Belgium's and Investment Deduction for a Sustainable Future - Introduction
On 6 March 2024, the Federal Parliament in Belgium saw the introduction of a transformative draft bill aimed at refining Belgium's investment deduction and tax credit regimes.
This initiative reflects a proactive response to ongoing technological advancements and the pressing demands of climate policy.
Revamping the Regime
Traditionally, Belgium's tax system encouraged investments through deductions on taxable profits, pegged at a certain percentage of the acquisition value for newly acquired tangible or intangible assets.
Currently, individuals and SMEs enjoy an 8% deduction, with opportunities for enhanced deductions tied to specific investments and adjustments for inflation. However, the landscape is set to change dramatically.
The New Tax Incentives Explained
The proposed legislation introduces additional tax deductions for companies and self-employed individuals engaging in specific categories of new assets utilized within Belgium for business operations. Exclusions apply, maintaining a strategic focus on environmental and digital progress.
Categorization of Deductions
Basic Investment Deduction
The basic Investment Deduction is set at 10% for SMEs and self-employed, excluding climate-detrimental investments.
It is boosted to 20% for digital assets investments, with a forthcoming detailed exclusion list.
Thematic Investment Deduction
The Thematic Deduction offers an enhanced 40% deduction for SMEs and self-employed and 30% for larger companies.
Eligible investments include efficient energy, carbon-free transport, eco-friendly projects, and digital advancements in these areas.
Technology Deduction
A 13.5% deduction for eco-conscious R&D and patents, increasing to 20.5% for staggered deductions.
Continuity and Transition
The bill retains the mechanism for carrying forward unused deductions, ensuring flexibility.
Set to take effect from 1 January 2025, the new regime keeps the current spread investment deduction for assets acquired before this date, promoting a seamless transition.
Belgium's Investment Deduction for a Sustainable Future - Conclusion
Belgium's forthcoming tax reform is a bold step towards marrying fiscal incentives with the urgent need for sustainable and technological advancement.
By fostering a conducive environment for eco-friendly and digital investments, the country positions itself at the forefront of economic resilience and environmental stewardship.
Final thoughts
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