Tax presence
Belgium
Public limited company (société anonyme/naamloze vennootschap)
Subject to corporate income tax:
- Belgian public limited companies are in principle taxable on their worldwide income, less allowable deductions. The taxable income is determined on the basis of the approved Belgian GAAP annual accounts, subject to certain adjustments in accordance with the Belgian Income Tax Code
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Resident public limited companies are subject to a standard corporate income tax rate of 25 percent. The first income band of EUR 100,000 of small public limited companies is subject to a lower rate of 20 percent provided that certain conditions are met
- A participation exemption regime exists for received dividends under which, subject to certain conditions, 100 percent of the received dividends are deductible. Capital gains realized on shares may be exempt provided that certain conditions are met
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The payment of dividends, royalties and interest is in principle subject to a 30 percent withholding tax. Domestic law provides for reduced rates and exemptions in certain circumstances. The applicable rate may further also be reduced under an applicable double taxation treaty
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Losses may in principle be carried forward indefinitely, but their use in a given tax year is limited to EUR1 million plus 70 percent of the taxable basis in excess of EUR1 million. As of income year 2023 (assessment year 2024), the 70 percent threshold was reduced to 40 percent, to increase the minimal taxable basis to 60 percent instead of 30 percent. This measure was temporary, as it was the intention to abolish this measure as soon as the global minimum tax rules (OECD Pillar Two) enter into force in Belgium.
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At the end of 2023, Belgium implemented the Council Directive (EU) 2022/2523 of December 15, 2022, ensuring a global minimum level of taxation for groups of multinational enterprises and large domestic groups in the European Union. These rules introduce a coordinated system to ensure that large groups with a consolidated revenue exceeding EUR750 million for at least 2 of the 4 previous years, are subject to a minimum effective tax rate of 15 percent. The global minimum tax rules in Belgium will be applicable to financial years beginning on or after December31, 2023. With the introduction of the global minimum taxation rules, the 40 percent threshold was increased back to 70 percent as of assessment year 2025.
- A Controlled Foreign Company (CFC) regime and a group consolidation regime entered into force in 2019. The CFC regime was reinforced in Belgium at the end of 2023. The previous CFC regime intended to tax undistributed profits from low taxed subsidiaries or branches resulting from an artificial construction set up with the essential purpose to obtain a tax benefit. As the old rules proved to be ineffective in practice, the new rules shift the burden of proof to the taxpayer. The new rules focus on the taxation of passive income realized CFCs that are directly owned by the Belgian controlling company and that are located in a low-taxed jurisdiction (or in a jurisdiction where the taxation amounts to less than half of the tax that would be due in Belgium, if the foreign company would be located in Belgium). There exist some safe harbor rules in case, eg, the CFC performs significant economic activities. These rules may have a substantial impact for holding companies.
Limited company (société à responsabilité limitée/besloten vennootschap)
Subject to corporate income tax:
- Belgian limited companies are in principle taxable on their worldwide income, less allowable deductions. The taxable income is determined on the basis of the approved Belgian GAAP annual accounts, subject to certain adjustments in accordance with the Belgian Income Tax Code
-
Resident limited companies are subject to a standard corporate income tax rate of 25 percent. The first income band of EUR 100,000 of small limited companies is subject to a lower rate of 20 percent provided that certain conditions are met
- A participation exemption regime exists for received dividends under which, subject to certain conditions, 100 percent of the received dividends are deductible. Capital gains realized on shares can be exempt provided that certain conditions are met
-
The payment of dividends, royalties and interest is, in principle, subject to a 30 percent withholding tax. Domestic law provides for reduced rates and exemptions in certain circumstances. The applicable rate may also be reduced further under an applicable double taxation treaty.
-
Losses may in principle be carried forward indefinitely, but their use in a given tax year is limited to EUR1 million plus 70 percent of the taxable basis in excess of EUR1 million. As of income year 2023 (assessment year 2024), the 70 percent threshold was reduced to 40 percent, to increase the minimal taxable basis to 60 percent instead of 30 percent. This measure was temporary, as it was the intention to abolish this measure as soon as the global minimum tax rules (OECD Pillar Two) enter into force in Belgium.
-
At the end of 2023, Belgium implemented the Council Directive (EU) 2022/2523 of December 15, 2022, ensuring a global minimum level of taxation for groups of multinational enterprises and large domestic groups in the European Union. These rules introduce a coordinated system to ensure that large groups with a consolidated revenue exceeding EUR750 million for at least 2 of the 4 previous years, are subject to a minimum effective tax rate of 15 percent. The global minimum tax rules in Belgium will be applicable to financial years beginning on or after December 31, 2023. With the introduction of the global minimum taxation rules, the 40 percent threshold was increased back to 70 percent as of assessment year 2025.
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A Controlled Foreign Company (CFC) regime and a group consolidation regime entered into force in 2019. The CFC regime was reinforced in Belgium at the end of 2023. The previous CFC regime intended to tax undistributed profits from low taxed subsidiaries or branches resulting from an artificial construction set up with the essential purpose to obtain a tax benefit. As the old rules proved to be ineffective in practice, the new rules shift the burden of proof to the taxpayer. The new rules focus on the taxation of passive income realized CFCs that are directly owned by the Belgian controlling company and that are located in a low-taxed jurisdiction (or in a jurisdiction where the taxation amounts to less than half of the tax that would be due in Belgium, if the foreign company would be located in Belgium). There exist some safe harbor rules in case, eg, the CFC performs significant economic activities. These rules may have a substantial impact for holding companies.
Belgian branch office of a foreign company
A Belgian branch office of a foreign company will, in principle, be subject to tax on income generated by the Belgian branch office and will thus be subject to the so-called corporate nonresident income tax. Under the corporate nonresident income tax, specific categories of Belgian-sourced income are subject to tax. The nonresident income tax that is due is, in principle, calculated based on the corporate income tax rules for resident companies. Hence, the implementation of the global minimum tax rules, will also be applicable to the Belgian branch office of a foreign company. In addition, the applicable tax rates are identical to the tax rates for resident companies. If a double taxation treaty is in place between Belgium and the state of tax residence of the foreign company, such treaty should be consulted in order to verify whether Belgium has the authority to tax the income that is attributable to the branch.
The foreign company (via its branch office) may also be subject to certain other possible taxes, such as registration taxes on the purchase of real estate or communal taxes.
Depending on its activities, the Belgian branch office may also qualify as VAT taxpayer.