Corporate income tax alert
1. Reform of Belgian Investment Deduction
The Belgian Investment Deduction reform aims to:
- Modernize the list of investments eligible for this regime after 40 years.
- Align with sustainable development needs.
- Establish fixed percentages and simplify procedures.
The new system is set to commence as from 1 January 2025, but is still subject to legislative approval.
The new system comprises three tracks:
The table below provides an overview of the current system of qualifying investments and the percentages for the fiscal years 2022, 2023, and 2024.
| Small and medium-sized companies (SME’s) (1) | 2022 | 2023 | 2024 (2) |
| Ordinary investment deduction - one-off | 25% | 8% | 8% |
| Digital investments - one-off | 13,50% | 20,50% | 15,50% |
| Security - one-time | 20,50% | 27,50% | 22,50% |
(1) also applicable to self-employed individuals
(2) expected percentage for fiscal year 2024 (tax year 2025). To be confirmed via publication in the Belgian Gazette.
| All companies | 2022 | 2023 | 2024 (2) |
| Environmentally-friendly investments in R&D - one-off | 13,50% | 20,50% | 15,50% |
| Environmentally-friendly investments in R&D - staggered | 20,50% | 27,50% | 22,50% |
| Patents - one-off | 13,50% | 20,50% | 15,50% |
| Energy-saving investments - one-off | 13,50% | 20,50% | 15,50% |
| Fume extraction or ventilation systems - one-off | 13,50% | 20,50% | 15,50% |
| Greening of trucks and refuelling infrastructure - one-off | 35% | 42% / 36,50% | 31,50% |
| Reusable packaging - one-time | 3% | 3% | 3% |
| Companies exclusively active in maritime shipping | 2022 | 2023 | 2024 |
| Sea-going vessels - one-off | 30% | 30% | 30% |
The table below provides an overview of the “tracks” and the percentages that would apply as from 2025.
| New investment deduction from 01/01/2025 | SME's (3) | Other companies |
| General track: basic deduction - one-time | 10% | - |
| General track: digital investments - one-time | 20% | - |
| Thematic deductions - one-time | 40% | 30% |
| Technology deduction for R&D and patents - one-time | 13,50% | 13,50% |
| Technology deduction for R&D - spread out | 20,50% | 20,50% |
| Ships - one-time | 30% | 30% |
(3) also applicable to self-employed individuals
1) General track for small and medium-sized companies (SME’s):
- Basic deduction increased from 8% to 10% exclusively for SMEs
- Simplified application process without formal requirements
- Excludes assets with harmful environmental impact unless no alternative is available
- Additional 10% deduction for digital investments by small and medium-sized companies
- The eligible investments include software and equipment supporting digital payment and invoicing systems, digital accounting systems, digital CRM systems, digital e-commerce platform systems, and digital systems for securing information and communication technology. The specific nature and technical features of the qualifying investments will be defined by royal decree.
- Annex 275U should be added to the corporate income tax return
2) Targeted track: thematic deductions:
- Offers higher deductions for specific investments and technologies
- Applicable to all companies with a 40% deduction for small and medium-sized companies and 30% for others
- Categories include energy efficiency, renewable energy, zero-emission transportation, and digital investments aligned with these themes
3) Transformation of research and development investment allowance:
- Introduction of Technology Deduction offering a 13,50% deduction for qualifying R&D investments and patents
- Increased to 20,50% if deduction is spread over time, excluding investments in patents
- Option for taxpayers to opt for a tax credit
Implementation:
- Expected as from 1 January 2025
- Details to be determined by Royal Decree, influencing Belgium’s investment landscape
Example : Investment in zero-emission truck ad 60.000 EUR, depreciated over 10 years
| Thematic investment deduction (one-off) | Company A | Company B |
| Revenue | 150.000 | 150.000 |
| Depreciation zero-emission truck | -6.000 | 0 |
| Taxable profit | 144.000 | 150.000 |
| Investment deduction (30%) | -18.000 | 0 |
| Taxable base | 126.000 | 150.000 |
| Corporate income tax | 31.500 | 37.500 |
Consider the following scenario: Company A and Company B, both large companies, generate both a revenue of 150 KEUR during the year 2025. However, Company A makes a strategic decision to invest 60 KEUR in a zero-emission truck, whereas Company B does not pursue the same investment opportunity.
Company A benefits from a thematic (one-time) investment deduction of 30% due to its investment in the zero-emissions truck. As a result, Company A’s taxable base decreases to 126 KEUR after deducting the 18 KEUR investment deduction. As a result Company A would be liable to a corporate income tax of 31,5 KEUR.
On the other hand, Company B chooses not to utilize the investment deduction. Therefore, its entire profit becomes taxable. Assuming that no additional costs are present, this would result in a corporate income tax liability of 37,5 KEUR.
The decision to invest in a zero-emission truck at 60 KEUR results in a decreased taxable basis for Company A, attributed to the additional annual depreciation of 6 KEUR and the one-time investment deduction of 18 KEUR. Consequently, leading to a net tax saving of 6 KEUR for Company A.
2. 120% deductibility for E-invoicing costs
- Costs for e-invoicing are 120% deductible for small and medium-sized companies starting from 1 January 2024.
- The law of 6 February 2024, obliges electronic invoicing between VAT-registered businesses from 1 January 2026.
- Eligible investments for the enhanced 120% deduction include billing software enabling structured electronic invoicing, periodic subscription fees for such software and consultancy costs related to compliance with these obligations.
- It only concerns direct costs related to preparing for compliance with electronic invoicing obligations
- Costs that are capitalized and depreciated are not eligible for the enhanced deduction.
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