Tax liability
Belgian companies with taxable income and foreign (non-resident) companies that are taxable in Belgium, are required to make prepayments for corporate tax purposes. Only SMEs are exempt from this requirement the first three years after setup. SMEs will not face any tax increase until the 4th financial year for not doing so.
Before your company qualifies as an ‘SME’, it must not exceed more than one of the following criteria in its two most recent financial years: (i) (on average) max. 50 FTE (full-time equivalent) employees; (ii) an annual turn-over of max. € 9m (excl. VAT); and (iii) a balance sheet total of max. € 4.5m. If your company is part of a group of companies, these conditions apply on a consolidated basis.
Sanction
In case of non-compliance or insufficient prepayments, corporate taxpayers will be subject to a tax increase, which amounts to a hefty 9.00 % for financial year 2024 (tax year 2025).
However, this tax increase is reduced by the total amount of benefits associated with the advance payments made according to the following schedule:
- Deadline for Q1 tax prepayment (10 April 2024): prepaid amount x 12.00%
- Deadline for Q2 tax prepayment (10 July 2024): prepaid amount x 10.00%
- Deadline for Q3 tax prepayment (10 October 2024): prepaid amount x 8.00%
- Deadline for Q4 tax prepayment (20 December 2024): prepaid amount x 6.00%
The average of these percentages (12.00% + 10.00% + 8.00% + 6.00% / 4) corresponds to the maximum tax increase (9.00%).
In other words, by making sufficient tax prepayments every quarter, you can completely neutralize the tax increase. If your company’s cash flow would allow it, it is recommended to make a higher prepayment at the beginning of the financial year resulting in neutralizing the tax increase, without having to pay the full amount of estimated corporate tax due. The question whether or not to make prepayments essentially often boils down to a ‘cash flow’ decision.
Any surplus or overpaid amount will afterwards be refunded to you as soon as your corporate tax assessment is issued for the financial year in which you made the prepayment.
Example
The following example may demonstrate this: let us assume that your company’s estimated tax burden for 2024 is €1,000.00. If you would not make any tax prepayments, the corporate tax due would be increased with 9.00%, which means your total tax would be €1.090,00.
By making an advance payment of €500.00 before April 10 (500.00 x 12.00% = €60.00 tax benefit) and another prepayment of €300.00 before July 10 (300.00 x 10.00% = €30.00 tax benefit) the total increase of €90.00 would be neutralized by the tax benefits (€60.00 + €30.00) as a result of making advance payments in Q1 and Q2 of 2024.
Payment instructions
For financial year 2024 (tax year 2025), companies can make tax prepayments to the following tax department and bank account:
- Beneficiary: Inningscentrum – Dienst Voorafbetalingen / Centre de Perception – Service des Versements anticipés
- Account number: BE61 6792 0022 9117 – BIC PCHQ BEBB
- Mandatory payment reference: to create via this link
The above payment process is also streamlined via the MyMinFin tax portal where a bank transfer can be made directly online.
Self-employed individuals
Sole proprietors and individual contractors can also make advance tax payments. If you first registered yourself as a self-employed individual in 2022, 2023 or 2024, you are not required to make any prepayments, but could get a so-called ‘bonification’ or tax reduction if you would voluntarily make advance payments for the 2025 tax year.
For the tax year 2025 (income 2024), the amount of this ‘bonification’ is equal to the sum of the following prepayments:
- Amount for Q1 tax prepayment (10 April 2024) x 6.00 %
- Amount for Q2 tax prepayment (10 July 2024) x 5.00 %
- Amount for Q3 tax prepayment (10 October 2024) x 4.00 %
- Amount for Q4 tax prepayment (20 December 2024) x 3.00 %
To be entitled to a tax reduction, you must prepay 106 % of the estimated amount of tax due for 2024. This 106 % is calculated on your overall tax liability for this year minus the withholding tax and other deductible items (e.g., tax credits, lump sum portion of foreign tax, and so on). This is typically a calculation that should be made by a tax advisor or accountant.
While self-employed individuals and freelancers will get a tax reduction if they overpay, this benefit is never available to companies.
Takeaway
As it may take a few days before your payment is received by the tax authorities, we would advise you not to wait until the very last day to make the transfer. Payments that arrive after the deadline will automatically be allocated to the following quarter (with a smaller benefit as a result).
If you are client of TAXPATRIA® and would like to make tax prepayments for 2024, please let us know so we can provide you with estimation of your income tax due and the amount to transfer every quarter.