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Belgian Plans for Broad Tax Reforms Include Rate Cuts — Orbitax Tax News & Alerts

Belgian Finance Minister Vincent Van Peteghem has announced plans for broad tax reforms. Some of the main reform measures include:

  • Increasing the tax-exempt portion for personal income tax from EUR 9,270 to EUR 13,390, along with a reduction in current tax bracket rates and the introduction of a new top bracket:
    • up to EUR 13,870 - 25%
    • over EUR 13,870 up to 24,480 - 35%
    • over EUR 24,480 up to 42,370 - 40%
    • over EUR 42,370 up to 84,740 - 45%
    • over EUR 84,740 - 50%
  • Abolishing the special social security contribution;
  • Providing a personal tax exemption on income of up to EUR 6,000 for extra work performed by individuals outside their normal employment, with income from such work exceeding that amount taxed as professional income;
  • Changing the concept of remuneration for social security contribution and tax purposes so that remuneration through benefits other than cash remuneration will be taxed on the basis of their real value
  • Reducing the corporate income tax rate for SMEs from 20% to 15%, along with an increase in the amount of profit on which the SME rate applies from EUR 100,000 to EUR 200,000;
  • Introducing a global minimum tax on multinationals under the OECD framework (i.e., pillar 2 of the OECD's two-pillar solution);
  • Reducing the withholding tax on interest, dividends, and other recurring income from movable property and capital from 30% to 25%;
  • Harmonizing the reduced VAT rates of 6% and 12% into a new VAT rate of 9%, while maintaining the standard VAT rate of 21%;
  • Reducing the VAT rate on electricity permanently;
  • Extending the reduced rate of VAT for the demolition and reconstruction of housing; and
  • Reducing the VAT rate to 0% for fruits and vegetables, medicines, products intended for personal hygiene protection, and public transport.

Proposed effective dates of the various measures are not provided in the plan. Further details on their implementation will be published once available.