Latest Belgian Tax Measures in the “Post”-COVID-19 Era

June 15, 2020 | Blog

During the past three months, Belgium introduced an arsenal of tax measures to ease the economic impact of the COVID-19 pandemic (see our previous newsflashes and blogs). While the health issues reduced drastically, numerous social and economic difficulties are yet emerging. As a response, the Belgian federal government is currently drafting new measures to further ease the economic recovery. Hereinafter, we inform you on two of the key measures that were approved on Saturday, June 13, 2020, by the Council of Ministers. The draft bill was transmitted to the Council of State for advice. Once the Council of State will have issued its advice, the bill will be finalized, discussed in the Finance Commission of the Belgian House of Representatives and then submitted to, discussed in and adopted by the House. The whole legislative process may take a couple of weeks but will hopefully be finalized when the Parliament goes into the summer recess (on or around Independence Day, i.e., July 21, 2020).

   A.   Partial Wage Withholding Tax Exemption

Employers who benefited from the Belgian temporary unemployment regime for an uninterrupted period of at least one month between March 12, 2020 and May 31, 2020, are eligible for a partial Wage Withholding Tax (“WWT”) exemption for June, July and August 2020.

The exemption (i) amounts to 50 per cent of the difference between the total WWT due for the relevant month (June, July or August 2020) and the total WWT due for May 2020, and (ii) cannot exceed EUR 20 million for the three relevant months in the aggregate. The legislative history of the Law Proposal offers three examples:

Example 1
WWT for May 2020:                                                           EUR 1.000
WWT for June 2020:                                                           EUR 1.500

Partial WWT exemption for June 2020:                          EUR 1.500 – EUR 1.000
                                                                                              = EUR 500 x 50% = EUR 250

Example 2
WWT for May 2020:                                                           EUR 1.000
WWT for July 2020:                                                            EUR 1.800

Partial WWT exemption for July 2020:                           EUR 1.800 – EUR 1.000
                                                                                              = EUR 800 x 50% = EUR 400

Example 3
WWT for May 2020:                                                            EUR 1.000
WWT for August 2020:                                                       EUR 2.000

Partial WWT exemption for August 2020:                      EUR 2.000 – EUR 1.000
                                                                                               = EUR 100 x 50% = EUR 1.000

If between March 12, 2020 and December 31, 2020, corporate taxpayers distribute dividends, buy back shares or reduce share capital, they are not eligible for the exemption. Likewise, corporate taxpayers with a direct participation in tax haven companies or making payments exceeding EUR 100.000 to such companies are out of scope (unless they establish they made such payments for legitimate economic or financial purposes).

Given the timing for legislative approval (see above), it remains to be seen if this new legislation will actually be adopted and published by the due date for payment of the WWT for June (i.e., July 15, 2020).

  B.   Deductible/Non-Taxable Catering Vouchers for Employees

Companies buying and offering qualifying catering vouchers to their employees benefit from an advantageous tax and social security regime until December 31, 2020. The purchase price of these vouchers will be (i) fully deductible for corporate income tax purposes for the employer, (ii) fully exempt from WWT and personal income tax in the hands of the employee, and (iii) fully exempt from social security contributions (employee and employer). The special tax regime does not apply for independent workers (bedrijfsleiders/dirigeants d’entreprise). The exemption from social security contributions must be implemented by Royal Decree and is only announced in the Explanatory Memorandum accompanying the current draft bill.

For more information, please contact Werner Heyvaert or Vicky Sheikh.

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