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6.2. Main Differences between Commercial and Tax Accounting

The RD-ITC (Arts. 74-79) describes eight successive steps used for the determination of the taxable income starting from the annual accounts (Arts. 74-79 RD-ITC).

These are:

  • profit determination (increases in reserves, non-deductible expenses, and distributed dividends) (Art. 185 ITC and Art. 74 RD-ITC). The profits are increased with the amounts allocated to the reserves (the reserved profits), non-deductible expenses and distributed dividends (attribution of profits from current or prior years);
  • classification of the profit according to its source (Belgian-source profit, profit from non-treaty countries, profit from treaty countries);
  • deduction of profits from treaty countries, other allowed deductions and exempt profits;
  • 100% deduction of intercompany dividends (participation exemption or the dividend deduction for qualifying dividends);
  • patent income deduction;
  • notional interest deduction;
  • offset of previous losses; and
  • investment deduction.