Doing Business in Belgium - RSM International

When changes in the risk capital (except those coming from the result of the year)
occur during the income year, they are taken into account on a prorated basis.
If the taxable income is not sufficient to allow a total deduction of the notional
interest, the excess can be carry forward during 7 years.
The deduction of the notional interest does not depend on any reinvestment
conditions or any condition regarding additional employment.
7.2.5. Investment deduction
Companies acquiring new tangible or intangible fixed assets used in Belgium for
business purposes can (under certain circumstances) claim a deduction from their
taxable profit amounting to a percentage of the acquisition or investment value of
those investments.
The investment deduction does not affect the depreciation base. It is treated as a
tax deduction in the tax return and (when the profit is insufficient) can be carried
forward indefinitely but with certain limits as to the amount.
What investment deduction rates are available?
Either a one-time or a spread investment deduction may be taken at the option of the
taxpayer. The onetime investment deduction regime is equal to a certain percentage
of the cost price of the investment.
The rates are as follows:
• 3% for investments made in tangible fixed assets which are used solely for the
production of recycled packaging (figures based on tax year 2010);
• 15.5% for energy-saving investments, patents or R&D investments leading to
environmentally friendly products (figures based on tax year 2010; for tax year
2011 = 13.5%);
• 22.5% for investments in the security of a company’s premises (fire and theft)
(figures based on tax year 2010; for tax year 2011 = 20.5%);
• 30% for investments in sea-vessels.
The spread investment deduction is spread over the depreciation term of the capital
investment made.
The following rates apply:
• A 22.5% spread investment deduction for R&D investments leading to
environmentally friendly new products (figures based on tax year 2010; for tax
year 2011 = 20.5%).
Deduction for investment
For investments in R&D, energy savings equipment and related patents, a deduction
of 13.5% of the investment value is accorded.
Companies can decide to spread the deduction over economic duration of investments.
In this case, deduction is equal to 20.5% of annual amortization.
If the taxable income is not sufficient to permit the deduction, the excess can be
carried forward.
For investments in R&D, companies may opt for a tax credit instead of a deduction.
7.2.6. Tax credit for research and development
Companies investing in fixed assets that qualify for the increased investment
deduction for patents or for research and development will have the option to apply
for a tax credit instead of an investment deduction.
The choice for a tax credit will be irrevocable. The tax credit for research and
development can be carried over to the four subsequent assessment years. The
unused part of the tax credit carry over is fully refundable after five assessment
years (including the investment year).
7.2.7. Tax deduction for patent income
The Belgian government has introduced a tax deduction for companies in relation to
specific patent income. The deduction is designed to stimulate technical innovations
by Belgian companies through R&D activities in relation to patents. In principle, it
reduces the effective tax rate on patent income to a maximum of 6.8%.
The tax deduction will apply to all Belgian companies and Belgian branches of foreign
companies, as well as to the following types of income:
• Income derived from the licensing of patents by a Belgian company or branch;
• Income derived from the use of patents in the production of patented products by
a Belgian company or branch or on its behalf.
The above-mentioned patents should be developed in R&D centres in Belgium or
abroad or involve patents obtained or licensed from third parties, provided the
patented products or processes are further developed by R&D centres in Belgium
or abroad.
The deduction in respect of licensed patents will be equal to 80% of the arm’s length
patent income received. For patents used in the production process, the Belgian
company or branch will be able to deduct from its taxable profits an amount equal to
80% of the arm’s length royalty the Belgian company or branch would have received
had it licensed the patents to unrelated parties.
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DOING BUSINESS IN BELGIUM
DOING BUSINESS IN BELGIUM
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