- Residence by engaging in self-employed activities
- Residence by employment
- Residence by pursuing studies
- Belgian citizenship
- Taxation of individuals
- Corporate tax
- Estate planning
If you are contemplating setting up your business in Belgium, the following taxation matters are relevant to you.
All commercial companies in Belgium are subject to corporation tax. The nominal corporate tax rate is 33.99%. There is an exception for small and medium-sized enterprises with a limited taxable profit as the tax rate drops to 24.98% when certain criteria are met.
The Belgian system allows certain legal mechanisms which make it possible to lower the nominal rate:
1. Notional Interest Deduction
One of the most well-known Belgian measures is the 'notional interest deduction'. This is a tax deduction for capital which alleviates the differences in tax treatment between finance raised through borrowed capital and finance raised through equity capital.
The system allows companies to deduct from their tax base a notional interest charge (not stated in the accounts) corresponding to a specific percentage of their 'adjusted' equity capital.
2. Dividend Withholding Taxes - individual investors
Dividend distributions by Belgian SMEs can benefit from reduced tax rates. If the company was only funded by cash contributions, a 15% rate is possible. The company also has an annual choice to reserve its profits at a 10% tax cost, after which distributions can take place at reduced rates depending on a waiting period.
3. Dividend Withholding Taxes - corporate investors
Another popular measure for investors is the withholding tax exemption on some dividends. Corporate investors (from treaty countries) who use Belgium as their holding location for investments in Europe are allowed to repatriate European profits without paying dividend withholding tax and without a limitation on profits, subject to a 10% minimum participation and a one year holding period. Some well-known treaty countries in this regard are Hong Kong and the United States.