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.