Belgium: Limitation of corporate tax deductions in assessment year 2024
The new program law reduces the percentage from 70% to 40% as from assessment year 2024.
Assessment year 2024
Following the corporate tax reform of 2017, the application of certain corporate tax deductions is limited to €1 million, increased by 70% of the taxable income exceeding €1 million (system of the “korf/corbeille”).
The tax deductions concerned are (in this order):
- Notional interest deduction of the year
- Dividends-received deduction carry-forward
- Innovation income deduction carry-forward
- Deduction of the loss carry-forward
- Notional interest deduction carry-forward
The new program law—expected to be published in the Belgian official gazette before the end of the year—reduces the percentage from 70% to 40% as from assessment year 2024 (linked to tax periods starting on 1 January 2023, at the earliest). However, it will revert to 70% beginning in assessment year 2025 (linked to tax periods starting on 1 January 2024, at the earliest) provided Belgium has adopted a law implementing an EU Directive guaranteeing a global minimum taxation of multinational groups in the EU (“Pillar Two”). EU member states have formally adopted the directive, following the agreement reached on 12 December 2022. Read TaxNewsFlash
Any change to the closing date of the financial year as from 11 October 2022 that is not justified by other motives than the avoidance of income taxes is without effect for the application of both changes of the percentage.
KPMG observation
According to the new program law, the notional interest deduction of the year will be eliminated as from tax periods closed beginning 31 December 2023 (assessment year 2024). Any change to the closing date of the financial year as from 11 October 2022 that is not justified by other motives than the avoidance of income taxes will also be without effect in this case. However, the notional interest deduction carry-forward remains applicable.
Read a December 2022 report prepared by the KPMG member firm in Belgium
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