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Tax on Companies and Businesses in Belgium

An overview of the different taxes paid by companies in Belgium, including information on corporation tax, tax payable by a company director and special issues relating to taxes for companies.

Disclaimer: Tax law is complex and every effort has been made to offer information that is current, correct and clearly expressed. The information in this summary is intended to be no more than a general overview of the position and certain details have been deliberately omitted. The contents of this page should not be taken as an authoritative statement of Belgian tax law and practice. Neither the author nor the publisher are responsible for the results of actions taken on the basis of information contained in this summary, nor for any errors or omissions. This text is not intended to render legal, accounting or tax advice. Readers are encouraged to seek professional advice concerning specific matters before making any decision.

On this page there is information on:

Tax Payable by a Company Director
Tax Payable by a Company
The Basic Rate of Corporation Tax
Lump Sum Social Security Contribution
Special Issues Relating to Tax for Companies

Tax is paid in advance. If it is paid after receipt of income, the rates are higher. Banks often offer loans to help business people with advance payments.

Note: The income of self-employed people established as natural persons is deemed to be personal income for tax purposes.

See AngloINFO INFOrmation page Self Employed in Belgium

Tax Payable by a Company Director

A company director is a private person who:

is mandated to act as a director, general manager, liquidator or the like
holds a senior job or position within the company that is concerned with day-to-day management, of a commercial, technical or financial nature, without a contract of employment

Company director's taxable income

The following are considered as taxable income for company directors:

Interest-bearing advances: Interest on advances (that is, on any cash loan, whether or not represented by shares) may be treated as dividends under certain circumstances. If that interest qualifies for treatment as dividends, it is subject to withholding tax at a rate of 25 percent and cannot be deducted from the company's tax as a business expense. If it is treated as interest, it is subject to a 15 percent rate.
Rents from letting a property to the company: A company director may rent to the company a building or land that he owns. In principle, the rent that he is paid for the property is deemed to be income from property and is taxed at only 60 percent (after a lump sum deduction, generally 40 percent). Tax may also be further reduced by deducting interest paid on loans for acquiring or maintaining real-estate that generates income. Income from real-estate is not subject to social security contributions. In order to prevent abuse, such letting income is treated as professional income where it exceeds certain ceilings. The rent that the company pays is deductible from its taxable income.
Income from the professional activities undertaken by company directors: Such income consists of various items, the most important of which is professional remuneration. Statutory wage-bill tax (bedrijfsvoorheffing/précompte professionnel) is withheld on remuneration paid to company directors - this does not cancel out the obligation to make tax payments on account.

Deductible expenses for company directors

Company directors may deduct from their professional income the amount they pay in social security contributions and the premiums for minor-risks insurance that they pay to a mutual health insurance fund. Other business expenses are similarly deductible.

Deductible expenses are determined in a number of ways:

On a lump-sum basis: an amount representing 5 percent of gross income (after deduction of social security or similar contributions) received as a company director, subject to a maximum deductible ceiling of €3,200 (tax year 2007)
On the basis of certificates and receipts: Actual expenses include interest paid on capital borrowed in order to purchase shares in the company – except by subscription – from which remuneration is periodically received and, under certain conditions, sums devoted to settling the company's losses
Private persons may also benefit from a tax credit calculated on any increase in investment in the business they make. The tax credit is 10 percent, subject to a ceiling of €3,750
An additional deduction of 3.5 percent to 13.5 percent on certain new investments is also possible
Notional interest may be deducted in proportion to the company's net worth

Losses

Business losses sustained by a one-person business in previous tax periods may be recovered, without limitations in time or as to amount. Losses sustained by either spouse may be deducted from the other spouse's income. Any residual loss after this offset may be carried forward to future tax periods.

Tax Payable by a Company

A company's profits are subject to corporation tax, which is levied on the company's taxable income less any allowable deductible expenses.

Company's taxable income

The items that make up the tax base for a company are:

Retained earnings (reserves)
Dividends allocated or distributed to members (private limited liability companies, limited liability partnerships, unlimited liability cooperative societies) or shareholders (companies limited by shares)
Non-deductible expenditure
Excess interest paid on interest-bearing advances. If this interest is treated as dividends for tax purposes, this must be included in the tax base

Deductible expenses

Deductible items are:

All remuneration (of any kind) paid to company directors
Employers' social security contributions
Workers' pay
Expenses relating to benefits of any kind
Group insurance premiums

Losses

For tax purposes, a company that sustains losses can recover them without limitation in time or amount. In the event of a takeover or change in control of the company during the tax period, this possibility ceases to exist, unless the takeover or change in control meets legitimate needs of a financial or economic nature.

The Basic Rate of Corporation Tax

The basic rate applies as long as one of the following conditions is met:

Taxable income is over €322,500
The company distributes dividends in excess of 13 percent of paid up capital at the start of the tax period
At least 50 percent of the certificates representing the share capital are held by one or more other companies (as long as the company itself is not approved partnership (CV/SC)
The company is other than an approved partnership and has paid a minimum of €33,000 in the tax period to at least one company director. For companies whose taxable income does not exceed €33,000, the reduced rate of tax continues to apply if the highest remuneration paid to a company director in the tax period is equal to or exceeds the company's taxable income
The company forms part of a group which includes an approved coordination centre
The company is one of the following:

an approved coordination centre
located in an employment zone
an open-end investment fund (beleggingsvennootschap met veranderlijk kapitaal/société d`investissement à capital variable, BEVEK/SICAV)
a closed-end investment fund (beleggingsmaatschappij met vast kapitaal/ société d`investissement à capital fixe, BEVAK/SICAF
a loan investment fund (vennootschap voor beleggining in schuldvoreringen/société d'investissement en créances, VBS/SIC)

The company is other than an approved partnership and has equity holdings with an investment value of more than half of the revaluation value of the paid-up capital or of the paid-up capital plus taxed reserves and capital gains booked (with the exception of active, permanent participating interests representing at least 75% of the paid up capital of the company issuing the shares is concerned)

Lump Sum Social Security Contribution

All companies subject to Belgian corporation tax or tax on non-residents must pay a lump sum social security contribution each year. There is a ceiling on the contributions of €852.50. This contribution is tax-deductible.

To make these payments, the company must register with a social security contributions fund. Newly formed companies may, under certain conditions, be exempt from payment of this contribution. The social security contributions funds can advise on eligibility for such an exemption.

Special Issues Relating to Tax for Companies

Capital duty

In principle, the contribution of real estate to a company is exempt from capital duty (kapitaalsbelasting/droit d'apport). However, where it relates to the contribution by a private person of "residential property" located in Belgium, capital duty is charged at a rate of 12.5 percent (10 percent in the Flemish region).

Registration duty on mixed contributions

A contribution of real estate (mortgaged or not) whereby the company takes up part of a contributor's debt is called a mixed contribution. This type of contribution is partially subject to registration duty (registratierechten/droits d'enregistrement) of 12.5 percent. The mixed contribution rule does not apply where the contribution relates to a branch of activity or is a whole asset contribution. In these cases, the contribution is fully exempt from registration duty.

Special levy on undeclared commission (geheime commissies belasting/cotisation spéciale sur commissions secrètes)

A special levy of 309 percent is payable on charges not adequately justified by salary slips or by other documents (commission, undeclared remuneration and concealed profits that are not part of the company's assets). However, the company may deduct this special contribution as a business expense.