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Belgium: Temporary increase, one-time deduction for certain investments (COVID-19)

Belgium: Temporary increase, one-time deduction

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.

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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

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