Bill of program law with tax and social measures submitted to House of Representatives

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The government submitted a bill of program law to the House of Representatives.

This bill contains provisions relating to some (but not all) of the proposals announced in the framework of the government agreement on the 2013 budget and recovery measures (click here  for the tax alert on this agreement).

The bill deals with the following tax measures:

  • The levy of a 25% withholding tax with a liberating character on movable income (with exceptions for liquidation bonuses (10% withholding tax), interest from recognized savings deposits (15% withholding tax on the part exceeding the exempt amount), interest on the bond Leterme (15% withholding tax), dividends from real estate investment companies with a fixed capital (“vastgoedbevaks/SICAFI”) (15% withholding tax as from 2013) and copyright income (15% withholding tax to a certain threshold and taxation as movable income or professional income on the excess amount)). Movable income includes dividends, interest and royalties;
  • The abolition of the 4% special levy on dividends and interests as of 2013 and a transitional regime for 2012 income.
  • The increase of excises on tobacco and alcoholic beverages (excluding beer);
  • The increase of the tax on life insurance premiums (branch 21 and branch 23) from 1.1% to 2% (except for group insurances, pension funds and “schuldaldoverzekeringen/assurances de solde restant dû”);
  • The reporting obligation for individual life insurance contracts concluded abroad with foreign insurance companies;
  • The abolishment of the federal environmental tax.

The bill also contains some interesting measures in other fields:

  • The introduction of an employee social security contribution of 13.07% on the part of the non-recurrent result-tied bonuses not exceeding the cap (which will be increased from EUR 2,200 to EUR 3,100);
  • The introduction of an anti-abuse measure for social security purposes (comparable to the new general anti-abuse provision relating to income taxes);
  • Measures related to secondment fraud;
  • Provisions relating to the special social security contribution for second pillar pensions;
  • Some changes related to contributions imposed on pharmaceutical companies.

Moreover, the announced increase of the payroll tax for temporary unemployment benefits to 26.75% was included in the royal decree of 11 December 2012 on payroll taxes, which was published in the Belgian Official Gazette of 14 December 2012.

The following announced tax measures have not been included in the bill but will be dealt with at a later time:

  • The application of the notional interest deduction rate for tax year 2014 based on the OLO rate of the third quarter of 2012 (2.742% (+0.5% for Small and Medium-sized Enterprises));
  • The levy of a 0.4% capital gains tax on shares as from 2013 for corporate tax purposes (excluding Small and Medium-sized Enterprises) in cases where these capital gains are currently tax exempt;
  • The increased combat of tax fraud;
  • A new tax amnesty.

We will keep you updated in case of further developments.