Temporary tolerance to determine VAT deduction on costs relating to company cars in 2020
The federal minister of finance allowed a temporary tolerance to determine the VAT deduction on costs relating to company cars for 2020.
The VAT on costs relating to company cars is in principle limited to the professional use of the car. If a company car is used professionally and privately, there are 3 possible methods to determine the VAT deduction percentage (with a maximum deduction of 50%).
- the manual/automatic registration of all rides;
- Semi – fixed percentage: Formula to determine the private use of the car;
- Fixed 35% professional use, no proof required.
In principle, once a method is chosen, this methodology should be maintained for at least 4 years. However, the minister has now allowed a temporary tolerance to change from the second method (semi fixed formula) to the third method (fixed 35%) due to the Covid-19 related consequences of telework, temporary unemployment, etc. having a negative impact on the calculation of the semi-fixed formula.
Consequently, taxpayers applying the semi-fixed formula can change to the fixed VAT deduction of 35% for car costs made in 2020 regardless of the condition to maintain the method for 4 years has been fulfilled.
PERSONAL INCOME TAX
Obligation to declare foreign immovable properties revised
On February 25, 2021, a legislative amendment was published in the Belgian Official Gazette regarding the way in which foreign real estate owned by Belgian residents will be taxed in the future. This amendment is the result of Belgium being criticized several times in the past by Europe due to the fact that the Belgian tax law treats real estate income differently depending on the location of the property.
Generally speaking, the taxable income of immovable properties located in Belgium is based on the indexed cadastral income, if it is related to properties which are not rented out or are rented out for private purposes.
The income from immovable property located abroad is in principle taxable based on the rental price/rental benefits or on the rental value if the property is not rented out.
In order to eliminate this discrimination, the amendment to the law provides that all foreign immovable properties on which Belgian residents or (certain) legal persons have a right in rem (owners, possessors, usufructuaries, leaseholders, superficiaries) will be attributed a cadastral income and foresees that the immovable income concerned will be taxed in the same way as income from Belgian immovable properties.
To determine this cadastral income, the Administration will contact taxpayers who have declared an income from a foreign immovable property in assessment years 2020 and/or 2021. These persons will be requested to provide certain information (including the location and current sales value of the property). Based on the information obtained, a new cadastral income will be determined, which will constitute the taxable base for the foreign immovable income in the personal income tax return as of assessment year 2022 (2021 income).
As from January 2021, the taxpayer has an obligation of declaration in a.o. the following cases:
- The taxpayer already owned (or had another right in rem on) a foreign immovable property on December 31, 2020;
- The taxpayer acquired or disposed a foreign immovable property as of January 1, 2021;
- A person was previously submitted to the non-resident tax/corporate tax and would in the future be submitted to the personal income tax/legal entity tax and has a right in rem on a foreign immovable property;
- A foreign immovable property was newly built or rebuilt and has not yet been put into use or was not yet rented out.
It is advisable to get informed about your possible declaration obligations, since noncompliance with this obligation can result in a fine of 250 EUR to EUR 3.000 EUR.
CORPORATE INCOME TAX
Towards a (digitized) upgrade of the relationship between taxpayer and Belgian tax authorities
Covid-19 has caused an accelerated transition to a digitalized world, both professionally and personally. The Belgian government could not stay behind, further to its promise in the Coalition Agreement of September 30, 2020 to improve, modernize and simplify the relationship between taxpayer and Tax Administration. On February 10, 2021, the law of January 26, 2021 on the digitization of the relationship between the Federal Tax Administration and the taxpayers, was published in the Belgian Official Gazette. The law foresees that, in the future, exchange of information with the Federal Tax Administration will take place via a secure electronic platform (E-box).
The E-box, already in use since October 1, 2019, will become the main communication medium for all messages sent to and by the Belgian tax administration in relation to rights and obligations contained by the various codes of tax law, and for all kinds of letters, forms or transmission of data.
This also means that, in all cases where the Belgian tax legislation explicitly requires communication via registered mail, the taxpayer will now receive an e-box alert, notifying an incoming message from the Federal Public Service (FPS) Finance on the secure platform.
The new legislation will be effective as from January 1, 2025 for all taxpayers, with following exceptions:
- Private individuals subject to personal income tax or non-resident income tax. They are given the possibility to opt-in, which means that they must explicitly opt for electronic exchange by activating their e-box. They may continue to work on paper unless they have chosen to work electronically. They may also, at any time, opt-out again by de-activating their e-box.
- Legal persons and natural persons not registered for VAT purposes in accordance with article 50 of the Belgian VAT code.
- Taxpayers who are not able to comply with the identification conditions of the secure platform. A Royal Decree still has to determine the cases where identification on the secure electronic platform is not possible.
Mandate holders authorized to represent taxpayers (bookkeepers, accountants, tax consultants,..) but also other third parties (notaries, financial institutions etc.) are always obliged to use the secure electronic platform, even if they represent a taxpayer who has not opted-in.
The FPS Finance guarantees the use of a secure electronic platform by means of adapted security techniques that guarantee the origin and authenticity of the content, the time indication (linking the messages to a date and an hour) as well as the secure archiving of the messages sent.
From April 1, 2021 onwards, all paper communication sent by the taxpayer to the Tax Administration will already be scanned and stored on the secure platform. The eSeal will be used to guarantee the integrity and authenticity of the document after which the original paper document will be destroyed. The taxpayer can consult the digitzed documents on MyMinfin.be.
In the case of electronic (versus paper) communication, the delay granted for answering requests for information or notices of amendment or to file notices of objection, starts running as from the first (instead of the third) working day following the date on which the message or notice of assessment was made available electronically.
Deadline CIT return
Within the aim of simplifying the relationship with the taxpayer, the new law also contains a uniform deadline for submitting the annual CIT return, which will be applicable to all companies subject to corporate income tax or non-resident income tax, as from assessment year 2021.
This rule replaces the different deadlines for submitting the return, published every year by the Belgian tax administration, especially important for companies with broken financial years. The final date for submitting the tax return will be the last day of the seventh month following the close of the financial year. In addition, the Biztax declaration must be based on the approved annual accounts (new article 310 of the Income tax Code).
Within the context of improving relationships with the taxpayer, the Coalition Agreement announces a less formalistic and more service-oriented approach to mitigate non-compliance by taxpayers which is often caused by misinterpretation of tax law or lack of information. The Tax authorities mainly want to focus on combating fraud and tax abuse. The extension of the Co-Operative Tax Compliance Program, which was launched in 2018 as a Pilot Project for multinationals, to enhance compliance and transparency, might be a next step in this respect. Furthermore, a code of conduct with mutual rights and obligations for taxpayer and tax authority would be in the pipeline.
KEEP IN MIND THE DEADLINE !
- VAT return February 2021 : before March 20, 2021
- Client listing (financial year 2020) : before March 31, 2021
Corporate income tax
- Prepayment corporate income tax : April 10, 2021
- Increased Investment Deduction / Tax Credit for Energy-Saving / R&D investments : Online application request ultimately by March 31, 2021
Personal income tax
- Tax forms 281.20 (income year 2020): March 15, 2021
- Prepayment individual income tax: before April 12, 2021
- Wage withholding tax return (02/2021): before March 15, 2021
- Wage withholding tax return (Q1/2021 or 03/2021): before April 15, 2021
- French RAS return (Q1/2021) : before April 15, 2021
- Social security return (Q1/2021) : before April 30, 2021