COVID-19 related tax measures in Belgium

By Kevin Paramore, Brent Springael

04-2020

General support measures to undertakings

Tax debt measures

Enterprises affected by COVID-19 outbreak may apply for aid with the Federal Tax Administration. The support measures must provide financial breathing space and allow debtors to overcome their temporary financial difficulties. 

The support measures are available to all natural or legal persons in possession of a company number (CBE):

  • irrespective of their sector of activity; and

  • which are actually affected by the COVID-19 outbreak, and can demonstrate this (e.g. through a fall in turnover, a substantial fall in orders and/or reservations, consequences of a "chain reaction" with partner companies, etc.). 

The support measures include repayment plans, exemption from arrears interest and a waiver of fines for non-payments. They are available for the following tax debts:

  • Payroll tax;
  • VAT;
  • Personal income tax;
  • Corporate income tax; and
  • Legal entities tax.

The support measures cannot be granted to undertakings which, independently of the coronavirus, have structural payment difficulties, nor if they have not complied with the filing conditions of the relevant tax returns or if the debts arise from fraud. Furthermore, the support measure will be withdrawn if the authorised repayment plan has not been complied with, unless timely contact with the tax authorities is made by the debtor and if a collective insolvency procedure arises (e.g. bankruptcy, judicial reorganisation, etc.).

One request per debt may be made once a notice of assessment/payment has been received and until 30 June 2020. The request should be made by email or by post to the competent Regional Recovery Center ("Regionaal Invorderingscentrum" / "Centre régional de Recouvrement") (i.e., the competent centre depends on the person's postal code or company's statutory seat - for help as to the appropriate office, click here). Foreign companies may direct their requests to the Regional Recovery Center Brussels 1 (Boulevard Botanique 50, box 315, 1000 Brussels / email: [email protected]).

A reply should arrive within 30 days of the request being received by the tax authorities.

Income Tax Prepayments

The credit rates on personal income tax prepayments (for self-employed workers) have been increased by 0.25% for both the 3rd and 4th quarters to decrease the impact of late/postponed payments. They will therefore amount respectively to 2.25% and 1.75% rather than 2% and 1.5%.

The increased percentages do not apply to individuals who could receive more benefits due to advance payments.

The credit rates on corporate income tax prepayments have been increased by 0.75% for both the 3rd and 4th quarters to decrease the impact of late/postponed payments. They will therefore amount respectively to 6.75% and 5.25% rather than 6% and 4.5%.

This measure is only applicable for companies with liquidity problems. It will therefore not be applicable to companies that have effected: 

  • A share buy-back or a capital reduction;

  • A dividend distribution between 12 March 2020 and 31 December 2020.

The percentages of the increases themselves remain unchanged, as do the dates of the prepayments.

Extension of tax returns' filing delays

Corporate income tax, legal entities tax and non-resident (corporate) tax whose filing deadline elapses/d between 16 March and 30 April 2020 included have been granted an automatic delay until Thursday 30 April 2020 at midnight to file their tax returns.

The deadline for the filing of VAT periodical returns and VAT intra-community statements relating to: 

  • February 2020 have been extended to 6 April 2020 (included);

  • March 2020 or to 2020's 1st trimester have been extended to 7 May 2020 (included); or

  • April 2020 have been extended to 5 June 2020 (included).

Annual VAT listings may be filed until 30 April 2020 or, in case of termination of business, at the latest at the end of the 4th month following the cessation of the activities subject to VAT.

Accelerated refund of VAT credit on VAT current account

All applicants for monthly VAT returns (with/without a monthly refund authorisation and whether or not considered as "starter") will be able to benefit, subject to the below conditions, from an accelerated refund of the VAT credit on their current account as of 31 March 2020.

All monthly applicants wishing to benefit from this accelerated refund should file (via Intervat) their February and March 2020 VAT returns respectively by 3 April 2020 (included) and 3 May 2020 (included), while ticking the box "Request for refund". VAT taxpayers may file a corrected VAT return via Intervat until 3 April 2020 (included) or 3 May 2020 (included) respectively, in which they change this option.

The other basic conditions remain applicable, among others:

  • Minimum amount of 245 euros;

  • All declarations for the current year must have been submitted;

  • The administration must have a bank account number for VAT refunds (form 604B).

Moreover, there must be no opposition to this refund (following writs of garnishments served and assignments of receivables notified to the Federal Tax Administration).

Refund will take place at the latest on 30 April 2020 (instead of 29 May 2020 or 30 June 2020).

This credit may possibly be subject to a deduction or offset against another open debt and be subject to a "VAT credit check".

Attention: this filing deadline is without prejudice to the possibility of filing on time (up to and including 6 April 2020) the monthly returns for February 2020 that do not show a credit balance or for which a refund is not requested.

Automatic deferral for VAT and payroll tax payments

An automatic two-month deferral for the payment of VAT and payroll tax is applicable, without having to pay fines or interest on arrears, meaning that:

  • VAT payments related to the February monthly return may be paid until 20 May 2020;

  • VAT payments related to the March monthly return or to the 2020's 1st trimester return may be paid until 20 June 2020;

  • VAT payments related to the April monthly return may be paid until 20 July 2020;

  • Payroll tax payments related to the February monthly return may be paid until 13 May 2020;

  • Payroll tax payments related to the March monthly return or to the 2020's 1st trimester return may be paid until 15 June 2020; or

  • Payroll tax payments related to the April monthly return may be paid until 15 July 2020.

In addition to this automatic postponement of payment, it is also possible to request the application of the abovementioned support measures for the payment of debts relating to VAT and payroll tax (i.e. repayment plans, exemption from arrears interest and a waiver of fines for non-payments).

Automatic deferral for personal income tax, corporate income tax, legal entities tax and non-resident (corporate) tax

An additional period of two months will be automatically granted for the payments of personal income tax, corporate income tax, legal entities tax and non-resident (corporate) tax which relate to assessment notices for tax year 2019 established as of 12 March 2020.

Again, the payment of debts relating to personal or corporate income tax (including those established before 12 March 2020) is also subject to the abovementioned support measures (i.e. repayment plans, exemption from arrears interest and a waiver of fines for non-payments). 

Extension of excise duty, packaging tax and VAT payment terms for alcohol and alcohol-containing beverages

Payments of abovementioned taxes have been extended from 1 to 4 weeks for all companies with a credit account, as of 21 March 2020 and until 30 June 2020 at least.

Tax treatment of donations of medical equipment

The medical equipment includes medical devices and instruments, face masks and other protective gear but excludes medicines and legal drugs, which are directly given to qualifying hospitals and other healthcare institutions (as recognised by the Public Federal Service Healthcare) between 1 March 2020 and 30 June 2020.

Such donations may be made free of VAT (temporary waiver of self-supply rule), will not constitute abnormal or benevolent advantages granted and will remain deductible in the hands of the donators provided that for each donation made, a document is drawn up by the healthcare institution confirming that the goods have been obtained free of charge and undertaking either to use the goods  itself in the provision of care or to make them available free of charge to another qualifying healthcare institution.

The document must be drawn up in duplicate for each party to the donation and contain at least the following information:

  1. the date;

  2. the (company) name, address and VAT identification number of the taxable donor;

  3. the (company) name, address and business number of the recipient of the donation;

  4. an accurate and complete description of the donated goods;

  5. an indication of the quantity of the goods;

  6. a confirmation by each party that it has received its own copy; and

  7. a signature by each of the parties.

Some tolerances with regard to the document are permitted (see Title 4, points 17 to 21 here).

The said document replaces, in the hands of the donor, the document establishing the self-supply, provided for in Article 3 of Royal Decree Nr 1 of 29 December 1992 on measures to ensure VAT payment. It also reverses the legal presumption of Article 64(1) of the VAT Code in respect of the taxable donor.

Tax deductibility of debt write-downs

The tax authorities have announced in their circular 2020/C/45 dd. 23 March 2020 that they will show flexibility with regard to the tax deductibility of write-downs for probable losses on trade receivables. Tax rules are indeed stricter in this regard than accounting rules, which only require uncertainty as to the collection of the debt in order to book a write-down in respect of doubtful debtors.

The "special circumstances" that must have occurred during the taxable period will therefore be assumed to be present in the context of the Coronovirus crisis, as the crisis "justifies the exemption of write-downs on trade receivables from companies that are in arrears with the payment of these receivables as a direct or indirect consequence of the measures taken by the federal government".

The crucial condition for the deductibility of the write-down of the receivable is that the debtor must suffer a significant loss of turnover. 

This means that the taxpayer's burden of proof has been simplified and that there will now be a presumption that a loss on the receivable is "probable" within the meaning of article 48 ITC as long as the debtor has suffered a significant loss of turnover (the old rule that a presumption is not sufficient being temporarily suspended).

Please note however that the usual formalities still need to be complied with and that companies must identify and give details about every doubtful debtor in Form 204.3 accompanying the taxpayer's tax return.

Inheritance tax/registration duties

  1. The Flanders Region allows for a temporary lifting of tax increase in case of (timely) delay request for the filing of an inheritance declaration in Flanders. This measure is applicable for declarations with a filing period expiring between 13 March and 5 April 2020. More information as to the postponement procedure may be found here.

  2. Registration of private deeds ("pacte adjoint" donations) may exceptionally be made by sending the deed of donation by email to [email protected]. The donation registration duties can be paid on the account of the (federal) registration tax office "Kantoor Rechtszekerheid Brussel 2". The donation will be registered upon receipt of the registration duties, albeit on a provisional basis: the original deed has to be mailed later on for the donation to be valid.
     
    Bureau Sécurité Juridique 2
    SPF Finances | AGDP | Sécurité juridique | Bruxelles 2
    Boulevard du Jardin Botanique boite 3954 1000 Bruxelles 
    Service: [email protected]
    0257 742 10

    Kantoor Rechtszekerheid 2 
    FOD Financiën | AAPD | Rechtszekerheid | Brussel 2
    Kruidtuinlaan 50 bus 3954
    1000 Brussel
    Dienst: [email protected] 
    0257 742 10
    Attention: confirmation should be sought with the competent regional registration tax office, e.g. for Flanders, Vlabel.

  3. Notaries in Flanders get two more months to execute notarial deeds for the sale of real estate.

Other

  1. The Brussels city tax for the first half of 2020 has been cancelled.

  2. Flemish property tax assessments will be delayed until September (rather than being assessed from May onwards).

  3. The Flemish annual traffic tax will be deferred by 4 months for companies for tax year 2020.

  4. As of 18 March 2020, the Walloon region has suspended for 30 days the 2-year deadline for the signing of an authentic deed of resale which allows for a partial restitution of registration duties. Said suspension may be extended twice for the same duration.

  5. As of 27 March 2020, the Walloon region has reduced for 30 days the registration duty for the creation of a mortgage on immovable property to 0%, but only in the event of conversion into a mortgage of a mortgage mandate existing before 27 March 2020, in order to prevent the risk of the banking sector activating mortgages mandates to cover the loans taken out. Again, the said reduction may be extended twice for the same duration.

  6. As of 27 March 2020, the Walloon region has decided to lower by 1/12th for any month of inactivity the lump sum tax on automatic entertainment machines. The tax decrease is granted upon request by taxpayers active in the hotel and catering sector and is calculated prior to the computation of other decreases (fairground devices, devices installed post-1st quarter, etc.). The end of the application period and the number of 12ths concerned will be established by decree. 

  7. Customs and tax exemptions in the event of disasters: EU Commission decided to authorise the suspension of duties and VAT on imports of goods needed to combat the COVID-19 virus pandemic. For more information, click here.

For more information, please visit https://finances.belgium.be/fr/coronavirus or click here.

Last reviewed: 20 April 2020