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Corporate Taxes in Belgium in 2022-23: Complete Guide

This article will discuss the various corporate taxes in Belgium. Along with that, it will discuss the corporate tax rate in Belgium that resident firms as well as non-resident firms are liable to pay.

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Corporate Taxes in Belgium

Firms in Belgium are accountable to pay tax on the entire amount of their revenues, i.e., their net revenue involving distributed earnings. The amount of the corporate tax rate in Belgium is determined by how much income companies will receive while they are engaged in numerous business activities, usually within one year. 

corporate taxes in belgium

Belgium Corporate taxes is a tax that companies pay, while the nominal Belgium corporate tax rate is 25%. Small and medium-sized businesses (SMEs) may, nevertheless, qualify for a 20% tax rate reduction on their first EUR 100,000 in profit under certain circumstances.

In this article, we will be discussing more in-depth the various corporate taxes in Belgium that firms have to pay in the country and their corporate tax rate in Belgium as per the residency.

The corporate taxes in Belgium

If you establish a company in Belgium, you are liable to pay the corporate taxes. In 2022, the corporate tax rate in Belgium is 25% which had been reduced from 29%. A surcharge tax of 29% was previously added to the Belgium corporate tax rate, as this was eliminated in 2021.

Companies that own more than 50% of their assets or make smaller profits will be charged a lower rate.

After the final corporate tax bill has been assessed by authorities, companies must pay a surcharge in the amount of 6.75%. This surcharge can be avoided by companies making enough tax payments in advance.

The progressive tax rates for Belgium are:

  • 24.98% to make a taxable net profit of up to 25,000 Euros.
  • 31.93% to get a taxable net profit between 25,001 and 90,000 Euros.
  • 35.54% for a taxable profit of 90,001-322,500.
  • 33,99% for a taxable profit of 322,501 or more.

VAT in Belgium

Your business may have to pay VAT if you offer goods or services. There are some exceptions like journalists, artists, and doctors. You should keep receipts and accounts.

Belgium’s VAT rate is 21%:- The VAT rate in Belgium must be paid monthly, quarterly, or on a per-professional basis.

Belgium also has a VAT threshold:- Small businesses can apply for an exceptional VAT threshold if they have a turnover of less than EUR25,000. 

Cross-border VAT in Belgium

  • If you sell goods to another VAT-registered company in the European Union the customer will pay VAT at the rate of their country.
  • Additionally, the opposite is true. You will pay VAT at Belgian rates if you purchase goods from outside the EU.
  • Cross-border transactions require the customer’s unique VAT number. This information can be viewed at the European Commission.

Other types of business taxes in Belgium

Capital gains from shares

Capital gains on qualifying shares that are realized upon fulfilling all requirements will be exempt from tax. Non-qualifying shares will be liable to the 25% corporate tax rate in Belgium. 

Base tax minimum

Limits on the amount that companies can deduct from corporate taxes bills for profits exceeding EUR1,000,000 are placed on companies with greater than EUR1,000,000.

Certain deductions, including carried-forward tax losses, are not deductible beyond 70% of the taxable profit exceeding EUR1 million.

Credits and Exemptions for Belgium corporate tax rate

A lower Belgium corporate tax rate of 20% is available to companies with less than EUR 100,000.

To qualify for the discounted rate, you must fulfill a number of conditions. These conditions include compliance with the small- and medium-sized enterprise rules and regulations regarding salaries for directors and managers.

Corporate tax credits

  • Companies that make environmentally-friendly and energy-saving investments can get a 13.5% credit off their tax bill. 
  • Credits can be earned on the payroll tax for companies that employ skilled scientists.

Companies can deduct certain expenses

  • Depreciation and amortization of assets: Tax may be deducted at these rates for depreciation and company assets. These are commercial buildings (3%), industrial buildings (5%), machinery, equipment (20% or 33%), and rolling stock (20%). 
  • Incorporation expenses: Incorporation fees can be deducted immediately after incorporation, or depreciated for up to five years.
  • Charitable Contributions: Charitable donations are tax-deductible so long as they do not exceed 5% of total income.
  • Vehicles: The deductibility rate of automobiles ranges between 50% and 100% depending on their value and emissions. Fuel cost deductions are only 50%.
  • Operating losses and interest expenses: The extent to which these can be offset against your bill will vary depending on many factors. Ask a tax professional for advice on the best options for your company.

Belgian corporate tax year

The Belgian tax year is from 1 January to 31 Dec and the annual tax returns must be submitted by taxpayers. Companies must register with the tax and VAT offices before filing tax returns. You can do both through a single-stop-shop or a business counter.

You must inform the competent tax collector if you are a non-resident and have earned income in Belgium. They will then send you a tax return every year. You can also pay online or by mail.

Who pays corporate taxes in Belgium?

Business taxes in Belgium is paid by companies, associations, bodies, and establishments with registered offices in the country. Although Belgium residents and foreign companies with permanent establishments in Belgium pay corporate income tax (CIT) of 25% on profits. 

The Belgian Companies and Associations Code (BCAC) allows qualifying companies to receive 20% CIT on their first EUR100,000 (US$99.530) of taxable profits. Surcharges up to 6.75% can be imposed on companies that fail to make sufficient advance payments. 

Are sole traders and partnerships required to pay corporate taxes?

  • In contrast to the rare Belgian corporation tax, income taxes paid by sole proprietors, independent contractors, and anyone with a stake or partnership are based on profits.
  • Belgian tax residents are freelancers who work in Belgium for over six months (183 days) per year. They are therefore required to pay tax on all income earned worldwide.
  • After deducting social safety contributions, and any other allowed expenses, the taxable income is the amount of profit that remains.
  • Residents will have a tax-free allowance worth EUR9,050 in 2022 (higher for those with children). The income tax bands vary from 25% to 50%.

Fines for Belgium Corporate taxes

In the event of a late return, the government can automatically calculate the tax bill for the company.

The amount companies pay is based on factors such as turnover and the number of workers. It also varies depending on which industry sector you are in.

Late filings will incur a surcharge and the company’s past filing records and (deemed) intent to avoid taxation will determine the surcharge. You could be subject to a 20% increase in taxes if you do not properly report certain profits.

Companies that fail to pay business taxes in Belgium can be subject to legal sanctions or fines.

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Conclusion

Belgium is known for making unilateral tax deals with MNEs, resulting in illegal State Aid. The standard corporate tax in Belgium is 34%, plus a 3% surtax. 15% of gross patent income remains to be taxed. The qualifying income is subject to a 5.1% effective tax rate.

A tax expert in  Odint Consultancy will help you by providing complete details about corporate taxes in Belgium. If you have any queries regarding Belgium corporate taxes, get in touch with our professional experts.

FAQ’s

15% is the corporate tax rate and the corporate income tax rate applies to the taxable profit for the fiscal year (1 January – 31 December).

Belgium has among the highest rates of taxation in all of Europe. The personal income tax rate can be as high as 50% for those who earn the most, compared to the average of 38% in Europe. 

Belgium has signed double tax agreements with more than 150 countries.

The average rate is 7%. A 7% flat fee will be applied to non-residents. Exempt overseas income may occasionally be liable to local taxes.

The cost of living in Belgium might not be the lowest. However, higher living costs mean higher standards of living. According to the OECD, Belgium is among the top 15 countries worldwide in terms of standard of living.

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