Part II

Developments in the Member States

brackets (beside the basic allowance) between 25 and 50 % and a municipal surcharge up to 9 % (7.4 % on
average). Within certain limits, regions have the option to levy additional surcharges or to grant tax reductions.

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Since January 2012, the withholding tax rate is 21 % for most interest income (excluding ordinary savings
accounts) as well as for a large part of dividend income, with an extra levy of 4 % via the PIT return for interest
and dividend income above 20 020. Taxation of private capital gains is almost non-existent (except for those on
some capitalisation vehicles), interest on ordinary saving accounts is exempt up to 1 830 and pension savings
enjoy a special regime resulting in negative effective rates, as in other EU countries.
Corporate taxation
Companies in Belgium and the subsidiaries of foreign companies are subject to a fixed tax rate of 33.99 % (3 %
crisis surcharge included) regardless of the origin and the destination of the profits. There is no tax consolidation of
companies. Under certain conditions, a special scheme applies to SMEs having an assessed income lower than
322 500: a tax rate of 24.98 % is applied on the part from 0 to 25 000, 31.93 % on the part of 25 000 to
90 000 and 35.54 % on the remaining part up to 322 500 (all including the 3 % crisis surcharge).
An allowance for corporate equity (ACE), referred to as 'notional interest on corporate capital', was introduced in
2006 to stimulate the self-financing capability of companies. The tax-free presumptive rate of return on equity
applied under the ACE system is based on the rate of 10-year government bonds (OLO 10) with a cap of 3 % as of
2012 (3.5% for SMEs). In 2011, the rate was 3.425 % (3.925 % for SMEs). A tax-free reserve for new investments
financed by retained earnings exists for SMEs benefiting from reduced rates.
VAT and excise duties
There are four VAT rates. The standard rate has remained unchanged at 21 % since 1996. A reduced 6 % rate
applies to public housing, refurbishment of old housing, food, water, pharmaceuticals, animals, art and
publications and some labour intensive services; the 2009 recovery plan also includes the above-mentioned
temporary reduction of the VAT rate to 6 % for a maximum amount of 50 000 on invoices of newly constructed
private dwellings. An intermediate rate of 12 % applies to a limited number of transactions and, since 1st January
2010, to food in restaurants and catering services. A zero rate applies to newspapers and certain weeklies. Excise
duties in a strict sense yield relatively low revenue in Belgium, but this is supplemented by above average levels of
other taxes on products.
Wealth and transaction taxes
There are no wealth taxes. Other transaction taxes are generally levied at the regional level.
Social contributions
The social security system is financed by contributions from employees and employers as well as by government
subsidies. The amounts are calculated based on the gross salary (including bonuses, benefits in kind, etc). The
standard rate is approximately 13 % for employees and 35 % for employers but there are rebates for low wage
earners and some target groups.

Taxation trends in the European Union

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