De Wever’s “Super Note” – taxation section

A recently amended super note drawn up by Bart De Wever, the man charged with forming a new ederal government, is currently on the table. The note deals with the introduction of reforms in the abour market, taxation and pensions. These proposals are still in draft form and will be discussed and negotiated in the near future.

What measures are currently on the table in terms of taxation (subject to further amendments – non-exhaustive list)?

a. Personal income tax

The next federal government wants to work towards higher net pay, the target being to make working more attractive than not working (so the difference between the two would be around 500 euros a month by the end of 2029):

• Gradual increase in the tax-free allowance, from €10,570 in income year 2024 to €12,000 in 2029.
• Abolition of the 50% tax bracket (currently for income year 2024: the part above 48,320 euros). The highest tax bracket would become 45%.
• Introduction of a 35% tax bracket.
• Ceilings of current tax brackets to be adjusted (to be discussed).
• Adjustment of the tax work bonus (= tax relief for low wage earners) so that the lowest earners have more net pay left over.
• Partial or full phaseout of the special social security contribution (special SSC), which is currently capped at €730 per year.

Phaseout of the marriage quotient for non-retirees: this is a favourable tax calculation for married couples and legal cohabitants whereby, if one of the partners has little or no income, part of the highest income of the family is transferred to the lowest income for the purposes of taxation.

Capital gains tax of 10% on shares, with exemption of certain capital gains (e.g. for small investors and capital gains booked in the past).

Withholding tax on income from movable assets (interest, dividends)

• Currently: exemption of interest on savings accounts up to €1,020 per person/per year, and exemption of withholding tax on dividends received up to €833 per person/per year.
• Nieuw voorstel:Reform of personal income tax on rental property:
• o Currently: when property is privately rented, tax is levied on the (lower) cadastral income multiplied by a factor of 1.4 (and no tax on higher real rental income received.New proposal: the taxable basis for taxing property income would be adjusted (but it is still unclear how this would be done)./li>Phaseout of federal interest deduction on non-owner-occupied property.
  

  b. Self-employed persons

  Introduction of an entrepreneurs’ deduction: additional cost deduction of 10% of the profits or income for those self-employed in a secondary or main occupation, with a maximum of €10,000 per year.

  Less red tape: abolition of less significant taxes and administrative formalities, e.g. abolition of poster tax, costs associated with applying for and cancelling a VAT number.

  Supplementary pension accrual: increased maximum amount for Free Supplementary Pension for the Self-Employed (FSPSE) to 10% of net taxable income (this is currently 8.17%, with a maximum of €3,965.77 for an ordinary FSPSE).

  Removal of the 4.4% premium tax on deposits into the Pension Agreement for the Self-Employed (PASE).

  Easier access to supplementary pensions for the self-employed in secondary employment.

  Better social protection for the self-employed: introduction of partial disability and payment of proportional sickness benefits (for the hours that cannot be worked).

  Extension of the exemption from social contributions for self-employed women after pregnancy from 1 to 2 quarters.

  c. VAT

  Decrease in VAT rate from 21% to 9% for the supply and installation of home batteries, solar water heaters and heat pumps.

  Harmonisation of the reduced VAT rates of 6% and 12% in a new VAT rate of 9%. This would apply at most in the construction and hospitality sectors.

  Expansion of the scope for demolition and reconstruction.

  The government is looking at how a tax shift on energy products (electricity, gas, fuel oil etc.) could help meet the climate goals, without increasing the bill for families and entrepreneurs.

  d. Corporate Tax

  Address improper use of management companies in order to pay less tax.

  Increase minimum pay from €45,000 to €50,000 per year (to be indexed annually) to benefit from the reduced corporate tax rate (20%).

  Transformation of the FDI deduction into an FDI exemption: only for shareholdings in companies with which a lasting relationship is established.

  e. Miscellaneous

  Gradual increase in the value of meal vouchers (currently €8/voucher) and expansion of spending options.

  Phaseout of other vouchers, such as eco, consumption, and culture vouchers.

  (Re)introduction of an unpaid first day of sick leave.

  Reform of stock exchange tax:

  • No stock exchange tax for small companies.
  • Exemption from stock exchange tax on shares of new entrants to the stock exchange for the first 5 years.
  • Creation of a level playing field for various similar investment vehicles (e.g. investment funds, trackers, etc. for which different rates still apply at the moment).

  Tax on securities accounts: increase from 0.15% to 0.20% on securities accounts holding more than €1,000,000.

  Do you have questions about the provisional proposals of De Wever’s super note? Then please contact our experts at PKF BOFIDI.