Tax measures in Budget 2024

• As regards the existing permanent scheme for demolition and reconstruction of real estate in Belgium’s 32 central cities: extension of the reduced VAT rate of 6% under this permanent scheme to the entire Belgian territory as from 1 January 2024, with introduction of social conditions: individuals’ single and own residence and surfaces not exceeding 200 m² (also for residence destined for long term leases in the context of social policy).
  • Reduced VAT rate of 6% no longer applicable for sale by real estate developers as from 1 January 2024.
  • However, a transitory regime is provided until 31 December 2024 in respect of the expiring temporary regime for permits requested before 1 July 2023 and in respect of the expiring regime for the 32 central cities for permits requested before the end of this year.
• The reduced VAT rate of 6% on heat pumps is prolonged for 1 year.
• Reduced VAT rate of 6% for supply and installation of solar panels no longer applicable as from 1 January 2024 (except for private dwellings > 10 years under the reduced VAT rate of 6% for renovation works).
• Increase of registration duties on ground lease and building right from 2 to 5%;
• Stricter conditions for beneficial tax regime specialized real estate investment fund: fund must be registered with the Ministry of Finance for 5 years or shares obtained following contribution into fund must be held for 5 years, otherwise corporate tax of 10% in addition to initial exit tax of 15% would be due

• Introduction of mandatory e-invoicing for taxable persons (B2B) as from 1 January 2026.
• Stricter CFC rules:
  • shift to option A of the ATAD Directive: taxation of passive income (interest, royalties, dividend and income from disposal of shares) subject to low taxation abroad (defined as half of the taxation that would occur under the Belgian rules), unless the taxpayer can prove that sufficient substance is available locally;
  • implementation of ATAD: measures to avoid double taxation and optional exceptions in art. 7, section 3 ATAD.
• Anti-abuse measures of art. 54 and 344, §2 BITC made ECJ-proof:
  • payment or attribution must be made directly or indirectly to enterprise or establishment with which link of mutual dependence exists;
  • counter proof can be delivered that payments or attributions are made to enterprises subject to effective income tax of at least half of the income tax due if foreign entity was established in Belgium;
  • counter proof: sincere and real transactions – other than artificial constructions;
  • art. 344, §2 BITC: both direct and indirect transfers would be targeted
• Stricter Cayman tax in line with the recommendations of the Court of Audit:
  • introduction of exit tax;
  • introduction of minimum participation for non-related parties (in respect of fonds dédiés);
  • introduction of rebuttable presumption that individual mentioned in the UBO register is the founder of the legal construction;
  • targeting of interposition of regular company in chain construction (extension of definition of chain construction);
  • abolition of exemption of WHT on distributions which have been subjected to their Belgian tax regime in case income was exempted according to this Belgian regime;
  • clarification that income obtained through legal construction will always be taxed transparently even if redistributed in the same calendar year;
  • clarification of tax consequences of transfer to Belgium;
  • declaration of legal constructions completed with mandatory annex to the tax return;
  • other recommendations regarding exchange of data, audits, administrative clarifications, etc. will also be considered.
• Better auditing of application of legal entities tax and of special corporate tax regimes in light of the reformed legislation on associations, in particular the correct application of art. 181 and 182 BITC.

• Annual tax on credit institutions is increased by turning it into a progressive tax with a new rate of 0,17581% for savings deposits above 50 billion EUR and its tax deduction is completely abolished, as well as the deduction of the annual tax on collective investment institutions and insurance companies (already limited to 20%)

• Decrease of excise duties on electricity and increase of excise duties on fossil fuels (gas and propane) (with the exception of fuel oil and coal) as from 2028 – professional users will be excluded
• Further phasing out of the system of professional diesel (decrease with 10 EUR/1.000 liter), refund requests can only be made electronically
• And finally: an increase of excise duties on tobacco and alternative tobacco products

The agreed measures will now be translated into legislation which is expected to be approved by the end of the year.