Arizona draft bill containing various provisions was submitted in parliament

New draft law concerning various provisions was submitted in Parliament on July, 3 2025 (NL / FR). It includes several tax measures that were initially part of the Draft Program Law (see our alert), but were removed following the Council of State's advice.

This alert outlines key tax measures proposed in the draft law.  Separate more detailed alerts are addressing the various measures relating to personal income tax reform, the expat regime and mobility. Further details will be shared in upcoming alerts. As this is draft legislation, provisions may change during the legislative process.

Note that separate draft legislation related to capital gains taxation has also been made public. Further details on this topic are available in a separate Tax alert.
 

DBI-BEVEK/SICAV RDT

Capital gains on DBI-BEVEK/SICAV RDT will be taxed at 5% and creditable withholding tax can only be credited if the company meets the (increased) minimum remuneration condition for the company directors. 

This measure takes effect as of the tax year 2026. Any change to the closing date of the income year after February 3, 2025, not motivated by reasons other than tax avoidance, will be disregarded.
 

Group contribution

The Belgian group contribution regime includes some strict rules to allow companies within a group to share profits and loss through a group contribution. Currently, such contributions are only permissible between entities that have maintained a direct relationship of at least 90% for a minimum period of five years.

Although the Government agreement stated that they would ‘relax’ the regime a.o. to “indirectly” related companies, no changes have been included in the current legislative update.

Since the dividend received deduction has not yet shifted to an exemption, the new draft law aims to address the issue within the law for which Belgium was convicted (See ECJ 19 December 2019, Brussels Securities SA vs. Belgium State, C-389/18) in a different way. According to the court, the combination of the DRD scheme for received dividends, the deduction order in our national regulations, and the limited timeframe to use the group contribution may result in a scenario where receiving dividends causes the parent company to lose the benefit of the group consolidation compared to not receiving a dividend from its non-resident subsidiary (or if the dividends were excluded from the tax base of the parent company).

With the amendment of article 206/3 ITC92, group contributions in cases of negative results are no longer treated as a minimum taxable base and hence a.o. dividend received deduction can still be applied.

The draft law does not specify a specific date for the entry into force, so the new rules take effect 10 days after publication in the Belgian Official Gazette.

Investment deduction

Starting January 1, 2025, a new investment deduction regime supports companies' digital and sustainable transformations and promotes investments in green energy, technology, and climate-friendly innovations. It includes three categories or ‘tracks’: a ‘basic’ deduction, a ‘technology deduction’ and a ‘thematic deduction’ (read our previous tax alert).

The new draft legislation proposes changes to the investment deduction for qualifying investments acquired or established as of 1 January 2025. It removes the prohibition of combining thematic deduction with regional state aid. The basic investment deduction becomes indefinitely transferable, and the requirement for regional attestation for the technology deduction is eliminated. The draft law also specifies that the R&D tax credit and the technology deduction cannot be combined, and that the 10 percentage points increase for digital fixed assets is only applicable to small companies.

As from tax year 2027, the thematic deduction rate will be standardized at 40% for all companies (currently, the rate is 30% for large enterprises and 40% for small enterprises for investments listed under energy, transport, and environmental categories).
 

Special tax regime for inbound taxpayers and researchers

The draft law concerning various provisions introduces modifications to the expatriate regime, enhancing the system's advantages for incoming taxpayers and researchers.

Employers may reimburse or compensate employees for recurring additional “costs proper to the employer” (e.g., cost of living and housing, home leave) resulting from the assignment or recruitment from abroad.

On remunerations paid or attributed from 1 January 2025, reimbursement will be tax-exempt for up to 35% (previously 30%) of an employee’s gross remuneration. The annual limit of EUR 90.000 per year will be abolished. The minimum gross remuneration threshold for inbound taxpayers (including employees and company directors) providing services in Belgium will decrease from EUR 75,000 per calendar year to EUR 70,000 (this requirement does not apply to inbound Researchers).

For more details, read our specific Tax alert.

Mobility

The shift to electric company cars is slower than planned, so the Government decided to extend the transition period for hybrid cars with a new tax deductibility scheme. Hybrid cars can be deducted up to 100% (resp. 95%) if purchased, leased, or rented until the end of 2026 (resp. 2027), with deductions phasing out by 2029. The new rules will only be applicable to the personal income taxation regime. The deduction formula will no longer include a coefficient based on fuel type.

Finally, the draft also includes modifications regarding the deductibility of fuel costs.

More details will be provided in a separate Tax alert.
 

Procedural measures - Shorter tax investigations and assessment periods (statue of imitations)

The new draft legislation also shortens certain tax investigation and assessment periods (statute of limitations) with retroactive effect as of tax assessment year 2023. 

The standard limitation period of three years remains unchanged.

A four-year period will be applied to both complex and semi-complex tax returns, which will now collectively be referred to as 'complex tax returns'. This relates to specific situations such as filing local files or country-by-country reports, reporting payments to non-cooperative jurisdictions, when applying withholding tax exemptions based on a double tax treaty or the EU Parent-Subsidiary Directive or Interest- and Royalty Directive, in case of hybrid mismatches, CFCs, and reporting legal constructions under the so-called Cayman tax rules, etc. The four-year period will also continue to apply in case of a late or non-filing of a tax return.

In case of tax fraud, the period will be shortened from ten years to seven years (for both income tax and VAT). The required prior and written notification of the indications of tax evasion as a condition to apply for this period has been reinstalled.

The new draft legislation largely reverses the extended limitation periods introduced at the end of 2022 (and applicable as of tax assessment year 2023). This is done with retroactive effect meaning that the proposed limitation periods would apply as of tax assessment year 2023 (and for VAT due as of January 1, 2023). The explanatory memorandum justifies this retroactive implementation in order to avoid that three sets of rules would apply in parallel (i.e. those applicable prior to tax assessment year 2023, those introduced in 2022 and applicable as of tax assessment year 2023 and the newly proposed limitation periods).

As a result of the new draft law, the tax investigation and assessment periods would be as follows: 

Other announced measures relate to:

• Real estate taxation: abolition of the interest deduction on loans taken out for acquiring or maintaining immovable property other than the primary residence, also for outstanding contracts, as of assessment year 2026;
• Flexi-jobs - adjusted maximum amount of exempt income as of income year 2025;
• Gradual reduction of the deduction of alimony payments, paid after January 1, 2025, for taxable periods ending after December 30, 2025;
• Various modifications related to exempt income and tax reductions (a more detailed tax alert will elaborate on these new rules);

A more detailed tax alert will elaborate on these new personal income tax measures.
 

Action points:

Please consult our dedicated Tax reform website to stay up to date about the legislation process and all EY initiatives that will be organized in this respect. For questions regarding the points discussed, you can also contact your usual EY contact.