Supporting measures with respect to advance tax payments

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EY Belgium Tax
7 Apr 2020
Subject Tax alert
Categories Covid-19
Jurisdictions Belgium

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Many companies affected by the Covid-19 outbreak are likely to have insufficient liquidity to make advance tax payments in April or July 2020. Therefore, the Belgian Government announced an amendment of the current prepayment regime by increasing the bonification of the third and the fourth quarter of the financial year, and as such reducing the penalty for postponing prepayment to the second half of the year. Please note that the due dates for the tax prepayments remain unchanged as well as the general percentage of the tax increase in case of insufficient prepayments of 6,75%.

For companies with a financial year-end per 31 December 2020 facing liquidity problems due to the Covid-19 crisis, the bonification percentages with respect to the third and the fourth quarter of the financial year per 31 December 2020 (tax year 2021), respectively 12 October and 21 December, have been increased (see below).

As these supporting measures are only intended for companies facing liquidity problems, they do not apply to companies contemplating to undertake one of the following transactions cq operations between 12 March 2020 and 31 December 2020:

  • Payment or the attribution of dividends;
  • Share buybacks;
  • Capital reductions

The amended bonification rates for companies facing financial difficulties can be summarized as follows:

Q1     14/04/2020      9,00%

Q2     10/07/2020      7,50%

Q3     12/10/2020      6,75%

Q4     21/12/2020      5,25%

The normal bonification rates remain applicable for companies being considered as not encountering financial difficulties as defined above.

If companies with a financial year-end per 31 December 2020 would still like to make a Q1 advance tax payment, the respective amount should thus be transferred to the bank account of the Belgian Tax Authorities by Tuesday 14 April 2020 at the very latest (and not 10 April 2020).

Companies facing a decline in revenue as a result of the Covid-19 crisis could, based on these measures, decide to postpone their prepayments and reassess the need for prepayments in the course of the second and/or third quarter of the financial year per 31 December 2020. This should result in a more accurate estimation of the advance tax payments, without being penalized for this postponement.

At this moment, it is unclear whether similar supporting measures will be introduced for companies with an accounting year end close deviating from 31 December 2020.

In case of any further questions in this respect, please contact your EY person of contact.