Tax reform: towards a new “tax shift”? – Finance

Finance Minister Vincent Van Peteghem (CD&V) has obviously not lost all hope of landing his tax reform project. It was indeed agreed within the majority that it be started this year, at least in part. A detailed first phase must be presented by the Minister by December. Objective, specifies the seven-page note deposited by the great treasurer on the government table: “to strengthen purchasing power and increase the employment rate”. And this, via the increase in the tax-exempt quota (which would increase from 9,270 to 13,660 euros) and which would benefit in particular low wages and social recipients…

Finance Minister Vincent Van Peteghem (CD&V) has obviously not lost all hope of landing his tax reform project. It was indeed agreed within the majority that it be started this year, at least in part. A detailed first phase must be presented by the Minister by December. Objective, specifies the seven-page note deposited by the great treasurer on the government table: “to strengthen purchasing power and increase the employment rate”. And this, via the increase in the tax-exempt portion (which would increase from 9,270 to 13,660 euros) and which would benefit in particular low wages and social recipients. The magnitude of this first step towards a broader tax reform, based on the project presented in July, amounting to 6 billion euros. Several compensatory measures are envisaged to finance the reduction within a budget neutral framework given the dilapidated state coffers. There is talk of phasing out the marital quotient and the deduction of alimony. The petrol card for company cars would become less advantageous via a limitation of the tax advantage to business trips. The tax regime for stock option plans awarded to senior executives would be adapted “in order to eliminate existing excesses”, according to the minister’s document. While inflation and the energy crisis are not sparing companies, Vincent Van Peteghem also intends to toughen the regime of “definitively taxed income” (RDT). “The preferential treatment which allows heritage holding companies to benefit from the exemption regime for dividends and capital gains on shares could, in many situations, fall through”, indicates Denis-Emmanuel Philippe, associate lawyer at Bloom. Law. Moreover, he continues, “the repeal of the tax regime for ‘RDT sicavs’ would signify the death of a tax-advantaged investment product used by many Belgian companies (particularly SMEs) to invest their excess cash”. Finally, there is one last measure which should hardly please business leaders who build up pension capital via an EIP (individual pension commitment), namely the establishment of an additional ceiling in the context of the deductibility premiums paid which would be combined with the current famous 80% rule. “By limiting the deduction of the bonus to a ceiling of 10% of the gross annual periodic remuneration paid during the year to which the bonus payments relate, the Minister of Finance clearly wants to put barriers to the deduction of back service bonuses (payment of catch-up bonuses), notes Denis-Emmanuel Philippe. In addition to the fact that the part of the bonuses exceeding the 10% ceiling will not be deductible for corporation tax, it will also be considered as a benefit in kind (ATN) subject to social contributions and income tax!” Either a double punishment… for a new tax shift which, taken as a whole, is very likely not to be accepted as it is by the liberals.