The holidays are over, and hopefully you enjoyed a good break.
Before the Michel government left for the holidays, it drafted the Summer Agreement.
Among other things, this Summer Agreement addresses the reform of taxation.
Below you will find an overview of the main new features:
Sole proprietors are being harmonised with the system for companies.
From 2018 measures will be introduced to do away with the tax inequalities currently experienced by the self-employed compared with companies:
• Deductibility of car expenses according to their CO2 emissions instead of the current 75% scheme. This will also make “green” cars more advantageous for sole proprietors from a taxation point of view.
• Reduction in the tax on capital gains on termination of activity.
• Introduction of fixed-sum regulations for the self-employed.
• Increase in the one-time investment deduction from 8% to 20% (temporary measure lasting two years).
Corporation tax is being reformed in two phases.
• The rate decrease for corporation tax will be implemented in two phases, namely over income year 2018 and income year 2020 =
2017 2018 2020
Basic rate 33% 29% 25%
Reduced rate 24% 20% 20%
Crisis contribution 3% 2% 0%
• Increase in the one-time investment deduction from 8% to 20% (temporary measure lasting two years as from 01/01/2018).
• Abolition of the minimum rate of 0.4% on capital gains on shares generated by large companies.
In addition to these points, the Summer Agreement also stipulates that these reforms must be implemented on a budget-neutral basis.
• Limitation of the notional interest deduction: this will no longer be granted on the basis of the total amount of equity capital but on the basis of the growth of the equity capital. Each increase will also again be spread over five years.
• Abolition of the investment reserve.
• Introduction of a minimum profit tax: taxable profits greater than EUR 1,000,000.00 will no longer be able to be creamed off without restriction through tax deductions, only up to 70%. The following tax deductions will be restricted: past losses, FDI carried forward, etc.
• Combating of corporatisation by:
1) Increasing minimum management remuneration to EUR 45,000 per year. (instead of EUR 36,000)
2) Introducing a special tax of 10% in case of no or insufficient management remuneration.
• Collectability of withholding tax on every capital reduction on the portion of distributed reserves.
• Restriction of exemption on capital gains from shares.
• Reform of late-payment interest (minimum 2%).
• Abolition of degressive depreciation system.
• Increase in prepayment for tax increase from 1% to 3%: failure to make any or sufficient prepayments will be much more costly.
All these changes await us, but have not yet been specified in greater detail.
CFS Accountants is monitoring all these developments closely and will inform you as soon as more specific details are available.
On behalf of all the staff at CFS Accountants