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Immovable Withholding Tax for Equipment and Tooling Immovable Withholding Tax for Equipment & Tooling

As of 2010, industrial companies in Flanders have been able to accelerate the reduction of the taxable cadastral income of their industrial Equipment and Tooling, or even eliminate it completely, using the property tax scheme. An efficient accelerated reduction process requires close collaboration between those responsible for the technical and financial departments of the company, as well as with an external advisor who has the required experience.

The evolution of the regulations concerning Immovable Withholding Tax for Equipment and Tooling in the Flemish Region

The current arrangements for Immovable Withholding Tax for Equipment and Tooling in the Flemish Region are the outcome of a series of decisions taken by the Flemish Government:

  • On 18 December 2009, the Flemish Government applied its interpretation of the rules on property tax on industrial facilities to: as of 2010 decommissioning can be deducted from the taxable cadastral income. Additionally, investments in new Equipment and Tooling does not increase property tax.
  • Furthermore, decrees issued in 2013 and 2016, provided that such new investments in Equipment and Equipment not only remained exempt, but also gave rise to an additional reduction.
  • This favorable measure is not expected to be extended. This means that from 1 January 2020 onwards, new Equipment and Tooling investments will continue to be exempt from property tax but will no longer also result in a reduction in taxable cadastral income.

 

In recent years, it was crucial for companies in the Flemish Region to register and report their new investments in Equipment and Tooling so that the intended reduction in property tax would be applied. As this measure will no longer apply, it will (once again) be important to monitor not only new investments but also the decommissioning in order to be able still to benefit from a potential reduction in property tax.

How can you (continue to) take advantage of the system and achieve substantial savings in the short-term? You can do this by reviewing and adjust the taxable cadastral income of Equipment and Tooling, including regularizations, flat-rate reduction in capitalized non-attributable costs, the divestment system, and so on. So how do you actually do this in your company?

Accelerated reduction in practice

In the short-term, you can achieve substantial savings by accelerating a reduction in property tax. To this end, the KPMG Global Asset Management Competence Center and KPMG Tax Advisers have developed the KPMG Immovable Withholding Tax Optimization Methodology. Applying the Immovable Withholding Tax Optimization Methodology can offer additional indirect benefits:

  • a thorough basis for optimizing your maintenance and investment costs;
  • a methodology and procedures to allow internal departments to speak the same language;
  • the possibility of monitoring technical changes for accounting purposes, which makes it easier to respond to auditors and the tax authorities;
  • creating a high-quality technical database that can serve as a basis when taking management decisions on technical and financial / tax topics;
  • risk management for physical assets.
property tax

Our methodology aims to help you identify significant tax benefits and offers accurate, timely and complete reporting. KPMG’s Immovable Withholding Tax Optimization Methodology includes a step-by-step plan that details the type and scope of the fiscal and legal attributes of your Equipment and Tooling, new investments, decommissionings, IT systems, and so on. It also analyzes which areas of your company are already in good shape and where you still need some extra support. This will give you an extensive overview of what your organization needs, so you can be prepared for reducing this “sleeping tax”.

property tax optimization methodology

Our KPMG expert team is experienced and multidisciplinary. We will work with you to identify which steps need to be taken. Our support changes from step to step and together we can decide what it will involve based on your wants and the outcome of the analysis of your current assets.

Our team is part of the KPMG Global Asset Management Competence Center (GAMCC), based in Brussels, and boasts wide-ranging expertise in so many different sectors. Our advanced tools allow us to analyze and adjust your physical assets.

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