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Belgium: Tax prepayments and effects of earnings stripping rules

Belgium: Tax prepayments, earnings stripping rules

As 2019 draws to a close, taxpayers may want to turn and focus on the last prepayment date for the year. This could be the last chance for a company in a tax-paying position that has not yet made sufficient prepayments to avoid or mitigate a tax increase. For companies with a year-end closing on 31 December, the deadline for this last prepayment is 20 December 2019.

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Taxpayers need to be aware that the new rules on limited interest deductions (earnings stripping rules) were effective 1 January 2019 and that these rules could have implications for the amount of prepayments. While the complete legal framework of the new earnings stripping regime still needs to be finalized, taxpayers need to consider the impact of these new interest limitation rules.


General information concerning prepayments

Every company in a tax-paying position can prepay its corporate income tax to avoid a surcharge that applies if no, or not enough, prepayments are made. Each quarterly tax prepayment leads to a credit, and this reduces the overall corporate income tax surcharge.

  • For assessment year 2020 a surcharge rate of 6.75% on the tax liability of a company applies. On the other hand, a prepayment remitted in the first quarter brings along a credit of 9%.
  • For the second quarterly prepayment, a credit of 7.5% applies. 
  • For the third quarter, the credit rate drops to 6%.
  • In the fourth and last quarter, the credit is limited to 4.5%.


Prepayments in the last quarter of 2019

A company that has not made any prepayments in financial year 2019 can still do so in the fourth quarter—until 20 December 2019  (that is, companies with financial year ending 31 December). Although the credit rate linked to this last quarterly prepayment (4.5%), is only 50% of the credit linked to prepayment made in the first quarter, it might still be prudent to consider this so as to lessen or avoid the tax surcharge of 6.75%.


New account number

There is a new bank account number for prepayments made for assessment year 2020. A transition period is provided, so that all tax prepayments made to the old bank account number will be transferred automatically. Since this may have implications for the payment allocation date, taxpayers need to try to use the correct bank account number.


Reimbursement or transfer of prepayments

If in early 2020, it turns out that the prepayment is too much, it is possible to have the excess prepayments either refunded or transferred to the following tax period.  In the past, this could be done by simply writing a letter or e-mail to the tax prepayment service within one month after the receipt of the prepayment overview.

Now, the tax authorities will no longer send this prepayment overview (unless there is a written request for one).  Instead, companies have the ability to check their real-time prepayment situation via the MyMinfin platform.  In addition, transfers or refund requests of excess prepayments would need to be filed via the MyMinfin platform—if within 3 months after the end of the tax period. Only in exceptional cases are written refund/transfer requests allowed.

Read a November 2019 report prepared by the KPMG member firm in Belgium

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