The rate of a one-time “bonus” deduction for eligible investments made by certain taxpayers is temporarily increased to 25%—an increase that is intended to provide economic relief in response to the coronavirus (COVID-19) pandemic.
The temporary rate increase is applicable to investments in depreciable tangible or intangible fixed assets made by small companies, self-employed persons or individuals in certain professions for the period between 12 March 2020 and 31 December 2020.
This deduction is in addition to the normal tax depreciation of eligible assets.
Until now, the standard one-time investment deduction percentage has been 8%. For investments made between 1 January 2018 and 31 December 2019, this percentage has been temporarily increased to 20%. Due to the current COVID-19 situation, the percentage is now increased to 25% for small companies.
Previously, exceptions to the standard rate of depreciation were provided. For example, there is a 3% rate for investments to promote reusable packaging, and a 13.5% deduction rate for investments in digital and energy-efficient assets, smoke or ventilation systems, patents and certain environmentally focused investments in research and development. For investments in the safety of business premises and commercial vehicles, a rate of 20.5% is provided, and the deduction for companies with profits limited to shipping, the rate is 30%.
If a business fails to make insufficient profits during the current tax period for which the investment deduction can be applied, the portion of the exemption not taken can be carried forward to be applied in subsequent tax years.
Read an August 2020 report (French) prepared by the KPMG member firm in Belgium
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.