Value adding
Technical Perspectives from
Tax
The new tax fairness may require action from your finance department. Here our KPMG tax experts provide an overview and easy guide to understanding and implementing the principle features of this tax.
New Fairness Tax The fairness tax was introduced through the to tax, after application of all available tax law of 30 July 2013 (Belgian official gazette of 1 deductions. August 2013) and will apply as from assessment The fairness tax is levied for the taxable period year 2014. The main objective of this new tax is to for which dividends are distributed. The concept serve as a sort of minimum taxation for large com- of ‘dividends’ also includes the repayment of the panies that pay little or no corporate income tax in company’s capital, issue premiums and participation certificates (if they qualify as Belgium. Introduced as a separate dividends). However, the liquidation corporate income tax, it increases Value Adding – gains, repurchase gains and re-qualthe tax burden of multinational comKPMG provides ified interest are not included. The panies investing in Belgium, but only practical ideas dividends, which are taxed at 10% if they pay dividends to their (Belgian to real business in the context of the transition or foreign) shareholders. Below is an challenges. regime for liquidation gains, must overview of the principle features of also not be taken into account when this fairness tax. applying the fairness tax. 1. Fairness tax: a separate taxation The fairness tax was introduced as a separate There are three steps that must be taken in order taxation within corporate income tax. It is inde- to calculate the taxable base of the “fairness tax”: pendent of, and applied in addition to, other cor- 1. Determine the positive difference between porate income taxation(s). This separate taxation the gross amount of distributed dividends and the is, like the corporate income tax, not deductible. final taxable result, which is subject to corporate income tax. 2. Rate: 5.15% 2. The taxed reserves constituted no later than The rate amounts to 5.15% (5% with a 3 % crisis assessment year 2014 are excluded from the taxsurcharge). The tax payer should make tax prepay- able base. The result of the first step is reduced ments; otherwise there will be an increase due by the distributed dividends originating from preto a lack of or insufficient advance tax payments. viously taxed reserves. The Last in-First Out (LiFo)-method is used so that previously taxed 3. Taxable base: the fairness tax will only be reserves are first taken from the last reserves. due if the amount of declared dividends is Only reserves constituted until assessment year higher than the final taxable result. The final 2014 are considered to be good reserves and will taxable result is the amount that is subject be deductible from the taxable base.
18 | The KPMG Difference | November 2013