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Belgium: Tax relief proposed for SME investments (COVID-19)

Belgium: Tax relief proposed for SME investments

Temporary tax relief has been proposed for investments regarding small and medium-size enterprises (SMEs) that experienced a sharp decline in their turnover due to the coronavirus (COVID-19) pandemic.

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Under the proposal, individuals (both Belgian residents and non-residents) who acquire new shares or registered shares in these companies could benefit from an individual income tax rate reduction of 20% (if certain conditions are satisfied). As proposed, company directors could be eligible for this relief with regard to the acquisition of shares in the company. The proposal, thus, is intended to foster investments in Belgian SMEs during this exceptional period.

Only investments in SMEs would be eligible for this temporary favorable regime; the company would not have to be a start-up. The eligibility requirements for SMEs include that the annual average number of workers does not exceed 50 people, that annual turnover (excluding VAT) is less than or equal to €9 million, and that the balance sheet total does not exceed €4.5 million. A second condition is that the SME experienced a decrease of at least 30% of its turnover between 14 March 2020 and 30 April 2020 compared to the same period for 2019. If the company is not incorporated until after 14 March 2019, the turnover anticipated in the company’s financial plan would serve as a reference point.

Some companies would be excluded from benefiting from the relief (for example, companies that have a direct stake in a company located in a “tax haven” jurisdiction).

Read an August 2020 report (French) prepared by the KPMG member firm in Belgium

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