarding the application of the tax incentive signed as of 1 July 2013.

Secret commissions tax

The bill aims to enhance the legal certainty surrounding the application of the 309% secret commissions tax and has added some additional legal exceptions, effective as of tax year 2014.

Other provisions

In addition to the provisions outlined above, the bill also includes several changes in the areas of VAT, individual income tax, and tax procedure, among others.

There are several other new measures that were announced after the 2013 budget control, which are not yet enacted. Future Alerts will cover legislative developments.

Endnotes

1 For more details on the bill, see Ernst & Young Global Tax Alert, Belgian House of Representatives adopts miscellaneous tax provisions in Budget 2013, dated 21 May 2013.

For additional information with respect to this Alert, please contact the following:

Ernst & Young Tax Consultants SCCRL/BCVBA, Brussels
  • Herwig Joosten
    +32 2 774 9349
    herwig.joosten@be.ey.com
  • Werner Huygen
    +32 2 774 9404
    werner.huygen@be.ey.com
  • Steven Claes
    +32 2 774 9420
    steven.claes@be.ey.com
  • Kurt Van Der Voorde
    +32 2 774 9281
    kurt.van.der.voorde@be.ey.com
  • Peter Moreau
    +32 2 774 9187
    peter.moreau@be.ey.com
Ernst & Young LLP, Belgium-Netherlands Tax Desk, Global Tax Desk Network
  • Arne Smeets, Belgium
    +1 212 773 2093
    arne.smeets@ey.com
  • Bart Desmet, Belgium
    +1 212 773 3068
    bart.desmet@ey.com
  • Dirk Stalenhoef, New York
    +1 212 773 3390
    dirk.stalenhoef@ey.com
  • Jan van den Enden, New York
    +1 212 773 417
    jan.vandenenden@ey.com
  • Sebastiaan Kuijper, New York
    +1 212 773 5187
    sebastiaan.kuijper@ey.com
  • Mark de Jager, New York
    +1 212 773 5331
    mark.dejager@ey.com
  • Jeske Ladan, New York
    +1 212 773 4909
    jeske.ladan@ey.com
  • Maaike Muit, New York
    +1 212 773 7026
    maaike.muit@ey.com
  • Yorick Vreenegoor, New York
    +1 212 773 7025
    yorick.vreenegoor@ey.com
  • Frank Schoon, Chicago
    +1 312 879 5508
    frank.schoon@ey.com
  • Frank van Hulsen, San Jose
    +1 408 947 6503
    frank.vanhulsen@ey.com
  • Michiel van der Maat, San Jose
    +1 408 947 6678
    michiel.vandermaat@ey.com

EYG no. CM3583