Belgium: Belgian Government Reaches Agreement On Tax-Shift Plan

Personal incomOn 23 July, the Belgian federal government agreed the budget review for 2015 and 2016 and the implementation of the long awaited tax-shift plan.

The aim of the tax shift is to reduce the Belgian tax burden on labour, improve the competitiveness of Belgian companies and create new jobs. The loss in tax revenue will be compensated with taxes on other incomes.

The agreement involves a number of new tax measures that may impact Belgian businesses:

• Personal income taxes will be decreased for low- and mid-level wages.
• Employers’ social security contribution will be reduced gradually from 33% to 25%.
• A limited speculation tax will be charged on capital gains realised on quoted shares sold within six months of their acquisition. Any losses from such a sale could be offset.
• The introduction of a so-called ‘Cayman tax’ was announced during 2014. Certain low-taxed foreign vehicles (such as trusts) will be treated as tax transparent, and income received by Belgian resident founders or beneficiaries from the vehicles will be subject to tax. There is now an agreement to make some changes to the tax that will increase the expected revenues.
• Excise duties on alcohol, tobacco and diesel will be raised over the coming years.
• Withholding tax on interest and dividends will be raised from 25% to 27%.
• The current VAT reduction on electricity for private individuals will be reversed and the rate of VAT raised from 6% to 21%.

Although the details of the above measures are yet to be determined, the majority of the changes are expected to be in force by the end of 2016.