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Investment deduction

The investment deduction is intended to encourage SMEs to make productive investments. The investment deduction reduces the amount on which tax must be paid. The amount of the deduction is determined by the percentage of the investment.

The Corona III law increased the basic rate of the investment deduction from 8 % to 25 % for investments made between March 12th 2020 and December 31st 2020. This measure is from now on extended for investments carried out till December 31st 2022.

Investment deduction

  • Who can benefit from the investment deduction?

    Industrial, commercial or agricultural companies (exploited by a natural person or a company) and practitioners of "liberal professions" are entitled to claim such investment deduction.

  • Which investments are eligible?

    The investments should pertain to:

    • depreciable tangible or intangible fixed assets,
    • that are newly acquired or achieved,
    • during the calendar year or tax year,
    • and used in Belgium for professional activities.

    The investments may not be explicitly excluded by the law.

  • Which investments are excluded from the deduction?

    Fixed assets:

    • that are not solely used for professional activities
    • that are not depreciated or which are depreciable in less than three tax periods
    • that are acquired or achieved when the right of use of such assets is carried forward to a third party by means of a lease agreement or an emphyteusis or building agreement or any other similar land right, in cases where those fixed assets can be depreciated by the company that has obtained the right
    • when the right of use is carried forward to another taxable person in another manner than described above. However, the said fixed assets are eligible in case of a transfer to a natural person or company that uses those fixed assets in Belgium in order to gain profits or benefits and that does not proceed to a complete or partial transfer of the right of use of such assets to a third party (it should be noted that the said natural person or company must meet the conditions, criteria and limits for the application of the investment deduction at the rate of the same percentage or higher).
      This exclusion does not apply to certain audio-visual products, the distribution rights of which - with the exception of all other rights - are temporarily carried forward to third parties with a view of transmitting those products abroad.

    Are also excluded:

    • private cars and dual-purpose cars, as described in the regulations on the registration of motor vehicles, including light trucks referred to in Article 4, § 3 of the Belgian Income Tax Code assimilated to income taxes (however, this exclusion does not apply to vehicles solely used for taxi services or for rental services involving a driver and exempted from road tax on motor vehicles on that basis, and neither does it apply to vehicles that are solely used for practical training in approved driving schools and that are equipped for that purpose)
    • charges in addition to the acquisition price and indirect manufacturing costs if these are not depreciated along with the fixed assets they relate to
    • investments achieved by taxable persons that are assessed on a fixed basis in which the depreciations are included on a flat-rate basis (except for energy efficient investments for which no financial support is provided by the authorities)
  • Which is the deductible share?

    Investments made during the taxable period linked to the assessment year 2021 (income of 2020) that meet the legal requirements are entitled to the following investment deductions:

    A. Natural persons:

    • Digital investments (*), patents, investments in environmentally friendly research and development, energy-saving investments and air extraction or purification systems in horeca establishments:
      • 20 % if acquired or constituted from 01.01.2019 to 31.12.2019 (**)
      • 13.5 % if acquired or constituted from 01.01.2020 to 11.03.2020
      • 25 % if acquired or constituted since 12.03.2020 (**)
    • Investments in security:
      • 20.5 % if acquired or constituted from 01.01.2019 to 11.03.2020
      • 25 % if acquired or constituted since 12.03.2020 (**)
    • Other investments:
      • 20 % if acquired or constituted from 01.01.2019 to 31.12.2019
      • 8 % if acquired or constituted from 01.01.2020 to 11.03.2020
      • 25% acquired or constituted since 12.03.2020

    B. Companies:

    1. All companies
      • Patents (***), investments in environmentally friendly research and development (***), energy-saving investments and air extraction or purification systems in horeca establishments: 13.5 %
      • Investments encouraging the reuse of containers for beverages and industrial products: 3 %
    2. Companies referred to in Article 1:24, §§ 1 to 6, of the Companies and Associations Code
      • 13,5 % for digital investments
      • 20,5 % for investments in security
      • For investments other than those mentioned under B,1, B, 2 1st and 2nd points as well as B, 3 (****):
        • 20 % if acquired or constituted from 01.01.2019 to 31.12.2019
        • 8 % if acquired or constituted from 01.01.2020 to 11.03.2020
        • 25 % if acquired or constituted from 12.03.2020 to 31.12.2022
      • For investments referred to in B, 1, 1st point and B, 2, 1st point (**) (*****) :
        • 20 % if acquired or constituted from 01.01.2019 to 31.12.2019
        • 25 % if acquired or constituted from 12.03.2020 to 31.12.2022
      • For investments referred to in B, 2, 2nd point (**) (*****) :
        • 25 % if acquired or constituted from 12.03.2020 to 31.12.2022
    3. Companies collecting profits exclusively from maritime navigation
      • 30 % for investments in ships

    (*) Only applicable to natural persons who, for the assessment year 2022, meet mutatis mutandis the criteria of Article 1:24, §§ 1 to 6, of the Companies and Associations Code.
    (**) The increased percentage referred to in Article 69, § 1, point1, 2°, of the Income Tax Code 92 is not applicable if the basic percentage referred to in Article 69, § 1, point 1, 1°, or in Article 201, § 1, point 1, 1°, of the Income Tax Code 92, is more favourable (Chambre, Doc.54/2864-001, p. 36). - By analogy, the same reasoning can be applied to the increased percentage referred to in Article 69, § 1, point 1, 3°, of the Income Tax Code 92.
    (***) Companies which have irrevocably opted for the tax credit for research and development referred to in Article 289quater, of the Income Tax Code 92 may no longer benefit, as from the tax year during which this choice is made, from the deduction for investments for patents and for investments for environmentally friendly research and development.
    (****) Applicable only if the company has irrevocably renounced the deduction for risk capital referred to in articles 205bis to 205novies, of the Income Tax Code 92.
    (*****) The application of the 20% or 25% rate leads to the restrictions referred to in Article 201, § 1, paragraph 3 (renunciation of the deduction for risk capital) and paragraph 5 (carry-over limited to the next taxable period, or for assets acquired or constituted from 01.01.2019 to 31.12. 2021, carry-over limited to the two taxable periods following that of the acquisition or constitution of the assets concerned), of the Income Tax Code 92, as well as the obligation to keep at the disposal of the administration, in this case, the general statement provided for all companies in Article 47, 2°, Royal Decree implementing the Income Tax Code 92

  • On which basis is it calculated?

    The deductible share is calculated on the basis of the investment or cost value of the fixed assets, which also serves as the basis for calculating the amortisation (see also what concerns the spread deduction).

  • How does the deduction apply?

    The investment deduction is applied to the profits or benefits of the tax period in which you acquired or achieved the aforementioned fixed assets.

    As to all aforementioned investments, some taxpayers may spread the investment deduction over the duration of the depreciation period of the investments. This spread deduction system is described below.

    The deduction is applicable:

    • preceding the charge of any losses from other professional activities if you are subject to personal income tax
    • in the very last place, so subsequent to any other deductions, if you are subject to corporate income tax

    If there are no or insufficient profits or earnings, the deduction is carried forward to the following taxable periods, without time limit.

    The deduction of the exemption carried forward from the profits or gains of each of the following taxable periods may not, however, exceed EUR 1,026,470 per taxable period or, where the total amount of the exemption carried forward at the end of the previous taxable period exceeds EUR 4,105,890, up to 25% of this total amount (assessment year 2021, income 2020). For the assessment year 2020, income 2019, these amounts are respectively EUR 1,011,900 and EUR 4,047,610.

    For the 8% (or 20%) investment deduction, the carry-over of the deduction that cannot be granted for lack of sufficient profits or earnings is instead limited to the next taxable period.

  • Which formalities must be complied with?

    Natural persons must complete, date and sign a form 276U (available on www.myminfin.be) and enclose it with their personal income tax return or keep it at the disposal of the administration.

    Companies must complete box 275U in Biztax when filing their corporate income tax return. In case of exemption from the obligation to file electronic returns, companies must use form 275U (available on www.myminfin.be).

    Furthermore, a statement per category of fixed assets must be kept available for the administration, including the following elements for each of the assets:

    • the date of the acquisition or achievement
    • the exact denomination
    • the acquisition or investment value
    • the normal time of use and the depreciation period

    when appropriate, you must also keep the following documents available:

    • the copies and proofs required for patents
    • the certificate required for energy efficient investments (see next question)
    • the various documents required (request for approval, justification, certificate of the competent regional authorities (see next question), etc.), for environmental friendly investments for research and development
  • Application procedure for certificates

    Energy efficient investments

    The certificates regarding energy efficient investments can be requested from the following departments, depending on the place where the investment is established.

    • Walloon Region
      Service public de Wallonie
      Direction générale opérationnelle Aménagement du territoire, Logement, Patrimoine et Energie
      Département de l’énergie et du bâtiment durable
      Rue des Brigades d'Irlande, 1
      5100 Jambes
      Tél. : 08 148 63 35
      www.energie.wallonie.be
       
    • Brussels Capital Region
      Bruxelles Environnement
      Site Tour et Taxis
      Département « Primes Energie »
      Avenue du Port 86c/3000
      1000 Bruxelles
      Tél. : 02 775 75 75
      http://www.environnement.brussels/  
       
    • Flemish Region
      Vlaamse Overheid
      Vlaams Energieagentschap
      Graaf de Ferraris-gebouw
      Koning Albert II-laan 20 - bus 17
      1000 Brussel
      Tél. : 02 553 46 00
      www.energiesparen.be
       

    Environmental friendly investments for research and development

    The certificates regarding environmental friendly investments can be requested from the following departments, depending on the place where the investment is established:

  • What is the staggered deduction scheme?

    Natural persons with fewer than 20 employees on the first day of the tax period relating to the assessment year 2022 may, if they so wish, spread the investment deduction relating to fixed assets acquired or constituted during that tax period over the amortisation period of those assets. In this case, the deduction for these assets is uniformly set at 10.5% of the amortisation allowed for each taxable period within the amortisation period.

    By way of derogation from the previous paragraph, regardless of the number of employees, the staggered deduction amounts to 20.5% of the depreciation on investments for environmentally friendly research and development which are acquired or constituted during the taxable period referred to in the previous paragraph by both natural persons and companies (***).

  • What are the legal stipulations?

    • Articles 68 up to 77 and 201 of the Belgian Income Tax Code 1992.
    • Articles 47 up to 49bis of the Royal Decree enforcing the Income Tax Code 1992.