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Qualifying investments for the new thematic deduction published


As from 1 January 2025, the new investment deduction regime1 entered into force, introducing three categories or ‘tracks’: a ‘base’ deduction, a ‘technology deduction’ and a ‘thematic deduction’. Qualifying investments acquired or established as from 1 January 2025 will be in scope of the new rules. The thematic deduction foresees an investment deduction of 30% to 40% of the acquisition value of the qualifying assets (for more information, read our previous tax alert).

Two Royal decrees of 20 December 2024 specify the lists of qualifying assets and technologies subject to the new rules and specify the required compliance formalities.
 

Thematic deduction

The thematic deduction can be applied to following type of investments:

  • Investments relating to the efficient use of energy and renewable energy;
  • Investments in zero-emission transport;
  • Environmentally friendly investments; and
  • Investments in digital applications to support aforementioned investments (not further specified at publication date of this alert).

In order to claim this deduction, a specific certificate will need to be obtained from the competent authorities, confirming that the investment is a qualifying investment. This certificate needs to be applied for within 3 months after the end of the fiscal year in which the assets are acquired and is to be added to the tax return.

To determine which investments qualify for the thematic deduction, three separate investment lists have been introduced: the energy list, the mobility list, and the environmental list. The fourth list, linked to the investments in digital applications, has not yet been published on the date of publication of this alert.
 

1. Investment list – Energy

The  “Energy” list is applicable to investments with a payback period of more than 3 years. For “large” companies, fixed assets are however not eligible if they have an internal rate of return (IRR) of more than 13 percent. For many technologies the investment should also have been subject to an energy study or audit (a.o. demonstrating that the IRR is below 13 percent) in order to be eligible.

On the Energy list the technologies are classified in 5 groups and 9 categories:

  • Group 1- Limiting energy loss in existing buildings (older than 10 years ):
    • Category 1: Reduction of energy loss insofar as they are not imposed by a legal or regulatory provision. This category supports:
      • the insultation of roofs (Rd > 4,0 m²K/W), outer walls (Rd>3,0 m²K/W or Rd>2,0m²K/W), walls that separate heated and non-heated spaces (Rd>3,0 m²K/W or Rd>2,0m²K/W), retrofit cavity wall (more than 5cm) and floors (Rd>2,0 m²K/W);
      • replacement of outer doors, doors forming a separation between heated and non-heated spaces (Ud <1,0 W/m²K), windows and the placement of high-efficiency glass (Ug <1,1 W/m²K), skylights (U <1,1 W/m²K).
    • Category 2: limitation of energy loss by insulating appliances, pipes, valves, and ducts in use, covering hot or cold liquid baths in use, or in existing furnaces.
    • Category 3: reduction of ventilation loss, such as the installation of airlocks, air curtains, or automatically closing doors and gates between the inside and outside of a heated and/or cooled building, or between a heated and a cooled or unheated part of the building; the installation of automatically closing doors between cold storage or freezer rooms and the rest of the building.
       
  • Group 2 - Energy recovery and sharing
    • Category 4: Capture, recovery, and supply to third parties of heat or cold, with the exception of equipment and installations intended for cogeneration, are eligible when they enable an existing system to capture, recover, and/or supply energy (heat or cold) to third parties in an energy-efficient manner as defined in Regulation (EU) 651/2014.
    • Category 5: Investments in the utilization of expansion energy released in existing production processes or during the decompression of liquids pressurized for transport and only  for adapting existing installations (at least 5 years old) and systems for the utilization of that expansion energy.
  • Group 3 - Adaptation of equipment, installations, and industrial processes
    • Category 6:  Equipment and industrial production processes
      • investments made exclusively to reduce the energy consumption of existing combustion, heating, and air conditioning equipment, namely measurement and control systems (including detectors and sensors) and their software;
      • investments in new HVAC equipment to replace existing equipment with the aim of energy savings;
      • investments aimed at reducing energy consumption by adapting or replacing existing equipment, installations, or industrial processes;
      • investments in commercial and industrial refrigeration equipment.
    • Category 7: Electrification of industrial production processes to replace processes based on fossil fuels
  • Group 4 - Flexibility:
    • Category 8: Temporary storage of electrical and thermal energy
  • Group 5 - Renewable energies
    • Category 9: Production of renewable energy

 

2. Investment list - Mobility

The mobility list contains 4 groups and 3 categories of investments aimed at promoting zero CO2 emission transportation:

  • Group 1: Rail transport (max 1.000.000 euro of eligible costs)
    • Category 1: Shunting locomotives: transforming the locomotive to a version without CO2 emissions or the purchase of one using electricity provided by a battery.
  • Group 2: Road transport
    • Category 2: Active mobility:
      • the acquisition of bicycles, motorized bicycles, speed pedelecs, personal mobility devices, mopeds, motorized tricycles and quadricycles, and motorcycles as defined in the general regulations on road traffic police and the use of public roads, as well as their complementary cycle-logistics and transport accessories (bags, boxes, trailers, etc.); if they do not emit CO2 through the exhaust pipe and are exclusively intended for logistics services, goods transport, transport of tools useful for the exercise of a professional activity, or passenger transport; or are acquired to replace vehicles that emit CO2 through the exhaust pipe.
      • the acquisition, construction, or conversion of real estate intended for the storage of the vehicles mentioned in former bullet, whether or not these vehicles have been subject to investment deduction;
      • the installation of a changing room or sanitary facilities, with or without showers, with the aim of making them available to staff members who use these vehicles;
      • bicycle and pedestrian infrastructure that is accessible to the public and connected to existing pedestrian and/or bicycle infrastructure (the amount eligible for investment deduction is limited to 1.000.000 euro per investment).
    • Category 3: Other transport on wheels (max 500.000 euro eligible investment cost per investment) provided that the vehicles concerned are not used for the transport of fossil fuels: emission-free vehicles for transport of goods or people .
  • Group 3: Sea and intermodal transport provided that they relate to ships flying the Belgian flag or vessels holding a certificate of belonging to the Belgian fleet or Rhine navigation, and provided that these ships or vessels are not intended for recreational use.
  • Group 4: Charging infrastructure for green hydrogen and electrical charging infrastructure for vehicles subject to group 2 - category 3 and group 3.

 

3. Investment list - Environment

The environmental investment list includes 3 groups and 4 categories aimed at promoting sustainability and reducing environmental impact.

  • Group 1 - Resource management: Investments for the collection, sorting, processing, or treatment of products, raw materials, or waste are only eligible if they comply with the waste hierarchy based on the best available techniques for the product, raw material, or waste stream in question.
    • Category 1: Reduction of raw material use and waste
      • 1.1 Water-saving devices: water fountains connected to the drinking water supply and grey water recovery systems.
      • 1.2 Equipment or installations contributing to the reduction of single-use products and the transition to reusable products: equipment or installations technically necessary to collect reusable products, industrial cleaning equipment or installations for cleaning and drying reusable products, disinfection installations for medical devices aimed at reuse.
      • 1.3 Equipment or installations for repair, sorting, or dismantling for the purpose of reuse, preparation for reuse, or recycling
      • 1.4 Equipment for combing, spinning, weaving, and knitting, specifically made to process recycled textile fibers into a (part of a) textile product
  • Group 2 – Climate
    • Category 2: reduction of greenhouse gasses:
      • 2.1 Medium voltage switching system without fluorinated gases
      • 2.2 Medium voltage switching system without fluorinated gases (adjusting existing situation)
      • 2.3 High voltage switching system or gas-insulated line (above 52 kv) with low gwp insulating gas
      • 2.4 High voltage switching system or gas-insulated line (above 52 kv) with low gwp insulating gas (adjusting existing situation)
      • 2.5 Decarbonization of industrial production processes by a specified production method
    • Category 3: environmental adaptation
      • 3.1 Greening of non-public areas of an establishment unit, including parking lots and gardens, including paved areas (adapting an existing situation)
      • 3.2 Installations for protecting natural persons and businesses against the harmful effects of floods and preventing pollution from entering floodwaters
  • Group 3 - Investments to improve the environment
    • Category 4: Chemical substances in a circular economy: investments that enable the replacement of the use of substances of concern. The substances to be replaced must be marketed as such (within the meaning of article 3 of the REACH regulation) and a number of specific requirements apply as defined in several sub-annexes.

 

4. FLANDERS ONLY: New web application features

To streamline the submission process for investment deduction requests, the Flemish agency VEKA has launched a new web application. Key features of the application include:

  • Secure e-ID Login: Users can access the application securely using their electronic ID.
  • Required email information: Email addresses for the contact person, company, and tax authorities must be provided during the submission process.
  • Upload of supporting documents: All necessary supporting documents must be uploaded at the time of submission, removing the need to send a signed PDF afterward. These documents include:
    • Technical descriptions of the investments.
    • Justification and calculation of the percentage of energy savings for specific categories.
    • Justification and calculation of the increase in the relative share of annual tonnage transported by rail or waterway.
    • An option to upload a list of investment locations for identical investments at different sites.
    • Invoice details, either manually entered for up to 10 invoices or uploaded as a table for more than 10 invoices.
       

Conclusion

The recent changes introduced by the Belgian government through the new Royal Decree bring significant updates to the Belgian investment deduction regime as of 01 January 2025. In addition to a ‘base’ deduction and a ‘technology deduction’, a ‘thematic deduction’ was introduced. The technologies for which the thematic deduction can be applied have been listed in three separate lists—Energy savings investments, Mobility investments, and Environmental investments.

Belgian-based companies should carefully review the new criteria to understand the potential impacts on their investment plans and opportunities for the application of the different deductions. Specifically for the thematic deduction, compared to the prior investment deduction for energy saving investments, the deduction rate has increased significantly to 30% (or 40% for small companies and individuals) and the scope has also expanded to environmental investments (such as investments fostering decarbonization or a circular economy). At the same time, additional complexities are introduced such as the need for many energy technologies to have been subject to an energy study or audit to be eligible, cumulation restrictions with other public funding sources, undertakings in difficulties not qualifying for the incentive, etc. which need to be carefully assessed before applying the thematic deduction.

In case of any further questions with regard to these developments, please do not hesitate to reach out to your trusted EY person of contact.

1 Law of 12 May 2024, Belgian Official Gazette 29 May 2024