The normal rate of corporate income tax is 29.58% in 2019. As from tax assessment year 2021 (i.e. income 2020 if the accounting year matches the calendar year), the standard corporate income tax rate will be further reduced to 25%.
This rate hits the taxable base. The taxable base represents the profit (before tax) of a company, reduced, where applicable, by a series of fiscal deductions. The actual tax due may be much lower. It may fall to zero when the total deductions are greater than the profit.
Which incentives exist?
You can find a summary of the main incentives available to companies below.
Deduction of definitively taxed income
The deduction of definitively taxed income means that only the profits paid by the company paying dividends will be included in the taxable base, while the revenue from dividends paid by the beneficiary company will be reduced by the tax result.
As from tax assessment year 2019 (i.e. income 2018 if the accounting year matches the calendar year), the new corporate income tax reform has extended the 95% dividend received exemption to a full (100%) exemption.
Deductions for revenue from patents
Deductions for revenue from patents allow companies to deduct 80% of their income from patents so that the fiscal cost is a maximum of 6.8%.
Notional interest deduction (NID)
The NID is an innovative measure which enables companies subject to Belgian corporate tax to reduce their effective fiscal burden by deducting an amount of deemed interest paid on the basis of the company’s equity. The deduction aims to reduce the discrimination between the risk capital and the sums borrowed from third parties.
Deduction of previous losses
A company may deduct any previous losses from its tax base. This deduction is not limited in time.
Deductions for investments
Deductions for investments allow certain taxpayers to reduce their taxable profits by a certain percentage of the amount allocated by the company to a new investment.
In principle, the deduction for investments in unique (which is to say, it applies to the taxable investment period). However, some taxpayers may opt for a deduction distributed over the depreciation period. Some investments give rise to a deduction for single increased investments.
The corporate tax reform allows SMEs to benefit from an increase in the investment deduction from 8% to 20% for the next 2 years (assessment years 2019 and 2020) for assets acquired or created between 1 January 2018 and 31 December 2019.