In Belgium, companies usually have to pay various taxes, depending on the type of company, their activities, gained capital and other factors.
Corporate tax in Belgium
The corporate income tax rate on the total income of resident companies in Belgium is 33.99% and it includes 3% for a “crisis surcharge”, introduced in 1993 by the Belgian Government. This tax is a contribution to the social security funding. Belgian corporation with a taxable income under 322,500 euros, are subject of reduced tax rates, only if the company pays an annual taxable income of at least 36,000 euros, is not a holding company and 50% of the company does not belong to any other companies.
VAT tax in Belgium
The Value Added Tax in Belgium has a standard rate of 21%. However, there are reduced rates of 12% or 6% for certain goods or services.
The VAT may affect the costs practiced by a company, which is why some of them may be reduced by recovering the paid VAT. Refund claims must be submitted yearly, every six months or quarterly. If the application is for a period between 3 months and one year, the minimum amount should not be lower than 400 euros.
In order to claim a VAT refund, the company must provide original invoices with Belgian VAT, a copy of the most recent certificate issued by the Tax Authority and a Letter of Authority, authorizing a company specialized in VAT refunds to claim the respective refund, if necessary.
In some cases, VAT refunds are not possible. This applies to manufactured tobacco, meals and beverages included in a catering or accommodation agreements, accommodations, vehicles sold to investors involved in vehicles leasing or sales, entertainment expenses, vehicles and motor vehicles used for passenger transport. If the vehicles are used for other activities as well, a 50% refund may be asked.
Dividend tax in Belgium
The tax on dividends in Belgium is usually 25%. However, parent – subsidiary regulations stipulate that dividends paid to a company opened in Belgium or other EU country, which holds at least 10% of the shares for more than a year by the paying company, are exempt from taxes. In some cases, the dividend tax rate may be reduced to 21% and a 10% rate is applied to liquidation dividends.
Tax rates for other payments
Interests are usually taxed with 21% in Belgium, however there are some exceptions. Interests paid by finance and holding companies or interests paid to financial institutions in treaty countries benefit from a lower tax rate.
Royalties are subject tot a withholding tax of 15%, but countries that have financial treaties with Belgium, benefit from exemptions or reduced tax rates.
In Belgium, technical services don’t require a withholding tax and the country does not have a branch remittance tax.
Tax incentives for foreign investors in Belgium
Belgium is an attractive European location for foreign investors because the Belgian Government offers many incentives to create a proper business climate. Some of these incentives include favorable fiscal rulings, foreign trade opportunities, employment and training measures or financial aid linked to investments.
Asides from these incentives, double tax treaties signed by Belgium with more than 90 countries and parent – subsidiary treaties for companies are offering exemption or significant minimization on corporate tax and withholding taxes on dividends, interests and royalties.
Taxable income and deductible expenses
The items that make up the tax base for a company are retained earnings, non – deductible expenditure, dividends allocated or distributed to members or shareholders and excess interest paid on interest – bearing advances.
Deductible expenses are considered the following: any kind of remuneration paid to company directors, social security contributions for employees, worker’s pay, expenses related to benefit of any kind and group insurance premiums.