Federal government approves second draft tax law

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.

The first series of tax measures was included in the draft program law (see our earlier newsletter) of which the adoption by the Belgian Parliament 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 individual income tax (for the measures related to corporate tax and tax procedure, see here):

The ‘inpat’ regime will be made more attractive. The part of the expenses proper to the employer will be limited to 35% (instead of 30%) and its absolute ceiling of EUR 90.000 will be abolished. The minimum salary will also be decreased from EUR 75.000 to EUR 70.000. These changes apply to salaries paid or attributed as from 1 January 2025.

Plug-in hybrid vehicles costs will be deductible for a longer period, but only for the purposes of individual income tax.

Fossil fuel costs of plug-in hybrid vehicles purchased, leased or rented as from 1 January 2026 are not deductible.

The 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.

Furthermore, the current minimum deduction of 75% for vehicles purchased before 1 January 2018, will decrease by 5% annually starting in assessment year (AY) 2027, reaching 50% as from AY 2031.

Several tax benefits will be abolished:

• Exemption PC-privé: no longer applicable to interventions by employer as from 1 October 2025;
• Exemption capital gains business vehicles: no longer applicable to capital gains realized as from 1 September 2025;
• Exemption for social liabilities: no new exemptions for salaries attributed as from 1 October 2025;
• Exemption for additional personnel exports/quality care: no longer exemption for hires as from 1 September 2025;
• The exemptions for traineeships and for additional personnel with low wage, the increased lump-sum deduction for long distances and the tax reductions for capital losses private privak, acquisition electric vehicle, expenses development fund, domestic servant, adoption and legal assistance will be abolished as -from AY 2026.

The tax reduction for donations decreases from 45% to 30% as from AY 2026.

• Mortgages: Abolition of deduction of interest on loans for other than own dwelling – as from AY 2026, also for current loans;
• Flexijobs: increase of the exemption from EUR 12.000 to EUR 18.000 (and to be indexed) – as from income year 2025;
• Alimony payments: gradual reduction of the deduction and corresponding taxation from 80% to 50%, starting as from 2025 - no deduction and corresponding taxation if paid outside EEA and Switzerland, also as from 2025;
• Allowable means of existence for tax dependent persons: general increase for children to 12.000 EUR (indexed amount for AY 2026); individuals (including children) enjoying professional income which are deductible business expenses for the taxpayer cannot be considered as dependent individuals (extension of salary to professional income); individuals receiving a living wage can no longer be considered as tax dependent persons; only scholarships which lead to the constitution of social security entitlements are not allowable means of existence (previously all scholarships were not allowable): the doubling of the exclusion for income from student labor has been removed from the final draft law; entry into force: as from AY 2026;
• Indexation: freezing of indexation of tax expenses at level of AY 2025 up until AY 2030 (with some deviations, e.g. for pension savings);
• Tax credits: Doubling of tax credit for own means (self-employed) – as from AY 2026.

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.