Companies in Belgium must pay corporate tax on their profits. This guide explains how corporate tax in Belgium works, including advice on the following:
- The corporate tax system in Belgium
- Who pays corporate tax in Belgium?
- Corporate tax rates in Belgium
- Corporate tax exemptions and corporate tax credits in Belgium
- VAT in Belgium
- Corporate tax year in Belgium
- How to file your corporate tax return in Belgium
- Other types of business tax in Belgium
- Corporate tax advice in Belgium
The corporate tax system in Belgium
If you own a company in Belgium, you’ll need to pay corporate tax, with the rate depending on the size of your profits.
Companies must file their corporate tax return on an annual basis and make quarterly payments.
When filing their tax returns, companies can deduct a range of expenses to calculate their overall profit.
Who pays corporate tax in Belgium?
Corporate tax applies to companies, associations, bodies and establishments that have their registered office in Belgium.
Do sole traders and partnerships need to pay corporate tax?
Freelancers, sole traders and those with a stake in a partnership will generally pay income tax (impôt des personnes physiques in French, personenbelasting in Dutch) rather than corporate tax.
Freelancers working in Belgium for more than six months (183 days) of the year are Belgian residents. They must pay the tax on their worldwide taxable income.
Taxable income is the profit remaining after deductions for social security contributions and other allowable expenses.
Belgian residents have a tax-free allowance of €8,860 (higher for people with children) and income tax bands range from 25% to 50%.
Income tax is payable one year after the end of the tax year. Workers can instead spread the cost by paying advance estimated payments on a quarterly basis.
Corporate tax rates in Belgium
The Belgian corporate tax rate is 29%. Companies must also pay a surcharge tax (or crisis tax) of 2%. This means the total effective rate of tax for most companies is 29.58%.
The standard corporate tax rate lowers to 25% from 2021. The government plans on abolishing the crisis tax completely.
A lower Belgian corporate tax rate may be applicable for companies that are more than 50% owned by individuals or have a low taxable profit.
Finally, companies must pay a surcharge of 6.75% on their final corporate tax bill, after it has been assessed by the authorities. Companies can avoid this charge by making sufficient tax payments in advance.
Corporate tax exemptions and corporate tax credits in Belgium
Companies with low profits can benefit from a lower corporate tax rate.
To qualify for reduced Belgian corporate tax rates, a number of conditions must first be met.
Corporate tax rates in Belgium can be reduced to 20% (plus the 2% surcharge, totalling an effective rate of 20.40%) for companies with profits of less than €100,000.
The crisis tax will be abolished in 2021, meaning the total rate payable will be 20%.
Corporate tax credits
Some tax credits are available to companies who adhere to government initiatives.
For example, companies that make environmentally friendly and energy-saving investments can benefit from a 13.5% credit on their corporate tax bill. Companies that commit to employing skilled scientific researchers can get credits on payroll tax.
For more detailed information on corporate tax credits, check out the guide from PwC.
Deductible expenses for companies
- Depreciation of assets: tax can be deducted at the following rates for depreciation of company assets: commercial buildings (3%), industrial buildings (5%), machinery and equipment (20% or 33%), rolling stock (20%). To find out more about how these rules apply to your company, take advice from a tax expert.
- Start-up expenses: incorporation costs can be fully deducted in the year of incorporation or depreciated over a period of up to five years.
- Charitable contributions: charitable contributions are deductible as long as they don’t exceed 5% of the total net income of the company.
- Vehicles: the deductibility rate for automobiles varies between 50% and 120% (100% from 2021) of the cost of the vehicle, depending on its value and emissions. Fuel cost deductions are limited to 75%.
- Operating losses, interest expenses and bad debt reserves: the degree to which you can offset these against your bill varies depending on a variety of factors. Seek advice from a tax expert on the specific options available to your company.
VAT in Belgium
VAT is called Taxe sur la Valeur Ajoutée (TVA) in French or Belasting over de Toegevoegde Waarde (BTW) in Dutch.
If your business is offering goods or services (with some exceptions, such as teachers, journalists, artists, doctors, and lawyers) you may be liable to pay VAT – and charge your clients VAT, too. It is important that you keep accounts (an invoice book) and receipts.
The Belgian VAT rate is set at 21%. VAT must be paid monthly or quarterly, and companies can reclaim the VAT on their professional expenses.
There is also a VAT threshold in Belgium: if your earnings are less than €15,000 you can opt for petite entreprise/kleine onderneming status, which makes you exempt from VAT but also from claiming it back.
Small businesses can claim an exceptional VAT threshold up to €25,000.
Cross-border VAT in Belgium
If you’re selling goods to another VAT-registered business elsewhere in the EU, the customer pays VAT at their own country’s rate.
This also works the other way around, so if you buy goods from another country within the EU, you’ll pay VAT at Belgian rates.
When making a cross-border transaction, you will need the customer’s VAT number. You can check this through the European Commission.
Corporate tax year in Belgium
The Belgian tax year runs from 1 January to 31 December, and tax returns must be submitted annually.
Before filing a tax return, companies must register with the tax office and, if necessary, the VAT office – both of which can be done through a one-stop-shop or business counter (guichet d’entreprise in French, ondernemingsloket in Dutch).
If you are non-resident with a Belgian-earned income, you have to inform your competent tax collectors office, who will send you a tax return each year. You can also pay by post or online.
How to file your corporate tax return in Belgium
The filing deadline for 2019 corporate tax returns is 30 June 2020, but this could change as deadlines have regularly been postponed in recent years.
Companies typically make their Belgian corporate tax payments in four instalments:
- First quarter: no later than 10 April
- Second quarter: no later than 10 July
- Third quarter: no later than 10 October
- Fourth quarter: no later than 20 December
The government can calculate the company’s tax bill automatically in the event of a late return.
How much companies are charged is estimated based on factors including turnover and number of employees, and varies by industry sector.
Companies who file late must pay a surcharge. The surcharge depends on the company’s previous filing record and its (deemed) intention to avoid taxation. The government can also apply fines or legal sanctions to companies who fail to pay corporate tax.
Other types of business tax in Belgium
Capital gains on shares
Capital gains on qualifying shares realized without meeting the one-year holding requirement are taxed at 25.5% (25% plus a 2% crisis tax, which can be offset against available tax losses), provided certain conditions are met. Gains on non-qualifying shares are subject to the 29.58% rate.
From 2021, Capital gains on qualifying shares realised when meeting all conditions remain fully exempt. Non-qualifying shares will be subject to the 25% rate.
Minimum tax base
Companies with profits of more than €1 million face limits on how much they can deduct from their corporate tax bills.
Some deductions (such as tax losses carried forward) will only be deductible up to 70% on the taxable profit that exceeds €1m.
Corporate tax advice in Belgium
You can find an accountant (expert-comptable in French, accountant or belastingconsulent in Dutch) through the website of the Instituut van de Accountants en de Belastingconsulenten (French or Dutch only).
- Federal Public Service Economy SMEs, Self-Employed and Energy: information on self-employment in Belgium, some of which is in English.
- Belgium.be: information on Belgian social security, mainly in French and Dutch, but with an English language contact email service.
- RSVZ: social security authority for self-employment in Belgium.
- FPS Finance: more information on VAT, in French, Dutch and German.