Mazars Info November 2023

LEGAL

Introduction of the Code on companies and associations: amend your company's articles of association before 31 December 2023

Deadline

The Act of 23 March 2019 introduced the Code on companies and associations (CCA), which led to a thorough reform of Belgian company law. The CCA came into force on 1 May 2019 and became immediately applicable to all companies incorporated after that date. Furthermore, a complex transitional regime was provided for existing companies already
established before 1 May 2019.

On 1 January 2020, the CCA became applicable to existing companies, even if they have not yet adapted their articles of association to the CCA. The mandatory provisions of the CCA will then have entered into force (e.g. the amended rules on directors' liability, the conflict of interest rules, the abolition of capital in the private limited company). Provisions in a
company's articles of association that conflict with these are considered unwritten and replaced by operation of law by the mandatory statutory rules. The provisions of the CCA that are of supplementary or additional law do not apply automatically, but apply only to the extent that the articles of association of existing companies do not deviate from them.

In addition, there is a legal obligation for existing companies to bring their articles of association into line with the CCA at the next amendment of the articles of association that takes place after 1 January 2020. If one wants to amend an article in the articles of association after 1 January 2020, for example when an extraordinary general meeting decides on a capital increase with the issue of new shares in a public limited company, one is immediately obliged to adapt the entire articles of association to the CCA.

To the extent that existing companies have not yet amended their articles of association, they are required to amend them to comply with the mandatory provisions of the CCA by no later than 1 January 2024. This deadline is fast approaching and many companies have not yet amended their articles of association.

Sanctions

No criminal sanctions or fines are attached to the late adaptation of the articles of association to the CCA. However, article 39, §1 of the Act of 23 March 2019 does provide that the members of the management body are personally and jointly and severally liable for any damage suffered by the company or third parties as a result of the late amendment of the articles of association. Indeed, although the general meeting of shareholders must decide on the amendment of the articles of association, it is the management body that must take the initiative and convene the general meeting.

In principle, this provision will only rarely give rise to liability, since in addition to noncompliance with the law, the damage caused by this failure to convert must also be proved.
Damage will only exist in exceptional cases.

Introduction of the Code on companies and associations: amend your company's articles of association before 31 December 2023

Why we recommend amending the articles of association

Although the risk of directors' liability for non-conversion will prove to be a purely theoretical risk in many cases, it is still a risk and it is possible for someone who believes he or she has suffered damage due to the non-conversion to bring a liability claim against the directors.

In companies where a statutory auditor has been appointed, the statutory auditor will report the breach of the legal obligation to amend the articles of association in his or her annual audit report. This may cause reputational damage to the company concerned.

Some companies that have not been converted into another legal form by 1 January 2024 will be converted by operation of law into one of the legal forms provided for in the CCA. The two most significant examples are the following. A cooperative limited liability company (CVBA/SCRL) that does not meet the cooperative finality as defined in the CCA, will be converted into a limited liability company (BV/SRL) by operation of law. A limited partnership with share capital (Comm.VA/SCA) is converted into a public limited liability company (NV/SA) with one director by operation of law. The companies concerned then still have six months - i.e. until 30 June 2024 - to adapt their articles of association to their new legal form.

Even for companies that are not in the above specific situations, it may be useful to amend the articles of association. Often, we see that the articles of association of existing companies that have not yet been amended are stricter than what the CCA allows and these companies could therefore benefit from amending their articles of association. For example:

In a private limited company, it is possible to create different types of shares to which different voting and profit rights are granted, to issue convertible obligations or to make shares freely transferable. Capital has been replaced by contributions and it is possible to make these contributions available so that they can be distributed (subject to the application of the legal
balance sheet and liquidity tests).

The public limited liability company can be incorporated by one person and have one shareholder and it can choose between three governance regimes, the classic board of directors, the combination management board/supervisory board and a sole director. For holding companies, the last option could be interesting.

For more information on or assistance in amending your articles of association, please contact our legal team.

VAT

ECJ 7 September 2023, C-461/21 – Request for preliminary ruling

Import VAT is determined on the basis of the customs value. Added to this customs value are services charged, which are not included in the customs value, but whose value must be included in the tax base of the imported goods.

These are essentially commission, packaging and transport costs incurred up to the first place of destination of the goods on the territory of the importing Member State, as well as those arising from transport to another place of destination within the EU, if this latter place is known at the time of the taxable event.

These costs, which relate to the importation of goods, are exempt from VAT when their value is included in the taxable amount of the importation.

This exemption is justified because the cost of these services is included in the VAT taxable amount of the imported goods.

Thus, two conditions are expressly laid down for transportation costs to be exempt from VAT. First, this transport must be connected with the importation of the goods concerned and, second, the value of this transport must be included in the taxable amount for VAT purposes of the imported good.

In the present case, a Romanian carrier had transported goods from the Netherlands, the country in which the goods entered the EU, to Romania, the country of final destination. The invoice was not subject to VAT considering that the cost of these services was already included in the VAT taxable amount of the imported goods. However, the Romanian tax
administration found that (1) the carrier had not submitted documents showing that the transportation costs at issue were directly linked to the importation of the goods and (2) that the value of the services was included in the taxable amount of the imported goods. It therefore concluded that the entitlement to the VAT exemption to which those services had
been subject had not been established.

The question arises of how to prove these two conditions.

The Court decided that the recording of an import transaction does not mean that the costs of transport are systematically included in the taxable amount of the value for customs purposes.

The Court also emphasized that tax authorities may examine all available data to assess whether the substantive conditions have been met. Exemption from VAT can only be refused in the event of insufficient data to determine whether the value of the carriage is included in the basis for calculating import VAT.

Our VAT specialists can provide assistance for carrying imports of goods into Belgian territory.

GLOBAL MOBILITY SERVICES

Permanent establishment risk upon teleworking

General principles

If a foreign company would employ staff in Belgium for the same or related projects for a period or periods whose duration in the aggregate exceeds 30 days during any 12-month period, the company is to be considered a “Belgian establishment” based on Belgian domestic tax law. This implies that the company should amongst other formalities file a Belgian non resident corporate income tax return for the corresponding financial year.

However, in certain situations, based on the concerned double tax treaty, the company might also create a taxable (material / personal) permanent establishment (PE) in Belgium where the related profits and expenses, allocated to the Belgian PE, would become subject to corporate income taxes in Belgium at the standard rate of 25,00% (or 20%).

What if my Belgian employee works from home in Belgium?

The Belgian Minister of Finance has for the first time clarified his position on situations wherein cross-border teleworking could give rise to foreign companies disposing of a taxable material PE in Belgium based on the relevant Double Tax Treaty (“DTT”) concluded.

According to the Minister, a private residence used by a Belgian resident employee to perform his/her employment duties for a foreign employer would be deemed as a material PE provided that the teleworking could be considered as being performed on a continuous basis. According to the Minister such continuous teleworking would be the case if the teleworking
constitutes more than 50% of the total working time.

Notwithstanding the above, the foreign company would in the case of continuous teleworking only be deemed to dispose of a taxable material PE in Belgium provided that the foreign employer does not provide the possibility to the Belgian resident employee to work from another foreign office or if such office is in practice hardly used. Naturally, the home office
activities will only trigger a taxable PE presence if the activities do not qualify as ‘preparatory or auxiliary under the Treaty.

The Minister also confirmed that the payment of a home working net allowance to the Belgian resident only might be an indication of effective teleworking.

Belgian domestic tax law has its own definition of a Belgian Establishment, which is generally broader than the (treaty) PE definition under the DTT’s and will result in the obligation to file a non-resident corporate income tax return (“CITR”). In the absence of a Treaty PE, no taxable income should be allocated to this Belgian establishment and a nihil CITR could be filed.
Mazars would be happy to assist in analysing whether your company would dispose of a material or personal PE in Belgium under Treaty and domestic tax law and assist your company with the related tax compliance formalities.

CORPORATE INCOME TAX

Expected changes to the Belgian Investment Deduction Regime

The Council of Ministers recently approved a draft law relating to various tax provisions which will impact the current tax regime on investment deduction by implementing two new types of investment deduction, next to the existing “general” investment deduction:

• Thematic investment deduction
• Technology investment deduction

“General” investment deduction

Upon approval of the text in its current outset, the general investment deduction rate would increase to 10% (at present, an 8% rate applies for investments made in 2023). This percentage rises to 20% for qualifying digital investments made by eligible individuals or SMEs.

Thematic investment deduction

The new thematic investment deduction regime will replace specific categories of qualifying investments and will apply to investments in the following simplified categories:

• Efficient use of energy and renewable energy;
• Zero-emission transport investments;
• Environmentally friendly investments;
• Supporting digital investments.

SMEs and qualifying individuals are eligible for the 40% investment deduction rate, while a 30% rate applies for non-SMEs.

A list of eligible investments for this thematic investment deduction will be published by Royal Decree and renewed every three years.

Technology investment deduction

This new regime will offer a 13.5% ID rate for qualifying investments in patents and fixed assets supporting R&D of environmentally neutral or minimizing products and technologies. This percentage increases to 20.5% if the investment deduction is spread over time (excluding investments in patents).

If the draft tax law is approved, the new regime is anticipated to apply to investments made from January 1, 2025.

Deadline for CIT prepayments Q4 and Master File are approaching

Belgian companies could opt to make a Q4 tax prepayment (4,50% credit) by 20 Dec 2023 (for companies that close their financial year as per 31 Dec 2023). If no or insufficient tax prepayments are made, the FY2023 corporate income tax due will be increased with a non-tax deductible surcharge of 6,75%.

Also, we remind you that the FY22 Master file Form (“275 MF”) must be filed within 12 months after the reporting period of the multinational group with the Belgian tax authorities (i.e. 31 December 2023).

The Belgian company (or permanent establishment) of a multinational group is required to submit this form when it exceeds one of the following thresholds in the financial year immediately preceding the last closed financial year:

• Combined operating and financial income of € 50 million;
• A balance sheet total of € 1 billion;
• Annual average number of 100 FTEs.

Belgian entities of a multinational group with a consolidated group turnover exceeding € 750 million, should also review whether they are required to submit by 31 Dec 2023:

• A CBC Report (“275CBC”) for the FY ended 31 Dec 2022;
• A CBC Notification (“275CBC-NOT”) for the FY ended 31 Dec 2023.

Our Corporate tax specialists can provide further assistance on the preparation, review and or E-filing via MyMinfin of the Belgian TP filings and/or assist with tax prepayment planning to avoid a surcharge.

KEEP IN MIND THE DEADLINE!

VAT

• VAT return October 2023 : November 20, 2023

Corporate income tax

• Q4 advance tax payment (FY 31 Dec 22) : 20 December 2023
• Master File form “275MF” (FY 31 Dec 22): 31 December 2023
• CBC Reporting “275CBC” (FY 31 Dec 22): 31 December 2023
• CBC Notification “275CBC-NOT” (FY 31 Dec 23) : 31 December 2023

Personal income tax

• Filing of the Belgian non-resident income tax return for income year 2022 (AY2023) (electronically via Tax-On-Web or on paper) : 24 November 2023