Last weekend, the federal government was able to reach an agreement on the budget for 2017. As requested by the European Commission, the Belgian government has gone in search of around 3 billion euros to maintain its budget for 2017. The government can find 70% of the amount from additional savings, 20% will come from new revenues (i.e. taxes) and the remaining 10% from a few budget classics, such as a further reduction of the interest expense Belgium pays on its debt.
New revenues will be realised through the following main fiscal measures taken last Saturday:
1. Withholding tax
The much-discussed withholding tax on interest and dividends will rise from 27% to 30%. This increase of 3% from 2017 signifies yet another increase in the rate of withholding tax.
2. Fuel cards
In addition to the existing tax on the benefit-in-kind for company cars, there will be a tax on fuel cards. Specifically, the tax deductibility of fuel cards will be reduced, making it more costly for employers to give their employees a fuel card.
3. The stock market tax and speculation tax
It is intended to extend the scope of the existing stock market to include investments outside Belgium. Additionally, the absolute ceiling amount has been increased. On the other hand, the speculation tax has been abolished, which incidentally provided much less revenue than previously thought. With this abolition, the way is open for a possible introduction of a capital gains tax on shares. The decision that will be taken on this remains to be seen.
4. Internal capital gains
The fight against tax and social security fraud will be escalated. As part of this, a stricter approach will be taken against the 'transfers' of internal capital gains on holdings. If the shares of a company are introduced into a holding company, then the value of this company will be expressed as the capital of the holding company. An advantage is that this capital tax can be paid back tax-free to the shareholder upon fulfilment of certain conditions. It is this advantage that will cease to exist. However, the specific implementation of this new arrangement is as yet unknown.
On the other hand, the measures that will be taken to make additional savings are known.
The main savings will be made in healthcare. Thus, for example, the cost of antibiotics will rise, doctors will have to prescribe cheaper medicines more often and the main part of doctors' fees will no longer be indexed.
Additionally, the sickness pension for civil servants will be scrapped, the 'well-being fund' (used to link benefits and pensions at the bottom end of the scale to well-being) will be cut back to 75%, and public bodies must look for efficiency gains. These could include shrinking the subsidies provided by the federal government and improved collection of fines issued.
Although the government has done what Europe has requested, it was initially the intention of the Belgian government to restructure corporation tax. So far, this has not succeeded. Of course, we will follow this topic with particular interest.
If you have any questions about the new fiscal budget measures, then please contact one of our specialists.
We base our advice on current legislation, interpretations and legal doctrine. This does not prevent the administration from being able to challenge it or to change existing interpretations.