Belgium has published Circular 2020/C/122, which provides guidance on the application of the loss carryback relief (reserve) introduced for companies and individual entrepreneurs in response to the COVID-19 pandemic.

In order to claim the relief, companies are required to Form 275 COV along with their tax return. In this respect, one of the key points of Circular 2020/C/122 is that companies that have already submitted their return are still allowed to submit Form 275 COV to claim the relief, provided that the form is submitted by 30 November 2020. Where claiming the relief impacts other elements of the tax return, an amended return must be submitted as well.

The Circular also provides further information on companies that are not eligible to claim the relief. This includes:

• Companies that distribute dividends, purchase own shares, or reduce their capital during the period 12 March 2020 to the day the tax return is filed for the 2021 assessment year (2020 tax year);
• Companies that were already in financial difficulties at the start of the COVID-19 pandemic (considered 18 March 2020), including:
  • companies for which an application for bankruptcy was filed;
  • companies that are in the state of liquidation;
  • companies whose net equity is below 50% of the fixed registered capital; and
  • companies that received rescue or restructuring subsidy from the European Commission;
• Companies that hold an interest in a company established in a tax haven or make payments of at least EUR 100,000 to companies in a tax haven, unless the payments are based on legitimate financial and economic needs; and
• Entities subject to special regimes, including:
  • collective investment funds, regulated real estate companies, organizations for the financing of pensions;
  • cooperative participation companies set up for employee participation in the company; and
  • shipping companies benefitting from the tonnage tax regime.

The Circular also provides guidance on the calculation of the penalty (surtax) imposed in case the loss carryback reserve has been overestimated. The penalty rate is 2% to 40% according to a prescribed formula.