News |  


The Summer Agreement: third phase

Have a question about this article?
Contact us here!

The new year also marks the third and final phase of the Summer Agreement's entry into force. Below is a brief overview of the main changes. These measures will take effect as of tax year 2021, for fiscal years beginning as early as January 1, 2020 at the earliest.


1.Tariff reduction

In the third phase, the basic corporate tax rate is further reduced to 25%. At the same time, the additional crisis contribution will be completely abolished.

Small businesses can continue to benefit from the basic rate of 20% on the first tranche of profits up to EUR 100,000, also without additional crisis contribution.


2. Autofiscality

Furthermore, car taxation was completely reworked and equalized between personal and corporate taxation. The tax deduction percentage of car and fuel costs is determined uniformly using the following formula:

[120% - ( 0.5% * coefficient * grams CO2/km ) ] where the coefficient depends on the type of engine: 1 for diesel engines, 0.9 for natural gas engines with < 12 fiscal hp, 0.95 for other engines.

The deduction percentage cannot be higher than 100% (including for electric cars) and not lower than 50%, except when the vehicle has CO2 emissions of at least 200g/km for which a deduction percentage of 40% always applies.

For fake plug-in hybrid cars purchased from January 1, 2018, a flat rate CO2 emission is taken into account. This is either the emissions of the corresponding non-hybrid version, or (failing that) the stated CO2 emissions x 2.5. For genuine plug-in hybrid cars, however, the stated CO2 emissions may be taken into account.

In personal income tax, there is an exception for cars that were purchased, rented or leased before 2018 and whose CO2 emissions are less than 200 g/km. In this case, the fuel costs and other car expenses can still benefit from a deduction percentage of at least 75%.


3. Market Rate

For interest on non-mortgage loans without a well-defined maturity (e.g. credit current account), the maximum interest rate is explicitly determined by law (except for certain interest between related companies). It amounts to a maximum of 4.06% for calendar year 2020.

This market interest rate also applies in the context of the recharacterization of interest into dividends.

Note also that interest-bearing advances are reinterpreted as "receivables" from the company, rather than the more favorable concept of "money loans" in the old rule.


4. Depreciation

Various depreciation regimes were also taken in hand. Small companies are now required to pro-rate the first depreciation annuity, just like large companies. An investment purchased at the end of the financial year can no longer be fully depreciated.

From now on, the additional costs of an investment must also be depreciated "all at once" or "in the same way as the principal sum" and no longer as desired. In addition, the degressive depreciation system disappears for companies.

Note, however, that the changes only apply to new investments as of January 1, 2020. For already existing investments, the depreciation regime should not be changed.


5. Mobilization of exempt reserves

For assessment years 2021 and 2022, provision is made to permanently subject certain exempt reserves, created in an era ending before January 1, 2017, to corporate income tax at a favorable rate. The specific rate is 15%. This rate is further reduced (subject to conditions) to 10% if the amount of the reserve is reinvested in depreciable property, plant and equipment.

The following exempt reserves qualify, among others: exempt reserves of licensed engagement companies, investment reserves for which the three-year investment period has expired, and reserves resulting from 120% cost deductions.


6. Deduction limitation "special expenses.

Some other distinguished deduction limitations are as follows:

  • Fines are now no longer tax deductible in personal and corporate income tax. Fines that are not in the nature of a criminal sanction and even if they relate to a deductible tax (VAT, property tax, withholding tax on professional income, registration fees, etc.) are also no longer deductible.
  • The tax deduction of 120% is reduced to 100% in both personal and corporate income taxes with respect to the costs of collective commuting of staff members and the costs related to electric cars (see also earlier). In the corporate tax, the same applies to costs related to security and costs to encourage the use of bicycles for commuting.
  • The assessment of secret commissions is no longer tax deductible. The 50% rate for voluntary inclusion of black profits in the accounts is eliminated, as well as the rule that no administrative penalty is due in that case.


If you would like more information about this, please contact us at 051 26 82 68 or via email at