The following changes are planned to the conditions for the exemption for dividends known as the DRD or ‘dividend received deduction’ (DBI-aftrek/régime RDT):

-           Shareholding condition: 10% (unchanged) or at least EUR 2.5 million (unchanged – although the coalition agreement included an increase of the limit to EUR 4 million);

-           When the EUR 2.5 million threshold is applied, the shareholding must also qualify as a ‘financial fixed asset’ if the shareholder is not a ‘small company’. This tightening up of the conditions therefore only applies to medium-sized and large companies.

Note that the condition that the shareholding must also qualify as a financial fixed asset existed previously. It was discontinued as from 1 January 2011. The reason for this was that in 2009 the European Commission had found Belgium to be in breach of EU rules because of this additional condition.

However, the condition that the shareholding must qualify as a financial fixed asset will now only apply if it fails the 10% shareholding test, but does reach the EUR 2.5 million threshold. As only the shareholding condition is included in the European Parent-Subsidiary Directive, the requirement that the shareholding must also qualify as a financial fixed asset will probably remain in place this time round.

The new rules apply from tax year 2026

Definitively taxed income is currently treated in tax returns as a deduction (the DRD deduction), but will in future be treated as an exemption included in the tax return as an increase in the initial amount of the reserves.

This change could in principle result in the DRD exemption becoming automatically transferable to subsequent taxable periods. At present, the DRD deduction is not transferable in the case of dividends originating from companies in countries outside the EEA if no anti-discrimination provision has been included in the double tax treaty. However, the possibility cannot be ruled out that future legislation will retain the existing restrictions on transferability in some other form.   

Furthermore, some expenses are disallowed for DRD deduction purposes: these are known as ‘contaminated’ or ‘bad’ disallowed expenses. Given that the deduction is to become an exemption, this restriction may lapse in the future. Again, it is possible that the existing restriction will be maintained in some other form.

There will also be a number of changes relating to DRD Beveks: 

-            the gain when a DRD Bevek is exited will be taxed at a rate of 5% (exit tax);

-            the withholding tax on distributed dividends will only be deductible for corporate income tax purposes if the receiving company awards the minimum director’s remuneration (see below) in the year of receipt. Companies that invest in a DRD Bevek will therefore have to take this into account; if they fail to do so, the deducted withholding tax will no longer be treated as an advance payment deductible from their final corporate income tax bill, but as an additional tax burden.

The qualifying conditions for the reduced corporate income tax rate are being modified.

The reduced corporate income tax rate of 20% on the first EUR 100,000 of taxable income is subject to a number of conditions.

One of these is that at least one company manager (natural person) is awarded remuneration of EUR 45,000; if this remuneration is less than EUR 45,000, it must be equal to or more than the company’s taxable income.

This minimum remuneration will be increased to EUR 50,000 and index-adjusted annually.

From now on, only up to 20% of the company manager’s remuneration may consist of benefits in kind, although additional bonuses will still be allowed. It is not clear whether this maximum level of benefits in kind will only apply to the assessment of the minimum company director’s remuneration as a condition for applying the reduced corporate tax rate, or whether its scope will be broader.

The proposed tightening of the condition for using the reduced corporate tax rate fits into a broader context of combating the shifting of income to corporate form. A number of proposed measures with the same objective are included under the ‘personal income tax’ heading.

-       Investment deduction 

As things stand, the investment deduction is in some cases can only be carried forward for one year and the annual use of the investment deduction that has been carried forward is limited. As a result, the theoretical advantage of the investment deduction can either be lost or only enjoyed at a later date.

These restrictions will be removed.

In addition, the deduction will be increased from 30% to 40% for qualifying investments in energy, mobility and environmental projects for large companies. Small companies are already eligible for the 40% investment deduction. 

-        Research and development

The requirement for regional certification when applying the investment deduction for R&D is to be dropped. The purpose of this certification was to confirm that the new products and technologies resulting from the R&D for which the fixed assets in question were used had no impact on the environment or aimed to minimise any negative impact on the environment.

Tangible fixed assets used for R&D can now qualify for the investment deduction, including if they are used in a ‘research centre’. Companies that only carry out R&D will be able to obtain recognition as a research centre; they will then be able to apply the investment deduction for all tangible assets used for R&D at the recognised research centre, without having to collect the necessary evidence every year. 

As it is sometimes difficult to define the concept of ‘R&D’, Belspo and the tax authorities are to publish some agreements on what this term covers.

This will give companies more confidence and clarity as to whether they will be eligible for the investment deduction for their investments.

The group contribution system (i.e. tax consolidation) will no longer only be possible for direct shareholdings, but for indirect shareholdings too. This means that a holding company will not only be able to deduct the tax loss of a direct subsidiary, but also the tax losses of companies at a lower level in the group structure.

In addition, new companies – those with which the required mutual connection has existed for less than five years – will no longer be excluded. It is not yet clear whether the minimum term of five years will be scrapped or kept in a less strict form.

Finally, the DRD exemption (exemption of dividends received) can also be applied to profits resulting from a group contribution.

Since tax year 2021, an individually deductible percentage has been calculated per car on the basis of carbon emissions and fuel type, adjusted in some cases to take account of minimum and maximum percentages. 

Separate maximum deduction percentages for hybrid cars will be introduced that differ from those for other cars that run on fossil fuels. These will be the same during ‘the vehicle’s entire useful life with the same owner/lessee’, which suggests that the maximum percentage will depend on the year of purchase/ commencement of use:  

• Hybrid cars with emissions of more than 50 g/km: maximum tax deductibility
  • 75% for cars purchased in 2025, 2026 and 2027;
  • 65% in 2028; 
  • 57.5% in 2029.
    
    
• Hybrid cars with emissions of up to 50 g/km: maximum tax deductibility
  • 100% for cars purchased in 2025, 2026 and 2027;
  • 65% in 2028;
  • 57.5% in 2029.  

The fossil fuel costs of hybrids, which have been 50% deductible since 2023, will remain 50% deductible until the end of 2027. 

The costs of electricity will be subject to the same maximum deduction percentages as for electric cars: from 95% for cars purchased in 2027 to 67.5% for cars purchased in 2031.

There is a separate article on our website that provides a more general overview of the deductibility of car costs and related topics.

Form 270MLH, which since tax year 2024 has had to be added to the tax return in order for rental costs to qualify as deductible business expenses, will be replaced by an administratively simpler alternative. This alternative will take into account the information that the administration already has, in response to criticisms that the existing form 270 MLH has to be submitted in too many situations, such as for the rental of real estate (excluding VAT) where both tenant and landlord are companies.

-       Scrapping of further provision for social liabilities 

The possibility of creating an additional, tax-exempt provision for social liabilities is being scrapped. This was introduced following the harmonisation of the status of manual and white-collar workers and the increase in the cost of severance pay

-       Scrapping of favourable system for capital gains tax on company vehicles     

The system of temporary exemption of capital gains on vehicles used for paid passenger transport or freight transport will be discontinued.

-       Accelerated depreciation

Investments in research and development, defence and energy transition will be depreciable at an accelerated rate of 40% in the year of purchase.

SMEs will again be able to depreciate on a declining balance basis.

-       Temporary increase in tax deduction for electric vans and trucks

There will be a temporary increase in the deduction for electric vans and trucks. It is unclear whether the recently introduced investment deduction will become more attractive from a tax perspective or whether certain costs can be deducted from the taxable result at a higher rate

-       Meal vouchers and eco and culture cheques 

The maximum amount of a meal voucher will increase in two steps from EUR 8 to EUR 12. The tax deductibility of the employer’s cost (currently EUR 2 per meal voucher) will be increased accordingly.

Eco and culture cheques will be discontinued, possibly through social dialogue 

-       Donations of goods to recognised institutions 

These will become tax-deductible in the future, as is already the case for cash donations.

-       Tax shelter for audiovisual productions and advance payments                                          

The tax surcharge if insufficient advance payments are made will no longer be affected by the signing of a framework agreement in the context of a tax shelter for audiovisual productions. The exact scope of this measure is not yet clear.

-          Transfer pricing obligations

Transfer pricing documentation to demonstrate that affiliated companies are applying correct pricing for their mutual transactions will be simplified and confined to the essential points. This simplification will mainly relate to small and medium-sized enterprises.

-          Reform of the maximum tax-exempt accumulation of extra-statutory pensions

The accumulation of an extra-statutory pension (group insurance, IPT, etc.) can only be tax-exempt if, among other things, the so-called ‘80% limit’ is adhered to. Among other things, this limit takes account of the person’s career, all accumulated extra-statutory pensions and the transferability of the pension income. This rule will be reformed, but further details are not yet available.