Belgium: Update on loss carryback rules, tax relief (COVID-19)

Belgium: Update on loss carryback rules, tax relief

A parliamentary committee of the lower house on 7 July 2020 approved draft legislation concerning loss carryback rules and providing a reconstruction reserve as part of a stimulus package—all measures in response to the coronavirus (COVID-19) pandemic.


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Loss carryback

The draft law would narrow the scope of the loss carryback to accounting years closing between 13 March 2019 and 31 July 2020 (instead of 31 December 2020). Read more on the loss carryback rules: TaxNewsFlash

Reconstruction reserve

The reconstruction reserve measures, as approved by the committee, would provide that for three years following the income year 2020, companies would be able to allocate part of their profit to an exempt “reserve fund for equity reconstruction” in order to help them regain equity lost due to the COVID-19 pandemic.

Stimulus package

Tax measures are intended to stimulate the economy by providing for:

  • An exemption from paying wage withholding tax for employers that have resorted to temporary unemployment for at least 30 days until 31 May 2020—an exemption would apply for June, July, and August 2020 equal to 50% of the difference in wage withholding tax compared to May 2020 (for a maximum of €20 million)
  • An exemption (for the employee) and deduction (for the employer) of the amount of a consumption voucher
  • 100% deduction of “reception costs” between 8 June 2020 and 31 December 2020
  • An investment deduction, increase from the rate of 8% to 25% for investments between 12 March 2020 and 31 December 2020 (only for “small companies”), and a carryforward of unused investment deduction possible for two years instead of one year for investments in 2019
  • A tax reduction for acquisition of new shares of small companies of which the turnover dropped by more than 30% between 14 March 2020 and 30 April 2020
  • A tax reduction for donations by individuals—increased rate from 45% to 60% and of maximum amount from 10% to 20% of net income for donations made in 2020
  • An extension of the tax deduction and reduction and of the value added tax (VAT) exemption for donations of computers made to schools from 30 June 2020 until 31 December 2020
  • An exemption of VAT advance payment in December 2020
  • Confirmation of a temporary reduced VAT rate of 6% for restaurant and catering services (excluding alcoholic drinks)

Read a July 2020 report prepared by the KPMG member firm in Belgium

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