The Belgian tax authorities have decided to increase the number of tax audits on a yearly basis.

In a recent communication they have announced that they will mainly focus on the following items:

• internet sales
• employees claiming actual professional expenses
• company directors claiming actual professional expenses
• non-profit organisations that may be subject to corporate income tax
• sports clubs
• split-up of rights of ownership (usufruct of property)
• notional interest deduction (companies)

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The Belgian tax authorities have recently published the new models for individual salary statements 281.10 to 281.30 for income year 2011.

Please note that the due date for filing individual salary statements 281.10 to 281.30 has been set at 29 February 2012. The filing date for individual salary statement 281.50 and summary statement 325.50 remains unchanged, i.e. 30 June 2012.

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As announced in our previous Headlines, the law containing various measures published in the Official Gazette on 30 December 2011 fundamentally changes the way of computing the taxable benefit in kind arising from the private use of a company car, effective 1 January 2012.

As explained, the yearly taxable benefit in kind will be computed as 6/7th of the car’s catalogue value (including VAT and options, but excluding any rebates or discounts) multiplied by a percentage linked to the car’s CO2 emission rate. In addition, the employer will be taxed on a new disallowed expense equal to 17% of this benefit in kind.

Last Tuesday night, the council of ministers approved a new programme law amending the above computation method of the benefit in kind for company cars. Under the new rules, effective later this year (the entry into force date is not yet known), the catalogue value would be depreciated by 6% on each anniversary of the date on which the car was first brought into use, with a minimum value equal to 70 % of the original catalogue value. For example, as of the third anniversary of the car, the taxable benefit in kind may be depreciated by 18%.

This new rule still has to be enacted to enter into force.

A tool to measure the personal impact of these new taxation rules on a company car is available at http://www.hrservices.be/new-2012-company-car-benefit-in-kind/

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On 30 December 2011, the Act of 28 December 2011 containing various (tax) measures was published in the Official Gazette.  It contains some – but not all – of the measures announced by our government in December of last year.

The personal income tax provisions, recorded in this recent Act, concern:
-       changes in the tax charge on interest and dividend income;
-       new valuation method with regard to the taxation of the benefit in kind for the private use of ‘company cars’;
-       major changes with regard to ‘expenses for energy savings’ in houses;
-       increased valuation for the benefit in kind of stock options.

Most of the envisaged measures will come into force as from 1 January 2012.

You can find more information on our website:  http://www.taxreform.be/

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Currently, all pension commitments need to be externalised except those for self-employed company directors. According to the Government Agreement of 30 November 2011, pension commitments for self-employed company directors will soon also need to be externalised to an insurance company or a pension fund.  Balance sheet provisions for pension arrangements will therefore no longer be allowed.

This is also the case for so-called keyman insurance policies (‘Bedrijfsleidersverzekeringen’/ ‘Assurances Dirigeants d’Entreprises’) as the beneficiary thereof  is the company itself, which in turn transfers the payout subject to the 80% rule to the company director in the context of a pension promise. Externalisation intends to shield the beneficiaries of the accrued benefits from bankruptcy of the organising company. Read more

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Past weekend a break trough has been reached in the governmental negotiations. Although no official texts are currently available, we would like to keep you informed on the suggested changes related to personal income taxes.

On our website we will keep you updated on the currently known proposed changes on a day to day basis. Click here for the latest updates.

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When a company car is put at the disposal of an employee, its private use triggers taxation as a benefit in kind. Private use includes all uses other than the business use: use during weekends and holidays as well as commuting between home and the fixed place of work.

Up to income year 2011, the benefit in kind was computed based on the number of private kilometres, CO2 emissions and the fuel type of the car.

The amount of private kilometres was set at 5,000 km or 7,500 km, depending on whether the distance between home and the fixed place of work was less or more than 25 km.

The Government agreement of 30 November 2011 fundamentally modifies the way of computing the taxable benefit in kind arising from the private us of a company car, effective 1 January 2012.

It is expected that the yearly benefit in kind on which the employee will be taxed will be computed as 6/7^th of the catalogue price of the car (including VAT and options, but excluding any rebates) multiplied by a percentage linked to the car’s CO2 emission rate (the taxable percentage).

In addition, 17% of the catalogue price of the car multiplied by the taxable percentage will be included in the employers’ taxable profits as disallowed expenses and be subject to corporate tax.

The number of private kilometres driven for private purposes will thus no longer be taken into account for computing the taxable benefit in kind.

The base taxable percentage to apply to the catalogue price of the car is 5.5% for a diesel car with a CO2 emission rate of 95 g/km and for a petrol car with a CO2 emission rate of 115 g/km. This base taxable percentage of 5.5% is then increased/decreased by 0.1% for each CO2 gram/km below or above the CO2 emission thresholds of 95 g/km and 115 g/km (with a minimum percentage of 4% and a maximum percentage of 18%). In no circumstance can the benefit in kind be lower than EUR 1,200 per annum.

For example, for a (diesel) company car with a CO2 emission rate of 105 g/km, the taxable percentage to apply to the catalogue price of the car is 6.5% (i.e. 5.5% (base taxable percentage) + ([105 g/km – 95 g/km] x 0.1%)). Hence the taxable benefit in kind will amount to 6/7 th x 6.5% x catalogue price of the car.

A tool to measure the impact of these new taxation rules on a company car is available at http://www.hrservices.be/new-2012-company-car-benefit-in-kind/

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A recent change to Portugal’s income tax law makes the tax rules there more favourable for non-habitual residents.  There is beneficial tax treatment of individuals that take up residence in Portugal for the first time in and after 2009.

The main benefits of the special tax regime are (i) a special tax rate of 20% for earned income from “high-value-added activities” and (ii) a potential tax exemption for foreign-source (professional and private) income, including foreign source pensions. Conditions apply (e.g. the employment must qualify as a “high-value-added activity”) and tax authority approval is needed. The special tax regime may be applicable for a period of ten years.

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