A Royal Decree, published in the official gazette on 27 December 2019, implements the “earnings stripping rules”—that is, the rules that limit certain interest deductions pursuant to legislation enacted in late 2017.
The Royal Decree clarifies certain aspects of the earnings stripping rules, but some issues remain unresolved.
The new earnings stripping rules are effective as from assessment year 2020 (for tax periods beginning 1 January 2019 at the earliest).
The Royal Decree includes:
The Royal Decree does not foresee:
The Royal Decree brings some (but not all) much needed clarification to the application of the earnings stripping rules. The new rules add administrative burdens for Belgian groups.
In conclusion, the earnings stripping rules require a mind-shift for Belgian groups, as it is no longer possible to calculate a taxpayer’s interest deduction capacity on a stand-alone basis without first undertaking a consolidated approach.
Read a January 2020 report prepared by the KPMG member firm in Belgium
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