Higher tax increase for insufficient prepayments: from 6.75% to 9%

A corporation or sole proprietorship that makes too few prepayments of its income taxes should expect a tax increase. Until fiscal year 2023, this increase was 6.75% or 4.5%. For fiscal year 2024, it will be 9%. So a proactive prepayment strategy is not a luxury!

Tax increase from 6.75% to 9%

As a Belgian company, you can already pay corporate tax in the taxable period in which you realize profits. This is the system of advance payments: paying (part of) the tax due already during the current fiscal year on profits that will be made during that fiscal year.

However, these prepayments are not an obligation. Yet the tax authorities are urging entrepreneurs to the maximum extent possible to do so anyway. It does this through tax increases. Until fiscal year 2023, this increase was 6.75% on the base tax payable. Starting in fiscal year 2024, this rate will be raised to 9%.

Neutralizing tax increment

The earlier you prepay, the higher the applied neutralization is. This is shown in the following table:

Good to know: during the first three fiscal years from their formation, small companies – provided certain conditions are met – are exempt from this tax increase.

The dates and rates listed above apply to companies whose fiscal year began on Jan. 1, 2024. Companies with a broken fiscal year will not be subject to the new percentages until later. For example, a company with fiscal year end on Dec. 30 must apply the higher rates only from the fiscal year starting Dec. 31, 2024. It is fiscally optimal to make an initial prepayment by April 10, 2024.

Not enough cash to pay in advance?

Does your company have too little cash to make an upfront payment? If so, you can take out a loan for this purpose. Interest payable is tax deductible for corporate income tax purposes. This is in contrast to augmentation due to insufficient prepayment, which is not a tax-deductible expense.

Federal government reaches agreement on reduced VAT rate for demolition and reconstruction of rental properties

On March 20, 2024, the federal government approved the reduced VAT rate of 6% for demolition and reconstruction projects followed by construction of rental housing. This reduced rate (6% instead of 21%) already applies to individuals who demolish and rebuild their homes.

With this measure, the government is responding to calls in the rental market, which is also struggling with a shortage of affordable housing. Finance Minister Vincent Van Peteghem does attach some conditions to this reduced rate:

• the habitable area should not exceed 200 square meters
• the residents (in this case the tenants) must be domiciled there (second homes and vacation homes are thus excluded)
• the property must be rented for at least 15 years (but not necessarily by the same tenant). Thus, the property may not be sold.

Noteworthy: the reduced VAT rate for landlords is not only being reintroduced, but expanded. Indeed, the preferential rate is no longer limited to 32 Belgian cities (in the fight against dilapidation), but applies to the entire Belgian territory. The new scheme thus parallels the single, limited preferential rate the federal government retained for individuals last year.

Pension reform finally approved: what will change for you and your employees?

On April 4, 2024, the federal parliament gave final approval to the pension reform.
Some notable measures include a pension bonus of 33,975 euros for those who work for three years and stricter conditions for the minimum pension.

Pension bonus up to more than 30,000 euros

Employees, self-employed workers and civil servants alike will be able to receive a pension bonus.
This is an amount you receive if you continue to work beyond the earliest date on which you can retire (early).
You can find that date on mypension.be.
With this bonus, the federal government wants to discourage early retirement.

Each additional day worked counts, and you automatically accrue a bonus as long as you continue to work up to a maximum of three years longer.
You don’t have to pay taxes on the amount paid out (so gross is net).

The amount of the pension bonus depends on several factors:

• With a “normal” career of less than 43 years (on the day of the earliest retirement date), you will receive 3,775 euros if you work one year longer.
  In the second year this amounts to 7,550 euros, and in the third year 11,325 euros.
  So in total, the bonus can amount to 22,650 euros net.
• A “long” career of 43 years or more at your earliest retirement date yields even more, namely 11,325 euros per year.
  In total, then, it amounts to 33,975 euros (3 * 11,325 euros).

Note that your conventional pension and the bonus added together may not exceed 7,969.69 euros per month.

This rule will take effect from Jan. 1, 2025.
As of July 1, 2024, there will already be a transition period for those currently close to retirement.
On accrual of the bonus hereby starts on July 1, 2024, with payment to those who retire from January 1, 2025.

Minimum pension based only on days actually worked

Several years ago, the federal government decided to raise the minimum pension to 1,500 euros net per month.
From January 1, 2025, stricter rules will apply to this.

Until now, employees had to be able to present a career of at least 30 years to qualify.
But through so-called assimilated periods, unemployment can also be included in your career.
Therefore, the government has decided to calculate the minimum pension from 2025 on the basis of time actually worked.

To be entitled to the full minimum pension, you must have worked 5,000 days.
This amounts to about 20 years of work.
Full-time unemployment no longer counts when calculating a minimum pension.
But many other forms of absence still count as effectively worked.
Consider maternity and paternity leave, palliative care, informal care and caring for a child with a disability.
A period of temporary unemployment also counts.
Career breaks, military service or strike days do not fall into the category of days effectively worked.

Another new feature is that five part-time years worked before 2002 are given a higher weight in the calculation of the minimum pension.
This should help reduce the pension gap between men and women.

Restriction on perequirement of civil service pensions

Another measure in the pension agreement is the peregration of civil service pensions.
As a result, the highest civil service pensions are hardly allowed to increase additionally on top of the indexation.

Doubling Wijninckx contribution

Finally, you must take into account – although only from January 1, 2028 – a doubling of the so-called Wijninckx contribution, from 3 to 6 percent.
This contribution is paid by a very select group of Belgians who have accumulated very high supplementary pensions.
According to Pensions Minister Carine Lalieux, this would involve pension capitals of at least 1.6 million euros accrued through the second pillar for employees and of 2.2 million euros for the self-employed.
In 2022, this tax was applied to barely 2,437 employees and company executives.

Based on the Act of Nov. 5, 2023 containing various provisions on the economy, as entered into force on Dec. 21, 2023, since the end of 2023, the FPS Finance has a new ground for ex officio removal of a company from the CBE: non-compliance with UBO formalities.

The consequences are immediately visible: the General Administration of Treasury of the FPS Finance has already deleted nearly 21,000 ghost or dormant entities from the Crossroads Bank for Enterprises, mainly due to non-compliance with the legal obligations around the UBO register.

Prior to the enactment of the aforementioned law, an entity in the CBE could be deregistered ex officio based on the following grounds:

• the death of the founder-natural person, already at least six months ago according to the data of the national register;
• the conclusion of the liquidation of a legal entity, already pronounced at least three months ago;
• the closure of a legal entity’s bankruptcy, decided at least three months ago;
• failure to file financial statements for at least three consecutive fiscal years; and
• companies that do not fall under point 4°, but meet the following cumulative criteria:
• Minimum three years of not having active capacities, activities or branch units, enrolled in the CBE;
• Are enrolled in the CBE with active status;
• do not have current applications for admission or capacity, enrolled in the CBE;
• have not made any changes regarding enrolled data in the CBE for 7 years;
• have not carried out any publication other than that of the annual accounts, in the Appendices to the Moniteur Belge, for 7 years.

Since this is a purely administrative deletion, the entity in question continues to exist legally.
Thus, the entity retains its legal personality, including all rights and obligations.
Nevertheless, the deletion has some important consequences:

• the activities, with which the company was registered, can no longer be exercised;
• the deletion is published in the Belgian Official Gazette, which may have a negative impact on the entity’s business and its relationships with third parties, including credit institutions;
• legal actions brought by the entity are declared inadmissible ex officio.

Also good to know: the automatic deregistration for non-compliance with UBO formalities is not a definitive measure.
As soon as an entity completes the necessary formalities in the UBO register, the CBE management department will revoke the deletion as soon as the FPS Finance informs them that the situation has been regularized.