Coalition agreement of the new Belgian Federal Government

The formation of a new Belgian federal government is agreed by the negotiating parties on 31 January 2025. The policy choices and agreed measures of the new government are outlined in the federal Coalition Agreement 2025-2029.

The Coalition Agreement foresees a tax reform. This reform aims at strengthening the purchasing power of working people and increasing the competitiveness of the economy. It aims at incentivizing investments which contribute to climate change and sustainable economy. It also preserves the existing research and development tax regimes.

The most important tax measures of the Coalition Agreement are summarized below.

Corporate income tax

• Dividends-received deduction
  • The dividends-received deduction becomes an exemption.
  • The minimum participation condition of 10% remains, but the alternative minimum acquisition value of 2,5 MEUR is increased to 4 MEUR. The participation must also constitute a financial fixed asset. The stricter conditions do not apply to SMEs (cfr. art. 2, §1, 4°/1 BITC), but only for and between large companies.
  • In respect of DBI-Beveks/RDT-Sicavs, a taxation of 5% on the capital gain upon exit will be introduced. No credit of withholding tax will be possible unless a minimum director’s salary will be attributed (see also below)

• Incentives for R&D:
  • Accelerated depreciation: large companies will be able to deduct 40% in the first year, while SMEs can apply degressive depreciation again.
  • The exemptions of payment of wage withholding tax will be clarified and improved.
  • In respect of the investment deduction, the regional attestation requirement will be abolished.
  • Companies can obtain recognition as a research center, thus benefiting from a stable fiscal framework.
  • Innovation income deduction: no mention of changes
  • Legal certainty will be provided by means of an agreement between Belspo and the tax authorities.
     
• Management companies/distribution of reserves
  • The minimum salary condition for obtaining the reduced CIT rate of 20% on the first EUR 100.000 of income will be increased from 45.000 EUR to 50.000 EUR and will also be indexed. A maximum of 20% of that salary can consist of benefits in kind.
  • The liquidation reserve regime will be harmonized with the VVPRbis-regime: the waiting period will be reduced from 5 to 3 years, distribution after that period will be taxed at 6,5% instead of 5% as from 1 January 2026 for new liquidation reserves. Earlier distributions will be taxed at 30%.
  • A deduction for entrepreneurs will be introduced whereby a first tranche of profits (still to be determined) can be deducted. The deduction will be further increased as from 2029.
     
• Other corporate tax measures
  • Tax consolidation (group contribution regime) will not only be possible in case of direct participations, but also in case of indirect participations. New companies will no longer be excluded. The dividends-received deduction can be applied on the received group contribution.
  • Earnings stripping rules: no mention of changes
  • Exit taxation: the transfer of seat will be considered as a fictitious liquidation for tax purposes.
  • Carried interest: a specific, competitive tax regime will be introduced with a maximum rate of 30% on movable income. There will be no impact on existing plans.
  • The investment deduction can be carried forward unlimited in time, without limitations. The thematic deduction will be increased from 30% to 40% for large companies (already the case for small companies).
  • The prohibition to apply deductions will only be valid in case of repeated infractions provided a tax increase of at least 10% is effectively applied and not in case of infractions in good faith or administrative omissions.
  • The additional tax base can be compensated with the losses of the year, not with previous losses.
  • Car expenses: the deduction limitation will be simplified, a broader transitional regime will be foreseen for hybrids

Personal income tax

• A tax (“solidarity contribution”) of 10% will be introduced on future realized capital gains on financial assets, including crypto assets, built up as from the moment of introduction of the tax. Historic capital gains are thus exempt.
  • Capital losses can be deducted within the year, without carry-forward.
  • The first 10.000 EUR (to be indexed) will be exempt.
  • In case of a considerable participation of at least 20%, 1 MEUR will always be exempt.
  • Capital gain between 1 and 2,5 MEUR will be taxed at 1,25%.
  • Capital gain between 2,5 and 5 MEUR will be taxed at 2,5%.
  • Capital gain between 5 and 10 MEUR will be taxed at 5%.
  • Capital gain as from 10 MEUR will be taxed at 10%
     
• Annual tax on securities accounts: the new government will investigate how to tackle evasion  cfr. the recommendations of the Rekenhof/Cour des Comptes.
• The expat regime will be improved with a tax free-allowance of 35% (instead of 30%), the abolition of the ceiling of 90.000 EUR and a decrease of the minimum gross salary to 70.000 EUR (instead of 75.000 EUR).
• Stock options and warrants: no mention of changes.
• Copyright income: no discrimination of digital professions. Works protected under book XI, title 6, of the Economic Law Code will qualify for the regime.
• New system guaranteeing wage withholding tax reductions for shift and night work after the end of the temporary arrangement.
• Higher net wages as from 2027 by an increase of the tax-free amount, a decrease of the special social security contribution and a reinforcement of the social work bonus.
• Employer social security contributions: introduction of a wage ceiling, an unlimited reduction for first employee of 2.000 EUR per quarter and a limited reduction for second to fifth employee of 1.000 EUR per quarter for three years.
• Introduction of a framework for costs proper to employer.
• Salary sacrifice limited to maximum 20%.
• Introduction of a legal framework for flexible reward.
• Reform of the mobility budget: mobility budget for everyone, also replacing existing employer interventions and a favourable tax and social security treatment.
• Existing collective bonus systems (cao/cct 90, profit premium) will be simplified and their scope harmonized.

VAT and other indirect taxes

In the field of indirect taxes, the measures are aimed at affecting climate, consumption, simplification of formalities and combatting fraud. Most importantly, the following measures were agreed: 

• VAT rates:
  • Temporary reduction from 21% to 6% for the supply and installation of heat pumps for a period of 5 years.
  • Extension of the demolition and reconstruction regime of 6% to supplies, subject to the current social conditions. For supplies, the surface criterion will be reduced from 200 m² to 175 m².
  • Increase from 6% to 21% for the supply and installation of fossil fuel combustion boilers in the context of a renovation (for dwellings older than 10 years).
  • Increase from 12% to 21% for coal.
     
• Clarification of VAT rules:
  • Publication of a new circular concerning the lump sum deduction of input VAT on company bicycles used both for business and private purposes. This circular will provide a solution for the difficulties caused by a lack of km-administration for bicycles.
  • Elaboration of a clear definition for renovation works and works leading to a new building. ; Analysis of the possible introduction of sustainability criteria.
     
• VAT compliance and reporting obligations:
  • Introduction of “near real-time reporting” as from 2028 for B2B transactions and transactions with registered cash register (“GKS”). This means that cash registers and payment and invoicing systems instantly and automatically transmit data to tax authorities. Small independents and small companies will be provided support.
  • Extension of the mandatory use of the white cash register to the entire hospitality sector (i.e., hotels, restaurants, cafes) to ensure level playing field, and to other sectors which are prone to fraud. There will be tolerance for small scale activities. The EUR 25.000 threshold will remain with a revised calculation method.
  • Simplification of various VAT register requirements and abolition of the “nihil” client listing requirement after introduction of e-reporting.
  • Extension of the scope of the VAT relief regime for donations of goods to recognized organizations (condition of commercial sales period will be relaxed and list of excluded goods will be revised).
  • Inquiring the internationally applied models of VAT receipts lotteries to stimulate the request for VAT receipts by consumers and combat VAT fraud.
     
• Excise duty rates:
  • The excise duty rate on electricity for businesses will be lowered to the European minimum.
  • Consider not only traditional tobacco products in excise rate adjustments but also new variants and alternatives (e.g., vaping).
  • The excise duty refunds on commercial diesel will be gradually reduced to a level that keeps us competitive with neighboring countries.
  • Removal of excise duties on zero-sugar drinks, tea, and coffee.
  • Explore which other excise duties can be reduced to counter cross-border shopping.
     
• Energy taxes:
  • Tax shift on energy products to meet climate related targets without increasing household costs.
  • Simplification of the embarkation tax for intra- and extra-EU flights by harmonizing the rate to EUR 5 per person per flight.
  • Advocating the introduction of tax on kerosine.
     
• Packaging tax:
  • Reduction of the packaging tax for all products that are significantly more expensive than in neighboring countries (e.g., packaging tax on water).
  • Abolition of packaging tax for reusable packages on beverages.
     
• Excise and Customs duties legislation:
  • Initiation of work on a new draft General Customs and Excises Duties Law.
  • Excise legislation will be codified and modernized.

Tax administration and procedures

To improve tax certainty, the agreed measures include especially:

• Contact to auditor: Facilitation of direct access to the auditor in all tax audits and disputes.
  
• Horizontal monitoring: Revival of the horizontal monitoring approach, incl. new benefits (e.g., quicker refunds and legal certainty).
  
• Account management: Introduction and implementation of account management by FPS Finance for large enterprises.
• Ruling Commission: Preservation of the decision-autonomy of the Ruling Commission and reform of the appointment procedure for college members.
• Tax arbitration: To reduce the number of tax disputes, transformation of the Tax Conciliation Service into a tax arbitration system, which latter will only be accessible after the administrative procedure is exhausted.
• Principle of good faith: Incorporation of the principle of good faith in the legislation, incl. clarification that when a taxpayer was audited on a certain element of its tax return and applied the same approach in subsequent year(s), then it will not be penalized in a later audit, provided no changes to legislation.

To combat tax fraud, several measures were agreed, including:

• Penalties: Reform of the policy and procedures for the application of penalties. For initial good faith errors, the automatic tax increase of 10% will no longer be imposed, but the taxpayer will only receive a notification. With respect to proportional VAT penalties, mitigating circumstances such as absence of financial impact for the Treasury, will be taken into account.
• Uniform procedures: Actions for more uniform procedures, deadlines and sanctions (i.e., penalties, tax increases and interests) for both direct and indirect taxes.
• Statute of limitations: The periods for tax audit and assessment will generally be 3 years (4 years for complex and semi-complex tax returns) as from 1 January of the assessment year, except in the case of (suspicion of) fraud. In the case of fraud, the period will be 7 years as from 1 January of the assessment year.
• Good faith: Taxpayers acting in good faith will be able to correct their returns without sanctions (i.e., penalties, tax increases and interests).
• Regularization: New stricter rules for permanent regularizations, incl. an increase of the rate to 30% for capital within the statutes of limitations period, and to 45% for capital outside of that period, except for taxpayers who are able to prove good faith.