Please see below some noteworthy points of attention surrounding the 2023's edition which are based on the most frequently asked questions we receive.
For companies with a financial year ending between 12 December 2022 and 28 February 2023, this year's deadline to submit their tax return is 9 October 2023. For those concluding their financial year later, the deadlines for filling fall later. A comprehensive overview of these deadlines, published by the tax authorities, is available online.
2. R&D tax credit
A point of attention in this year's tax return concerns the R&D tax credit. Following the introduction of a new law provision (applicable regarding taxable periods ending as from 1 April 2022), it is no longer possible to combine the R&D tax credit with partial exemption from payment of withholding tax for R&D.
Companies that have been beneficiaries of both tax incentives must acknowledge this recent change and potentially assess its implications. For additional details, please refer to our prior newsflash.
3. EBITDA rule
On 12 January 2023, the tax authorities issued (once again) a circular explaining and commenting on the application of the deduction limitation applied to “exceeding borrowing costs” (known as the “EBITDA rule”), as well as any amendments thereto. The circular notably addresses the application of the EBITDA rule in the case of (tax-neutral) restructurings.
Given its complexity, the EBITDA rule leads to numerous issues and adverse tax consequences in practice (which explains the number of circulars written about this rule). It is therefore crucial for companies falling within its scope (which is not limited to large multinational groups) to assess the potential impact of this rule, well before, filing their tax returns (and ideally during the computation of the tax provision).
4. Recharged costs
Previously, an administrative tolerance was applied to recharges of reception and restaurant costs according to which their tax deductibility could be accepted (under certain conditions) in the hands of the taxpayer who recharged these costs to third parties and insofar as these costs are not deductible in the hands of the latter. This administrative tolerance has been incorporated in the law and has been extended to other costs i.e. clothing and specific leisure costs (e.g. hunting, fishing).
As part of the ongoing efforts to combat climate change, a non-deductible boarding tax per passenger was introduced in 2022. This tax has applied to airlines since 1 April 2022, and was typically passed on to airline customers through recharges. The tax deductibility rules described above also applies to these recharges.
5. Company cars
One of the government's key objectives was to amend the company car landscape to achieve a zero-emission standard. Through the law organizing the tax and social greening of mobility, significant amendments have been introduced regarding the deductibility of company cars. These changes took effect on 1 July 2023 (following a deferral period).
These key changes include:
- For thermal and hybrid cars acquired, leased, or rented between 1 July 2023, and 31 December 2025, a gradual reduction of the tax deductions over time to eventually reach zero. This reduction is determined by the calculation based on CO2 rate, albeit subject to new more stringent limits;
- Regarding newly acquired electric cars, deductibility will see a gradual reduction beginning on 1 January 2027.
Importantly, only the date of signature of the purchase order or leasing/renting contract is to be considered. A grandfathering clause is provided for thermal and hybrid vehicles acquired before 1 July 2023, allowing them to remain under the old regime without application of new limits until they are sold or decommissioned.
Regarding the benefit-in-kind calculation, there are no immediate changes (still partially considered a disallowed expense), although it may be indirectly influenced by CO2-related adjustments.
Please also note that a temporary increased deduction of 200% was made available for companies that installed a "smart" public-accessible charging station. This incentive was applicable for installations completed between 1 September 2021 and 31 December 2022 (150% since 1 January 2023).
6. Recovery reserve
It is still possible for companies to create a recovery reserve based on losses incurred during tax year 2021. Under certain conditions, the "recovery reserve" enables corporate taxpayers to (gradually) temporarily exempt taxable profits relating to tax years 2022, 2023 or 2024.
Technically, it takes the form of a tax-free "recovery reserve" in the tax return. It cannot exceed the accounting loss incurred during financial year 2020, with an absolute cap of €20 million. For additional details, please refer to our prior Newsflash.
7. Provisions for risks and charges
When booking provisions for risks and charges, taxpayer should bear in mind that, since 2018, these provisions must result from a legal, regulatory, or contractual obligation to be tax exempt. This latest condition holds significant weight, particularly in the context of tax audits.
8. Payments made to tax havens.
Belgian taxpayers are required to disclose any payments made to entities in tax havens. This requirement applies to payments that, when combined, exceed €100,000 to a single recipient. To comply with this obligation, it is essential to identify the jurisdictions recognized as “tax havens”, i.e. :
- Countries listed on the OECD blacklist;
- Countries listed on the blacklist outlined in article 179 the Royal Decree implementing the Belgian Income Tax Code;
- Countries listed on the EU blacklist.
It's noteworthy that the EU blacklist, being the most recently updated list, has seen recent additions such as Russia and Costa Rica. Furthermore, in their most recent circular[DO1] , the tax authorities have taken a stricter stance of the OECD list: excluding also countries considered as partially compliant, such as such as Malta or Turkey. It is recommended to always have a look at the most recent version of these lists before filing the corporate income tax returns.
9. “Basket rule” amendments (tax year 2024)
In the tax year 2024, a significant change will take place regarding the "basket rule", a rule that restricts (some) available deductions on profits. The provisions, which allows tax deduction up to €1m+70% of the taxable basis exceeding €1m, have been temporarily (in principle, for one year) revised to €1m+40%.
This adjustment implies that taxpayers typically exceeding the €1m threshold may experience a significant increase of their tax year 2024’s liability. Therefore, companies should carefully analyze the implications of this change and, if possible, already take appropriate actions to reduce their future increased liability.
In case of questions, please do not hesitate to reach out to your regular contact within the Fieldfisher Belgium tax team.
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