"Easter Agreement": Belgian Tax Reforms You Need to Know!

Introduction

On 11 April 2025, the Belgian Council of Ministers reached a significant agreement. Commonly referred to as the "Easter Agreement", it encompasses various reforms, including notable tax reforms. Proposed measures are encapsulated in a pre-draft program law currently under review by the Council of State.

While the content of this program law is subject to potential modifications and requires parliamentary approval before adoption, we have compiled a capita selecta of what we believe to be the most important tax measures. This newsflash aims to provide an informative and clear summary of these key elements, offering valuable insights into the anticipated changes. At a later stage in the legislative process, we will comment on some of the measures below in an ad hoc Newsflash.

 

1. Participation Exemption Regime (Dividend Received Deduction)

The proposed changes to the Participation Exemption Regime (so-called "Dividend-Received Deduction" or "DRD") are the following:

• Participation Requirement: Companies claiming the participation exemption based on an investment of 2.5 million EUR – in case the participation does not reach 10% – would have to demonstrate, in addition to the rest, that the participation qualifies as a "financial fixed asset" for the investor (except if the investor is a "small company").
• DRD Requirements: The amendments to the DRD requirements are extended to withholding tax exemptions.

 

2. DRD SICAV/BEVEK

The proposed changes are the following:

• Tax on Exempt Capital Gains: Introduction of a 5% tax on the full amount of the exempt capital gains realized on these funds by the investor.
• Withholding Tax Credit: The withholding tax credit on dividends received by an investor would be subject to the condition that a minimum remuneration is allocated to investment companies' director during the relevant income year.

 

3. Group contribution regime

The Group Contribution Regime ("GCR") is proposed to be amended to permit the DRD for the year on the amount of the GC that exceeds the negative result as determined before adding the GC to the taxable base.

This amendment is justified to comply with the Parent-Subsidiary Directive ("PSD") and the consistent case law of the Court of Justice of the European Union against the DRD regime. More specifically, in a decision rendered on 13 March 2025, the Court explicitly ruled that prohibiting the use of the DRD in the case of a GCR was contrary to the PSD since it could lead to an indirect taxation of the dividend received. For a comment on this recent decision, please refer to our previous Newsflash. 

 

4. Specific Anti-Abuse Provision on Tax on Securities Accounts

A specific anti-abuse provision is proposed to prevent taxpayers from circumventing the tax on securities accounts. This provision targets operations such as (i) "converting" financial instruments within a securities account into other forms or (ii) "transferring" portions of financial instruments. These operations would be deemed unenforceable against tax authorities, ensuring that taxpayers cannot use these methods to avoid taxation.

Taxpayers retain the right to present counterevidence by demonstrating motives other than tax avoidance. Examples of acceptable justifications include donations to children, divorce, or death. Unacceptable justifications include, for example, splitting an account to invest in financial products with different terms or registering shares in nominative form to save on bank fees.

For audit purposes, an obligation to inform tax authorities of these transactions is introduced, with non-compliance resulting in fines.  

 

5. "Exit Tax"

The proposed "exit tax" applies to a company's emigration and reorganization resulting in the transfer of company's assets abroad. Under this provision, shareholders would be taxed on a "deemed dividend" simulating a liquidation of assets (i.e. latent capital gains). By incorporating this fiscal fiction, the "exit tax" becomes applicable to shareholders who are residents in Belgium, as well as those subject to corporate tax and tax on legal entities.

To avoid double taxation for shareholders of a company that has transferred assets abroad, the proposed rules include a tax credit. This tax credit would allow taxpayers to offset the tax paid on a "deemed dividend" with the tax due on an actual dividend.

 

6. "Carried Interest"

The proposed measures include a new regime for individuals or related persons receiving "carried interest" from Alternative Investment Funds. The income will be treated as investment income and taxed at a flat rate of 25% through withholding and income tax. This measure will apply to "carried interests" paid or attributed from the date of entry into force of the law.

The new regime aims to make Belgium more competitive in the private equity and venture capital market.

 

7. Tax regime for Inpatriates

Slight amendments to the tax regime for inpatriates are proposed:

• Tax-free costs proper to the employer: The threshold is raised to 35% (previously 30%), and the €90k cap is removed.
• Eligibility for "regular inpatriates" (other than "inpatriates researchers"): The minimum gross salary in Belgium is lowered to €70k (previously €75k).

These changes aim at making the tax regime for inpatriates more accessible and attractive.

 

8. Hybrid Company Cars Taxation

Starting 1 January 2026, the proposed tax measure would temporarily improve the tax deductibility for hybrid vehicles. Hybrid vehicles would be eligible for up to a 75% deduction, based on CO₂ emissions, until the end of 2027. Vehicles emitting a maximum of 50 grams of CO₂ per kilometer would be eligible for higher deductions until 1 January 2028.

Fuel costs for hybrid vehicles would remain 50% deductible until the end of 2027, after which they would no longer be deductible. The costs of charging hybrid vehicles with electricity would be fully deductible, in the same way as for 100% electric vehicles.

 

9. Investment deduction

To promote new investments, notably in green energy, technologies and climate-friendly innovations, the Investment Deduction (the "ID") is proposed to be amended as follows:

• Carried-forward ID: In cases of no or insufficient profits from a previous taxable period, the carried-forward ID would no longer be subject to any deduction limitation.
• Thematic Increased Deduction: This category of ID may now be combined with regional aid, and its rate is standardised at 40% for companies of all sizes.
• Cumulation Prohibition: The prohibition on cumulating the R&D tax credit and the ID would now apply only to the technological deduction category.
• Basic Deduction: The 10-point mark-up for digital fixed assets is explicitly confirmed as applying only to "small companies".

 

10. Alignment of the Liquidation Reserve and VVPRbis Regimes

The proposed changes aim at aligning the Liquidation Reserve and VVPRbis regimes with the following adjustments:

• Liquidation Reserve: The waiting period is reduced from 5 to 3 years, and a new rate of 6.5% is introduced. The new regime would depend on the date of creation and distribution of the reserve, bringing the total withholding tax cost to 15%.
• VVPRbis Regime: The 20% rate applicable to dividends allocated or distributed based on the profit distribution of the second financial year after the cash contribution would gradually phase out. Beyond 31 December 2025, only the 15% rate would be available.

 

11. Simplification of Tax Return

The proposed simplification of the tax return process includes the abolition of various exemptions. Specifically, several exemptions from personal income tax (e.g. private PC plans, long-distance travel allowances) and corporate tax (e.g. social liabilities, capital gains on company vehicles) would be abolished.

 

12. Reduction in Tax Reduction Percentage for Donations lowered

The proposed changes include a decrease of the tax reduction percentage for donations from 45% to 30%.

 

13. Tax Procedure Related Measures

     13.1 Investigation and Assessment Periods

Revised Limitation Periods: The concepts of "semi-complex" (cases where the taxpayer must comply with transfer pricing formalities, makes payments to tax havens, benefits from withholding tax advantages under a Double Tax Treaty, offsets a Foreign Tax Credit, and when information is obtained from abroad) and "complex" return (cases of hybrid arrangements, CFC, and/or Cayman tax) would be merged under the concept of "complex" return, with the applicable deadline reduced to 4 years.

Fraud Limitation Period: Fraud limitation periods for VAT and income tax would be reduced from 10 years to 7 years.

Retroactive Application: New limitation periods would be retroactively applicable from tax year 2023.

Prior Notification of Tax Fraud Evidence: For income taxes, prior notification of tax fraud evidence, necessary to benefit from extended limitation periods, will be reinstated to its previous version. Fraud evidence must be notified in writing, precisely, and must exist for the audited taxable period. A similar notification requirement is foreseen for VAT

     13.2 Principle of "Good Faith"

The pre-draft program law includes a provision to waive any tax increase if the taxpayer is acting in good faith. Specifically, the 10% tax increase for a first-time offense committed in good faith would be waived. Good faith is presumed, except in the case of an ex officio assessment.

     ​​​​​13.3 Tax Amnesty

A stricter tax amnesty procedure will be reinstated, featuring a higher general tax levy and an even steeper rate for prescribed income. Key details include:

• Uniform Penalty Rate: All taxpayers seeking amnesty will face the same penalty rate. They must pay the applicable tax rate plus an additional 30 percent.
• Prescribed Capital: For fiscally time-bared capital (beyond the tax administration's assessment period), a 45% penalty on the regularized amount would apply.
• No Reduction for Good Faith: Taxpayers acting in good faith will not benefit from a reduced penalty. Even if a taxpayer cannot provide official proof of the legality of inherited capital due to its age, the penalty remains the same as for fraudsters.

 

14. Central Contact Point

Access to Information: Tax officials with at least the rank of Advisor will be able to request information declared to the Central Contact Point ("CCP") in the context of audits on securities accounts.

Periodic Communication Obligation: A new obligation would require periodic communication of the balance of securities accounts to the CCP, covering cases where this information was not previously disclosed.

Legal Framework for Data Processing: A legal framework will be introduced for the processing of personal data by tax authorities, including rules for the use, analysis, and cross-datamining of the tax authorities' databases with those of the CCP.

Extended Reporting Obligations: Reporting obligations to the CCP will be extended to include crypto-asset accounts and securities accounts starting 1 December 2026. The reporting modalities will be modelled on those for bank accounts.

 

15. VAT on Demolition and Reconstruction

As expected, the reduced VAT rate of 6% for demolition-reconstruction projects of homes would be reinstated and extended permanently, replacing the transitional measures expiring on 30 June 2025. Real estate developers can apply this reduced rate for the sale of homes under the following conditions:

• Sales to Private Individuals: The reduced VAT rate applies to homes sold to private individuals who will use the dwelling as their own and only home.
• Sales to Investors: The reduced VAT rate also applies to homes sold to investors who will rent the home to private individuals living in the home.
• Surface Area Limitation: The surface area of the home must not exceed 175 m².

The 6% VAT rate remains applicable under current regimes for owner-builders using the dwelling as their own and only home, for long-term social rental, or for long-term rental to individuals domiciled in the dwelling.

 

16. Other Tax Measures

• VAT on Fossil Fuel Boilers: The VAT rate on the installation of fossil fuel boilers will increase to 21%.
• Mortgage on secondary residence: The loan interest deduction (personal income taxation) for secondary residences will be abolished as from fiscal year 2026. 
• Airplane Tax: The airplane tax will be increased from €2 to €5 for flights of more than 500 km within the European Economic Area starting from 1 July 2025.

 

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In case of questions, please do not hesitate to reach out to your regular contact within the Fieldfisher Belgium tax team.