Corona Tax Benefits – Corona Act-III

The Corona Act-III consists of numerous supportive tax measures to minimize the impact of the corona crisis, stimulate the economy and ensure a better cashflow. In this article, you can find a selection of tax measures taken by the Belgian government. 

To lower the employment cost and to motivate companies to put employees back to work, the legislator has introduced an exemption of withholding tax on salary. The measure is applicable to companies that applied temporary unemployment for at least 30 consecutive days in the period between March 12 and May 31, 2020. This measure is also valid for foreign companies, employing persons that are subject to Belgian withholding tax. Companies could benefit from this exemption during the months of June, July and August. The calculation is made by taking the difference between the withholding tax in one of the applicable months (June, July or August) and the withholding tax in May. The exemption results in 50% of the positive difference between these two numbers, with a maximum of EUR 20 million. 

The following companies are excluded of this exemption:

• Companies which applied a buyback of own shares or a reduction of the capital 
• Companies which distribute a dividend between March 12 and December 31, 2020
• Companies which hold a direct participation into a company in a tax heaven
• Companies which have done payments exceeding EUR 100.000 to companies in tax heavens (unless this payment is legitimate based on financial or economic needs).

With regard to donations made by individuals to approved institutions, two measures have been introduced: on the one hand, the percentage of the tax reduction for donations in 2020 has been increased from 45% to 60%. On the other hand, in principle the amount of donations may not exceed 10% of the net taxable income. For income year 2020, this percentage is increased to 20%.

Handing out consumption cheques is another tax measure to stimulate the economy, especially for catering, cultural and sports sector, but also local retail shops. On the other hand, it can be used as an extra award, on top of the normal salary, for the extra effort that employees delivered during the COVID-period. The cheques are exempted of income tax and social security. It’s up to the employer to determine which amount of cheques is given to the employees, but the maximum amount is EUR 300. This incentive can be implemented via collective or individual agreement until December 31 2020. The validity of the cheque is the 7th of June 2021. 

For employees who regularly and structurally work from home, meaning at least 5 working days per month, it is possible to implement a homework allowance for a maximum of EUR 129,48 per month via a home working policy. If the conditions are met, this allowance is free of social security and tax. The allowance is considered to cover office costs related to installation and use of a desk, printer and computer equipment, office supplies, utilities such as water, electricity and heating, maintenance, insurance,… in the employee’s place of residence.

The same amount should be applied for all employees concerned. For a part-time employee, the amount does not have to be reduced proportionally according to their performance. 

Individuals who invest in the capital of small-medium sized enterprises who had a drop in turnover of at least 30% during COVID (period between March 14 and April 30, 2020 compared to the same period in 2019), can benefit from a tax reduction of 20% of the investment. Special about this tax shelter is that it is also applicable for the director of the company (while he’s excluded for all other types of tax shelter existing in Belgium).

Several conditions are imposed: 

• The participation can be for a maximum of 30%. 
• The investor must keep the shares for at least 5 years (if the shares are sold before the end of this 5-years period, a tax increase will be applied in the year of sale)
• The shares must be fully paid in cash by December 31, 2020.

Companies which suffered from the COVID pandemic can collect a maximum amount of EUR 250.000 with application of this tax shelter. For individuals investing, the investment is limited to EUR 100.000. This means that a company can attract several investors. However, it’s important to note that some types of companies are excluded (investment companies, financing companies, management companies, …), but also the companies that are excluded for most of the Corona-measures (see also above in the part about the partial exemption of withholding tax on salary).

More information?

As a client of Baker Tilly, you can contact Audrey De Bevere, TAX Manager or your file manager.
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