28 December 2023

Minimum tax for multinationals: does it apply to your business?

by Ine Coolman and Febe Louage

On Thursday 15 December, the law introducing the minimum tax for multinational companies was approved by the Chamber of Deputies. The law will enter into force on 31 December 2023 and will apply to financial years starting on or after 31 December 2023.

The law applies to any company that is part of a multinational group or a large domestic group with a consolidated turnover of more than €750 million. In any jurisdiction where the effective tax rate is less than 15%, an additional tax will be levied in the country where the parent company is located. However, the jurisdiction may choose to introduce a domestic extra tax. Belgium has chosen to implement this qualified domestic surtax: all low-taxed companies established in Belgium will be subject to a domestic surtax.

Belgium has a tax rate of 25% (20% for SMEs), so the effective tax rate will be higher than 15% in most cases. However, the calculation of the effective tax rate is complex. In order to know the real tax rate, numerous adjustments have to be made to the taxable result and the taxes due. For example, the tax rate may be lower than 15% due to certain tax incentives such as the investment allowance or the innovation allowance.

If you are part of a multinational group or a large domestic group with a turnover of more than €750 million, you will have to make this complex calculation and file an additional tax return for the domestic surtax. There will also be an increase in this tax if you have not made sufficient advance payments during the 2024 financial year.

Do you have any questions? Do not hesitate to get in touch with one of our specialists.

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