After months of negotiations, Arizona parties have reached an agreement on a series of tax and social justice reforms. This agreement has a major impact on business owners, both fiscally and socially. We list the key points in a smoothly scannable article. For questions, please refer to our client representatives.
Key tax changes
1. Harmonization of VVPRbis and liquidation reserves.
- The waiting period for the liquidation reserve is reduced from five to three years.
- The early payment rate increases from 5% to 6.5% from 2026, raising the effective rate to 15%.
- Distributions within the three years are taxed at the standard rate of 30% withholding tax.
2. Increased remuneration conditions for company executives.
- The minimum wage to qualify for the reduced corporate tax rate increases from 45,000 euros to 50,000 euros and is indexed annually.
- Benefits in kind may account for a maximum of 20% of gross pay.
3. Introduction of a solidarity contribution on capital gains in personal income tax
- A new tax of 10% on capital gains from financial fixed assets. Valid only for capital gains as of the time of implementation. Historical capital gains are exempt.
- Investors get an exemption of 10,000 euros, and with a substantial interest (at least 20%) there is an exemption for the first 1 million euros.
- Capital losses are now deductible.
- Important nuance: it is at present waiting for concrete legislation to assess whether action is needed or not. There are still too many ambiguities. What in the case of an exemption of less than 20%? Does one then automatically fall back to the 10,000 exemption? How does one put a value on historical capital gains?
4. Extended transitional arrangement for hybrid cars
- The tax deduction for hybrid cars remains at 75% until 2027 and gradually drops to 57.5% in 2029.
- Fuel costs remain 50% deductible until 2027.
- Increased deductibility for electric vans and trucks as long as affordable alternatives are limited.
5. Changes in VAT regulations.
- The 6% VAT rate for demolition and reconstruction is reintroduced, for construction promoters who wish to sell the property. The social conditions previously associated with this scheme will be retained. Specifically for sales for construction promoters, the area criterion will be reduced to 175 sq. m.
- VAT on heat pumps is reduced from 21% to 6% for the next five years.
- VAT on fossil fuel combustion boilers. increases from 6% to 21%.
- The white cash register (GKS) becomes mandatory throughout the hospitality industry.
Social and labor law reforms
1. Increase in net wages and purchasing power
- Lower net wages rise due to adjustments to the tax-free allowance and social work bonus.
- Automatic wage indexing and wage standard are retained.
- Collective bonus systems (such as CLA 90 bonus and profit bonus) are simplified and aligned.
- Meal vouchers increase gradually from 8 to 12 euros per day and become more tax deductible. Eco vouchers and culture vouchers will be abolished.
2. Flexibility of working hours and overtime.
- The 180 tax-friendly overtime continue to be maintained after June 2025.
- Voluntary overtime increases to 360 hours per year, and for the hospitality industry even to 450 hours. For the first 240 hours, gross will equal net and no overtime pay must be paid.
- The minimum weekly working hours is abolished, except for the obligation to work at least three consecutive hours per work shift.
- Mandatory weekly closing day for retail stores will be abolished.
- Prohibition of night work expires, and in distribution and e-commerce, night work does not start until midnight.
- Students are allowed up to 650 hours per year work instead of 475 hours and this from the age of 15.
3. Reform of flexi jobs.
- The tax-free limit increases from 12,000 to 18,000 euros per year.
- Full-time employees can pursue a flexi job at an affiliated company of their employer.
- Flexi-jobs are in principle allowed in all sectors, unless the sector itself explicitly decides otherwise.
4. Tighter unemployment policy
- Unemployment benefits will be limited to a maximum of two years, depending on career length.
- Exceptions apply for those over 55.
- Anyone temporarily unemployed for more than three months must register as a job seeker.
- Benefits fall faster the longer unemployment lasts.
5. Prevention and reintegration of the long-term sick
- Penalties for workers who do not cooperate (sufficiently) in reintegration are increased.
- Employers are encouraged to actively monitor sick employees.
- If you relapse from incapacity, as an employer you must pay guaranteed wages again only after a minimum 8-week work resumption.
- Maximum of two sick days per year without a doctor's bill.
- Important nuance: a lot of change is afoot in this area, but for now we await further concretization. The common thread is the implementation of a policy to combat absenteeism.
Other notable changes
- Reintroduction of probation: open-ended contracts can be terminated during the first six months with one week's notice.
- Abolition of the Federal Learning Account (FLA). due to administrative inconvenience.
- Introduction of family credit, which combines leave rights for birth and care.
What does this mean for you as an entrepreneur?
These reforms bring both opportunities and risks. Tax advantages such as the investment deduction and the new VAT rate on heat pumps can be financially interesting, but stricter rules on remuneration and unemployment require an adapted HR policy. It remains to be seen how all the new government's plans will be put into practice. Naturally, we are following this closely.
Do you have questions about how these changes affect your business? Contact your customer manager or one of our experts.