Mazars Info July 2019
Increased general investment deduction as alternative for lowered notional interest deduction
As from assessment year 2019 (financial years starting from 1 January 2018 or later), the potential tax benefit of notional interest deduction (NID) has decreased significantly due to its adjusted calculation. Henceforth NID only applies to 1/5th of the incremental adjusted equity of the preceding year in excess of the equity of the preceding fifth year, whereas NID previously applied to total equity of the preceding year. The applicable NID rate for assessment year 2019 amounts to 0,746% (+0,500% for SME’s). Unused NID of the year – in case taxable profits are lower than NID - is not transferable to a subsequent assessment year.
An alternative to decrease the taxable position of the company can be found in the general investment deduction (GID), which has temporarily been increased to 20% (of acquisition value) for investments made during the time frame of 1 January 2018 – 31 December 2019. The transfer of unused GID of the year – in case taxable profits are lower than GID - is limited to the subsequent assessment year.
Given that GID and NID cannot be claimed simultaneously, companies qualifying for GID should evaluate both tax deductions, in order to determine which is more favorable.
In order to qualify for GID, several conditions must be met, as listed below.
- Eligible companies: self-employed persons and SMEs (as defined by Art. 1:24 of the Belgian Companies Code).
- Eligible investments: tangible or intangible fixed assets, that are newly acquired or achieved, solely used for carrying out professional activities and depreciated over at least three years. ‘Leasing’ is also eligible.
The following investments are excluded from the investment deduction:
- buildings acquired to be sold
- private cars and cars for both professional and private use
- when the right of use of an investment good is transferred to a third party, (e.g. when letting the investment goods). This exclusion does not apply when the renter is a natural/legal person who uses the rented asset for his professional activity.
Apart from the GID, specific investment deductions (SID) can be used for specific investments, even in case they are made by "large" companies. The percentage of the SID depends on the nature of the investment (see table hereafter).
SID for self-employed persons, SME’s and large enterprises
(*) Except if the company opted for the "investigation and development tax credit".
SID for SME’S and large enterprises
SID for companies in the sea shipping industry
Other than GID, SID can be applied simultaneously with NID. Unused SID of the year – in case taxable profits are lower than SID - is transferable to subsequent assessment years, without limitation in time.
VAT return - holiday extension
It is expected, like previous years, that the Belgian Minister of Finance will announce an extension for filing the VAT returns during the summer.
Under current deadlines, monthly VAT returns for June and the quarterly VAT statement for the second quarter are due to be submitted by July 20, 2019. These deadlines will then be extended to August 10, 2019. The monthly VAT return for July, which is currently due by August 20, would be due to be submitted before September 10, 2019.
Similarly, intra-community sales listings for the month of June and the second quarter of 2019 are due by August 10 instead of July 20, with the monthly intra-community VAT statement for July also pushed forward to September 10, from August 20. However, the VAT payment deadlines will remain unchanged.
GLOBAL MOBILITY SERVICES
Single permit - practical solution to avoid premature termination or suspension of work in Flemish Region (Belgium)
As of January 1, 2019 the new combined permit, also known as the "Single Permit", has entered into force in Belgium. The benefit of the Single Permit is that through one application process, a work and residence permit can be combined. The biggest downside to this new application process to obtain the single permit is that the new procedure takes more processing time than the previous application process where e.g. a work permit B was combined with a residence permit, which were both applied for separately. Because of the longer administrative process, a "waiting period" could occur between the end date of the expiring work permit and the starting date of the new Single Permit.
The competent authority of the Flemish region (i.e. "Vlaamse Dienst Economische Migratie" in Dutch) now applies a practical solution to avoid termination or suspension of the ongoing work by means of extending the application of work (work permit) in the Flemish Region.
Based on the law, employees are only entitled to work as from the moment that the work permit or Single Permit has been approved and is delivered to the employee. In order to avoid suspending the existing employment for the period between the expiration date of the former work permit and the approval date of the Single Permit, the competent Flemish authority will provide a "temporary ex officio work permit", awaiting the definitive decision concerning the Single Permit (i.e. after approval of the residence part).
As a result of this administrative tolerance, this temporary work permit could make sure that the ongoing employment can be continued for the duration of the administrative process to extend the residence permit part included in the Single Permit.
From a practical perspective, the temporary work permit, as administrative tolerance for the longer administration process, will have a validity of maximum 90 days, unless the validity of the residence permit would be shorter.
For completeness sake, we mention that this temporary ex officio work permit can only be granted by the competent Flemish Authority and cannot be requested by any of the involved parties such as employers, employee, proxyholder,… .
Before making the decision, the following conditions will be checked by the competent Flemish authority to approve a temporary ex officio work permit:
- Extension is only possible for an application to extend an existing work permit into a combined permit (Single Permit);
- The competent authority will analyse the risk that the expiration date of the actual work permit (work permit B in most cases) would occur within the next 3 months;
- The residence permit should be valid longer than the work permit B;
- Only possible in case the processing of the request for a work permit with a combined permit (Single Permit) is decided positively.
We hope that this administrative tolerance in the Flemish Region will take some of the practical issues away that we encountered when extending work permits for existing employment situations.
In case you have questions concerning the Single Permit or an extension of an expiring work permit, please feel free to contact our Global Mobility Team.
Update: "Gardening leave" - inform the employee about this registration obligation!
The two most common ways to terminate an employment agreement are by way of a notice period during which the employee still remains active or by way of payment in lieu of notice in which case the employment is terminated immediately.
If the agreement is terminated by performing a notice period, the employee and employer can agree upon the so called "gardening leave", which means that the employee remains employed and still receives his/her normal remuneration and benefits, however is not required to attend for performing duties.
New obligation related to the unemployment benefits
One of the conditions to apply for unemployment benefit, the employee needs to register as a job seeker at the employment service in his or her region. In general, this can only be done after the employment is terminated, which is immediately in case of termination by payment in lieu of notice or after the notice period is expired.
The government announced different measures which will be aimed at the activation of unemployed persons and to the return of the workers to the labour market, combined in the so called "Jobsdeal".
One of these measures contains the obligation to inform the employee to register him/her already during the period of gardening leave. The employee is obliged to register at the employment service already within the month after agreeing on the gardening leave, which means that the employee cannot wait any longer until the notice period is expired.
The employer has the obligation to inform the employee in writing about this. In order to meet this obligation, it is recommended to include this information in the agreement about the gardening leave.
The specialists of our legal team can assist you and your employee with this procedure. Please contact us, in case you would like our assistance in this respect.
KEEP IN MIND!
- VAT return June 2019: before July 22, 2019 (payment)
- VAT return Q2/2019: before July 22, 2019 (payment)
- Third monthly prepayment for social security contributions (Q2 2019): July 5, 2019
- Personal income tax return – Belgian residents:
o Paper: June 28, 2019
o Via Tax-on-web: July 11, 2019
o Via proxyholder: October 24, 2019
- Prepayment corporate income tax: July 10, 2019
- Balance social security contributions (Q2 2019): July 31, 2019
- First monthly prepayment for social security contributions (Q3 2019): August 5, 2019
- Second monthly prepayment for social security contributions (Q3 2019): September 5, 2019
- Corporate income tax return – companies (Balance date: 31/12/2018): September 26, 2019
Please be aware that the deadline for the filing of the declaration regarding the tax on securities accounts is July 11, 2019. The payment of this tax should be made by August 31, 2019 (at the latest).