Belgian Law on minimum taxation amended

The Belgian Parliament adopted the proposed Law on various tax provisions. This Law introduces amendments to several areas of taxation, including the Law on minimum taxation adopted in December 2023 (see: Belgian law adopted on the Pillar 2 minimum taxation - KPMG Belgium).

The amendments to the Belgian Law on minimum taxation generally apply to fiscal years starting as from 31 December 2023. Most importantly, the new rules:

• Create a legal basis for registration of in-scope groups in the Belgian Commercial Register. In-scope groups are required to get a unique registration number for compliance purposes in Belgium. While further details on the practicalities of this registration process will be published shortly in secondary legislation, the following information is available:
  • The obligation to register in the Belgian Commercial Register for GloBE purposes applies to in-scope groups with Belgian Constituent Entities, regardless of whether the UPE is in Belgium or abroad.
  • A notification for registration will have to be submitted within a short timeframe, which is expected to be between 15 May 2024 and 30 June 2024. One of the reasons for the short deadline is the advance payment mechanism in the Law on minimum taxation, under which IIR and/or DMTT prepayments need to be made by 20 December 2024 to avoid tax increases. 
  • There will be a specific form for the notification for registration, which will require detailed information about the group, the consolidated financial statements, and the ownership structure. With respect to the ownership structure, in-scope groups will have to list group entities and characterize them for GloBE purposes (e.g., Partially Owned Parent Entity, Intermediate Parent Entity).
• Introduce the requirement to file an additional form about the amount of IIR and UTPR. Based on the information in this form, the Belgian Tax Authorities will be able to issue an assessment notice and avoid potential delays caused by late receipt of data through the system of centralized filing of the GloBE Information Return (incl. subsequent dissemination to involved jurisdictions).

• Modify the definition of Qualified Refundable Tax Credit to incorporate the definition of Marketable Transferable Tax Credits, in line with the OECD Administrative Guidance of July 2023.
• Introduce the election to include in the GloBE Income and Loss all dividends received from Portfolio Shareholdings (<10%) regardless of the holding period, in line with the OECD Administrative Guidance of February 2023.
• Introduce a restriction to the deductibility of the Domestic Minimum Top-up Tax (DMTT) from the Jurisdictional Top-up Tax, in line with the OECD Administrative Guidance of July 2023 regarding the QDMTT. Accordingly, the DMTT is not deductible as long as it is disputed by the group in an administrative or judicial proceeding, or as long as it is not collectible.
• Provide that the rule on the exclusion of deferred taxes with respect to tax credits does not apply in the case of substitute loss carry-forward DTAs, in line with the OECD Administrative Guidance of February 2023 about Loss-making Parent Entities of CFCs.
• Modify the definition of the amount of adjusted covered domestic taxes, in line with the OECD Administrative Guidance of July 2023.
• Introduce a transitional rule for Blended CFC regimes (e.g., GILTI), in line with the OECD Administrative Guidance of February 2023.

• Introduce the QDMTT permanent safe harbour, in line with the OECD Administrative Guidance of July 2023, as well as the permanent safe harbour for non-material CEs, in line with the OECD Administrative Guidance of December 2023.
• Introduce the transitional UTPR safe harbour, in line with the OECD Administrative Guidance of July 2023; and incorporate the hybrid-arbitrage rules in the transitional CbCR safe harbours, in line with the OECD Administrative Guidance of December 2023.

• Correct the charging provisions regarding Partially Owned Parent Entities (POPEs) to align the wording with the international rules. Accordingly, the POPE-exception will apply when the POPE is “wholly” owned by another POPE.
• Correct the definition of transition year, and the rule for the exclusion in the initial phase of international activity, to align the wording with international rules.

The most pressing aspect of the above developments is the registration requirement in the Belgian Commercial Register for GloBE purposes. There is a short timeframe for compliance, which makes that the required information must be readily available (e.g., ownership structure). We therefore advise all in-scope groups with Belgian Constituent Entities to take immediate action for timely registration.

If you have any questions on the above developments and their implications to your business, do not hesitate to contact your KPMG advisor. We are delighted to assist you with our dedicated experts and multidisciplinary teams.