Draft bill on job creation and purchasing power (tax shift)

The Belgian federal government is finalizing a draft bill containing various tax measures on the much debated “tax shift”.

The following measures are envisaged by the draft bill.

Speculative tax

A speculative tax of 33% on capital gains realized by individuals on listed shares and certain derivatives to be listed in a royal decree. This list will include at least options, warrants and share certificates. If the gain is Belgian sourced, non-resident could also be subject to the speculative tax.

The tax will only be due if the gain is realized:

  • within a period of six month after the acquisition and
  • outside the framework of a professional activity.

The lifo (last in first out) method will be used in calculating the threshold of six month.

Losses will not be deductible. However, an exemption will be provided for employee share option plans and alike.

The speculative tax will apply on sales realized on or after 1 January 2016.

Investment income

The withholding tax rate on investment income (dividends and interest) will be increased from 25% to 27%. It scope will also be enlarged as the reduced rate for interest from folk loans and dividends from shares in real estate investment companies will be abolished.

However, the withholding tax rate on interest from regulated savings accounts exceeding the threshold and the so-called Leterme-bons remains 15%.

The 27% withholding tax rate will apply on income granted or attributed on or after 1 January 2016.

Investment deduction

The investment deduction in the personal income tax and the corporate income tax for general investments will be increased to 8% and an supplementary spread deduction  is introduced for investments in fixed assets for the production of high technology products(totalling 20.5% for tax year 2016).

The increased investment deduction will apply on investments done or realized on or after 1 January 2016.

Salary withholding tax

Employers producing high technology products can benefit from an increase of 2.2% of the general salary withholding tax exemption to the extent that its employees effectively perform their duties on such production.

The general exemption, which also applies to employers providing (night) shift work, will be set at 22.8%.

The increased salary withholding tax exemptions will apply on salary granted or attributed on or after 1 January 2016.

School buildings and esthetical surgery

The general VAT rate of 21% will be lowered to 6% in respect of construction works on school building. However, as of 1 January 2016, services related to esthetical procedures will not be exempt from VAT anymore.

lump-sum expense deduction

The lump-sum deduction for expenses incurred by employees will be increase gradually as of tax year 2016 and should reach in tax year 2019 a maximum percentage of 30% limited to 2.950 EUR (to be indexed).

Personal income tax rates and basic allowance

The current five tranches of the progressive personal income tax rates will be reduced to four tranches. The 30% tranche of will be joined gradually with the 25% tranche. The 30% tranche should disappear as of tax year 2019.  The 40% tranche will be increased gradually at the expense of the 45% tranche. The 50% tranche remains the same.

In order to minimize the effect of these amendments on the benefits of the basic and increased allowances, it is foreseen that the allowances will remain to be calculated on the old progressive rate structure.

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