The federal government recently announced that it wishes to change the application of the investment deduction to emphasize investments in energy transition. In this way, it hopes to give companies a (tax) push for the investments needed to further green the business climate. But the concrete entry into force is still some time away. After all, the modified form of the investment deduction would not take effect until 2025 at the earliest. Thus, a small part of Minister Van Peteghem's famous fiscal blueprint is being introduced.
What is the investment deduction?
The investment deduction allows companies to exempt a portion of their profits by making certain new investments. Today, this regime is a tangle of rates and conditions. Moreover, the scope is often outdated. For example, coal or gas heating is still considered an energy-saving investment... In this case, taxation clearly lags behind current political and social objectives. For this reason, it was therefore decided to update the list of concrete examples of green investments every three years to take into account technological progress.
In addition, the investment deduction will be simplified by working with only three types of deductions. In this way, it is hoped to further modernize and green the investment deduction.
- A basic deduction of 10%;
- A thematic investment deduction for green investments of 30% or even 40%;
- A technology deduction of 13.5%.
Basic investment deduction
The (one-time) investment deduction for SMEs and the self-employed (and therefore not for large enterprises) increases from 8% to 10%. Following the corona crisis, it was decided to increase the standard rate to 25%. However, this temporary increase expired at the end of 2022. So in early 2025, this rate would rise again to 10%.
In addition, this basic deduction would be increased by another 10% (and thus amount to 20%) for all digital investments in billing, customer relationship management, e-commerce and cybersecurity. In this way, the government hopes to mitigate the imposed digital invoicing that will come into effect from Jan. 1, 2026.
Thematic investment deduction
There will also be a new thematic investment deduction for green investments. It will be as high as 40% for sole proprietors and SMEs. For large enterprises, the rate will be reduced to 30%. Eligible investments will be delineated into four categories:
- Efficient energy use and renewable energy (e.g., battery farms);
- Emission-free modes of transportation (e.g., electric vans and trucks used 100% professionally);
- Environmentally friendly investments (e.g., more economical water system);
- Green digital investments (e.g., energy consumption monitoring software).
Finally, the existing investment deduction for R&D and investment in patents will be transformed into a technology deduction. For this, a flat rate of 13.5% will apply to the one-time investment deduction in patents and environmentally friendly investments in R&D. If opted for the staggered deduction for R&D then the rate will be increased to 20.5%.
With this modified regime, the federal government hopes to support companies willing to invest in the challenges of tomorrow. However, the exact implementation modalities and a list of approved investments are still to be seen. But it does bring taxation in line with current political and social objectives.
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