Belgian Parliament adopts various tax measures

During the last plenary session before its dissolution, the Belgian Federal parliament has adopted various tax measures as well as a law implementing the EU directive on tax dispute resolution mechanisms in the European Union.

These measures include technical changes to the new interest limitation, which is applicable as of 1 January 2019. Under the new rules, exceeding borrowing costs that could not be deducted can be carried forward. The law prevents that the use of carried forward deductions in a later year impacts the taxable EBITDA, which serves as deduction threshold of that year. The law also provides for tax neutral treatment of the carried forward deduction in the context of restructurings. Furthermore, the elimination of intercompany transactions between Belgian group entities is clarified.

The law also provides for changes to the Country-by-Country Reporting (CbCR) notification in order to reduce the transfer pricing compliance burden. These changes were previously announced.

Furthermore, changes are also made to the law introducing the corporate tax reform of 25 December 2017. As of tax year 2021, for the purpose of the calculation of a benefit in kind, so-called fake hybrid vehicles purchased as of 1 January 2018 will be treated in the same way as their non-hybrid counterparts. The measure will as of the same date also apply to cars leased or rented.

As regards the investment reserve, the law withdraws its abolition due to practical issues in the absence of a transitory provision.

Finally, the EU directive on tax dispute resolution mechanisms in the European Union is implemented in Belgian law. More specifically, next to the current procedures relating to Transfer Pricing disputes and the allocation of profits to permanent establishments, an entirely new procedure is introduced for the settlement of disputes between member states arising further to interpretational differences regarding double tax treaties, whereby the latter differences have led to double taxation. The new rules apply on every complaint filed as of 1 July 2019 with regard to income or capital obtained in taxable periods starting on or as from 1 January 2018.