Are Belgian companies required to make advance tax payments ?
Belgian companies 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. They will not face any tax increase for not doing so.
In case of non-compliance or insufficient prepayments, corporate taxpayers will be subject to a tax increase, which amounts to 6.75% for income year 2020 (tax year 2021). However, this tax increase is reduced by the total amount of benefits associated with the advance payments made
- Deadline for Q1 tax prepayment (14 April 2020): prepaid amount x 9.00%
- Deadline for Q2 tax prepayment (10 July 2020): prepaid amount x 7.50%
- Deadline for Q3 tax prepayment (12 October 2020): prepaid amount x 6.00%
- Deadline for Q4 tax prepayment (21 December 2020): prepaid amount x 4.50%
The average of these percentages (9.00% + 7.50% + 6.00% + 4.50% / 4) corresponds to the maximum tax increase (6.75%). 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 calendar year resulting in neutralizing the tax increase, without having to pay the full amount of estimated corporate tax due.
The following example will demonstrate this: let us assume that your company’s estimated tax burden for 2020 is €1,000.00. If you would not make any tax prepayments, the corporate tax due would be increased with 6.75%, which means your total tax would be €1,067.50. By making an advance payment of €500.00 before April 14 (500.00 x 9.00% = €45.00 tax benefit) and another prepayment of €300.00 before July 10 (300.00 x 7.50% = €22.50 tax benefit) the total increase of €67.50 would be neutralized by the tax benefits (€45.00 + €22.50) as a result of making advance payments in Q1 and Q2.
Any surplus or overpaid amount will afterwards be refunded to you, as soon as your corporate tax assessment has been issued. While self-employed individuals and independent professionals will still get a tax decrease if they overpay, this benefit is not available to companies.
For income year 2020 (tax year 2021), companies can make tax prepayments to the following department and bank account:
- Beneficiary: Inningscentrum – Dienst Voorafbetalingen / Centre de Perception – Service des Versements anticipés
- Account number: BE61 6792 0022 9117 – BIC PCHQ BEBB
- Payment reference: to create via this link.
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 2020, please let us know so we can provide you with estimation of your corporate tax due and the amount to transfer every quarter.
Due to the recent events in respect to COVID-19, the tax authorities have announced that companies that face liquidity problems (e.g. those who will not distribute any dividend in 2020), the government has decided to increase the benefit of the tax prepayments for Q3 and Q4. The tax benefit for Q3 will be 6.75% instead of 6.00%; and for Q4 it will be 5.25% instead of 4.50%.
As a result of this, Belgian and non-resident companies taxable in Belgium will still be able to get a higher tax benefit even if they do the tax prepayment for tax year 2021 later this year.