As part of its recently approved budget for 2013 the Belgian government has announced the following tax changes.

Withholding tax

The standard rate of withholding tax on dividends and interest payments is increased to 25%. Reduced rates provided for by double taxation treaties will of course continue to apply.

The present rate of 15 % for interest payable on certain savings accounts and on certain government bonds (so called Leterme bonds issued between 24 November and 2 December 2011) is maintained.

Liquidation distributions remain subject to a rate of 10%.

Interest on residential real estate investment companies will be subject to a 15 % withholding tax as of 1 January 2013. For investment companies that do not qualify as residential the rate will remain at 25%.

Notional interest deduction

The Law of 28 December 2011 provided for a maximum deduction rate of 3% (3,5 % for SME’s), which was the rate applicable for income earned in 2012.

Under the new proposals, which still have to be finally confirmed, the deduction rate for income earned in 2013 will be reduced to 2,742% (+ 0,5% for SME’s).

Capital gains on sales of shares

Last year the company tax rules were changed to provide for a separate rate of 25.75 % on sales of qualifying shares by all companies which were made within a one year period of the shares being acquired. Sales of qualifying shares made on shares held for more than one year were tax exempt.

A new tax of  0,4 % will now be applied on capital gains made on sales of qualifying shares by  large companies and holding companies for sales realized on shares which have been held for more than one year.

Capital gains on sales of shares of qualifying shares by SME’s held for more than one year remain fully tax exempt.

Capital gains on the sale of non-qualifying shares are subject to a 33,9% tax.

Christelle Wils