BRUSSLES: Belgian lawmakers have agreed to review proposed changes to corporate tax as part of a budget deal struck between members of the country’s fractious coalition government.
The outline of a budget, which seeks to keep Belgium within EU deficit reduction requirements, was eventually agreed late on the evening of October 14 following a lengthy period of stalemate between the four parties making up the governing coalition. However, the agreement necessitated some compromises, and decisions regarding corporate tax and capital gains tax have been deferred.
Finance Minister Johan Van Overtveldt has previously proposed to reduce Belgium’s corporate tax, which at 33 percent (33.99 percent with the addition of the corporate tax surcharge) is one of the highest in Europe, to as low as 20 percent by 2020. This was to be paid for with the abolition of various corporate tax deductions and special schemes.
A proposal by the Flemish Christian Democrat Party to introduce a new 30 percent capital gains tax on short-term investment gains, with exemptions for small businesses, will also be debated at a later date, with the three other coalition parties opposed to the idea.
At present, capital gains are normally taxed as corporate income at 33.99 percent, although gains realized from the disposal of certain shares within one year of purchase are subject to tax at 25 percent. Gains derived from shares sold after the one-year holding period are generally exempt from capital gains tax, although a 0.4 percent tax applies to the disposal of shareholdings by large companies.
The coalition also agreed to an increase in the tax on dividends not exempt under the EU Parent Subsidiary Directive from 27 percent to 30 percent.
