Second draft tax law approved by federal government

The Belgian federal government has approved, in a second reading after legal vetting by the Council of State, a draft law which contains a second series of tax measures included in the government agreement (hereafter: the second draft law). The second draft law will be sent to Parliament for adoption. It is expected that the law will be adopted and published in the Belgian Official Gazette in the coming weeks.

Approval by the Belgian parliament of the draft program law containing the first set of tax measures (see our earlier newsletter) was postponed last week. Further tax measures of the government agreement are expected to be elaborated in separate thematical draft laws, including the capital gains tax on which the government reached an agreement on 30 June 2025 (see here).

Based on available information, the second draft law contains the following tax measures related to corporate tax and tax procedure (for the measures related to individual income tax, see here):

Dividends received deduction

The dividends-received deduction will also apply to the amount of the “received group contribution”. This adjustment was necessary in light of recent case law of the European Court of Justice. Recently, the Court of Justice of the EU ruled in the case of John Cockerill that the current prohibition violates the Parent-Subsidiary Directive. This change will already apply as from the 10th day following the publication of the program law in the Belgian Official Gazette.

In respect of DBI-beveks/RDT-sicavs, a separate tax of 5% will be due on the exempt part of capital gains realized on the sale of shares in such investment companies (excluding the private privak). Withholding tax on dividends from a DBI-bevek/RDT-sicav will also be creditable only if a minimum salary is paid to the business leader (cfr. condition for reduced corporate tax rate of 20% on first EUR 100.000 of income). The changes will apply as from assessment year 2026. Any change to the closing date of the financial year as from 3 February which is not justified by other motives than avoidance remains without effect.

As a reminder, the draft program law tightens the participation condition for the dividends received deduction for participations of less than 10%.

Investment deduction

Existing limitations on the use of the carry-forward and on the carry-forward in time will be abolished. The prohibition to combine the investment deduction with regional aid will also be abolished. These changes will enter into force with retroactive effect as from 1 January 2025. The increased thematic deduction of 40% for investments in energy efficiency, renewable energy, carbon emission-free transport, environment-friendly investments and supporting digital investments will also be available for large companies (previously 30%) as from assessment year 2027.

Car taxation

The extended deduction of costs of plug-in hybrid vehicles will, according to the second draft law, only be applicable for the purposes of individual income tax (see here). The corporate tax regime of costs of plug-in hybrid vehicles will thus not change: costs of such vehicles purchased, leased or rented as from 1 January 2026 will no longer be deductible.

The existing fake plug-in hybrid regime will also apply to vehicles with a CO2 emission of more than 75 g/km if the emission is calculated according to the Euro 6e-bis norm or a later norm.

Abolition of tax benefits

Several tax benefits, which are also applicable to corporate tax, will be abolished, such as the exemption of capital gains on business vehicles (for capital gains realized as from 1 September 2025) and the exemption for social liabilities (no new exemptions for salaries attributed as from 1 October 2025).

Assessment and investigation periods

While the 4-year statute of limitation period in the case of non- or late filing of the tax return is maintained, the periods of 6 and 10 years for semi-complex and complex tax returns will be reduced to 4 years, eliminating the need for a distinction as all will be called complex tax returns. The period for fraud will be reduced from 10 to 7 years for both income tax and VAT. The previous legal text on the notification of suspected fraud will be reinstated. The changes will apply retroactively as from assessment year 2023 (1 January 2023 for VAT).

If you have any questions on the above measures and their implications to you tax position, do not hesitate to reach out to your trusted KPMG tax advisor. We can provide you with more insights on these rules and expected future developments. We can also help you with assessing their impact and adjusting your tax compliance strategy.