The Belgian Federal Parliament has recently published a new bill (labelled ‘CORONA III’) regarding several urgent tax-related measures because of COVID-19. The draft contains various initiatives covering a wide range of tax provisions. We hereafter highlight the most important ones.
- Withholding tax payment exemption
Companies of hard-hit sectors will not be required to forward the payroll tax withheld on their salaries to the tax authorities and thus benefit from a reduced labour cost for the months of June, July and August 2020. One of the conditions is that they applied the ‘system of temporary unemployment’ for at least 30 interrupted calendar days (not working days) between March 12 and May 31, 2020.
The exemption itself will equal a 50 pct. deduction of the difference between the tax actually withheld on income earned that month in comparison to the total payroll tax actually due for the reference month, i.e. for May 2020. More technical restrictions apply, but for that we refer to the relevant text.
- Increased tax benefit for charitable donations
This measure is mainly for non-profit organisations that require charitable donations in order to properly function. Two measures are taken to stimulate those charitable donations:
Firstly, the tax deduction for gifts and donations done in 2020 will be increased from 45 pct. to 60 pct.
Secondly, the total net income amount of the taxpayer that qualifies for a tax deduction due to a charitable donation, will be increased from 10 pct. to 20 pct. for all donations done in 2020, with a total maximum of 397,850.00 EUR if donated by a private individual.
The tax incentive for donating computers to schools, in analogy with medical supplies, is also prolonged until December 31, 2020.
- Extension of childcare expenditure scheme
The purpose of this extension is to allow households to still receive a tax benefit on the childcare cost even in case the activity itself was cancelled due to COVID-19. This concerns registration fees for daycare and specialized organizations for children events. In return, the parents will not ask for a reimbursement of the said fees. This would be applicable to all activities between March 14 until December 31, 2020. It is important to clarify that only fees paid in 2020 qualify for this.
- Tax-exempted ‘consumption vouchers’
To help hard-hit sectors, the government wants employers and companies to hand-out consumption vouchers, a benefit in kind that was created post-COVID for max. 300 EUR to support mainly the catering, sport and cultural sector. These vouchers will be exempt from taxes if they comply with the conditions laid out in the proposed regulations. These vouchers will nevertheless be fully tax deductible as a professional expense for those handing them out.
- Increase of deductibility of reception costs
The aim is to obviously support the event sector itself, but also those professionals who will be using these services when they resume their activities. The deductibility of the reception cost will be increased from 50 pct. to 100 pct. if the event takes place between June 8 and December 31, 2020. An example are catering expenses or when buying flowers to welcome your customers. Business gifts are excluded from this measure.
- Increased investment deduction
The percentage of investment deduction for SMEs will increase from 20 pct. to 25 pct. if the fixed assets were acquired between March 12 and December 31, 2020. Moreover, any unused investment deduction for fixed assets can be carried-forward the two following taxable periods.
- Tax deduction for acquisition of new shares of certain SMEs
Those SMEs that have seen their sales drop following COVID-19 and who need some extra financial support, are normally eligible for this. The bill contains the specific details of those companies that can apply for the tax deduction in the context of a capital increase that takes place before December 31, 2020 if new shares are issued because of this.
The support will be limited to 250,000.00 EUR but is separate from the tax deduction for start-ups or scale-ups that already existed before.
It is important to mention that not every company can benefit from these measures. For example, investment, financing or treasure companies are not eligible. Furthermore, real estate companies, companies that already have (legally recognized) financial difficulties and companies that can be somehow linked to a tax haven, will also be excluded.*
Further, the bill also includes an exemption on the advance VAT payment normally due in December 2020 for the monthly and quarterly filers and a VAT-exemption for computers donated to certain institutions and organizations to help them to continue provide schooling.
These new measures are in addition to the measures that were already taken at the beginning of the crisis that we covered in a previous article. Those measures will normally be prolonged until December 31, 2020.