On July 9, 2020, the Belgian legislator approved a third section on fiscal support measures (Corona III). With this new set of measures, the main aim is to encourage investment in and by Belgian companies. In addition, a number of existing measures are further expanded and made more flexible. Below is a brief overview.
1. Tax relief for donations
To further encourage donations to recognized institutions, the existing percentage of the tax credit (45%) is increased to 60% and the amount eligible is also increased (from 10 % to 20% of total net income).
2. Donation of computers to Belgian schools
Donations of computers to Belgian schools are tax-deductible until December 31, 2020. For the donating company, the donation constitutes a deductible expense. Private individuals who donate outside of their professional capacity can benefit from a tax reduction of 45%. These donations will also remain tax-free if they are made between 1 March 2020 and 31 December 2020.
3. Expenses for child care
Child care expenses actually paid in 2020 for days when there was no effective child care due to the COVID-19 pandemic will still entitle the tax credit provided a number of conditions are met. For example, the care must be provided during a period from March 14, 2020 to December 31, 2020. In this way, expenses for shelter activities that were planned for the summer or fall vacations of 2020 are also eligible for the tax credit. Also, expenditures made in 2019 for shelter activities that were to continue in 2020 are now eligible.
4. Exemption of pass-through withholding tax
For employers who restart their activity after a prolonged period of temporary unemployment, a reduction in wage costs is provided for the months of June, July and August 2020. The measure applies to the wage cost of personnel who have been placed under the temporary unemployment scheme for a minimum period of 30 uninterrupted days due to force majeure, and this between March 12 and May 31. It is sufficient that at least one employee has been temporarily unemployed every day within this 30-day period.
The exemption is equal to 50% of the difference between the cost of withholding taxes for each of the months of June, July, and August 2020, and the cost of withholding taxes related to salaries for the month of May. Please note that only the withholding tax due on recurring monthly salaries is eligible.
5. Consumption Checks
The federal government is also launching "the consumption voucher," whereby private sector employers can give their staff up to 300 euros in vouchers to spend in the hard-hit hospitality, culture and sports sectors. These consumption cheques are not considered as wages when certain conditions are met. On the part of the employer, they also constitute a deductible professional expense.
6. Temporary increase in deductibility of reception expenses
In order to support the events sector, the government proposes to allow a full (100%) deduction for reception costs. This is on the condition that they take place between June 8, 2020 and December 31, 2020. However, the costs for business gifts are not covered by this temporary measure. This applies to both corporate income tax and personal income tax.
7. Increased investment deduction
The new law also provides for an increased, one-time investment deduction of 25% for fixed assets acquired or created between March 12, 2020 and December 31, 2020. In corporate tax, this measure only applies to small companies. The other already known conditions regarding investment deductions also apply to this increased deduction.
In addition, small companies will be able to carry forward their unused (ordinary) one-time investment tax credit for investments in 2019 exceptionally for 2 years (instead of one year).
8. Tax relief for acquisition of new shares
In order to support SME companies that have seen their sales decline significantly as a result of COVID-19 pandemic and therefore need additional financial resources, the government is introducing a measure to encourage taxpayers to subscribe to capital increases of those companies.
It is a temporary measure, i.e. capital increases until December 31, 2020, and the principle is largely similar to the already existing tax shelter regime for start-ups. However, there are a number of points of difference. More on this later in one of our next publications.
9. Exemption from VAT advance for December 2020
In addition, the new amendment to the law also provides for the removal of the obligation to pay the December advance this year. This applies to both monthly and quarterly filers.
If you need help or advice on how to use any of the above support measures, we will be happy to help. Contact us at 051 26 82 68 or via email at email@example.com.