How is tax changing in 2023?

Minimum basic corporate tax rate

Since 2018, a so-called ‘tax basket’ of taxable profits has been in place for corporate tax purposes, against which only a limited number of tax deductions can still be applied.

In specific terms, the basket is equal to taxable profit minus:

• Non-taxable items
• FDIs for the year in question
• Patent deductions
• Innovation deductions for the year in question
• Investment deductions

The following items can then be deducted from the remaining taxable profit:

• The notional interest deduction (to be scrapped for tax periods ending after 31 December 2023)
• Transfer of FDIs
• Transferred deductions for innovation income and previous losses

However, the latter deductions are limited to a total of EUR 1,000,000 plus 70% of the remaining profit balance. Therefore, in essence, tax is always paid on 30% of taxable profits over EUR 1,000,000 remaining after investment deductions. For tax periods after 1 January 2023, this minimum basic rate is now set to be increased, rising from 30% to 60%. So be sure to keep this in mind when it comes to any advance payments!

Federal housing bonus

 A second change concerns the scrapping of the federal housing bonus for second homes. With the Regions responsible for owner-occupied housing, the regional housing bonus had already previously been scrapped in both Flanders and Brussels. In Wallonia, the so-called ‘Chèque Habitat’ is still in place. In cases where someone owns a second (or third, fourth, etc.) home, jurisdiction lies at the federal level. At that level, deductions for capital repayments of mortgage loans from a basic amount of EUR 2,350 are still applicable. This tax relief on capital repayments is to be scrapped for mortgage loans taken out after 1 January 2024, meaning loans taken out in 2023 are therefore still eligible. However, any interest paid will still be deductible from any property-based income.

Copyright income

Copyright income qualifies as movable assets, taxable at 15%. In addition, a 50% cost flat rate applies to the first EUR 18,720 bracket, with a flat-rate deduction of 25% available on amounts between EUR 18,720 and EUR 37,450.

One initial limiting factor is the fact that the scheme will only apply to income from ‘classical works of literature’.

A second limitation relates to the introduction of a cap of 30% for total royalties received. However, a transitional arrangement has been provided with a cap of 50% in 2023, 40% in 2024 and 30% from 2025.

A third limitation comes with the absolute limit of EUR 70,220, to be aligned with the average of the four previous tax periods. If the average exceeds EUR 70,220, then any royalties received (in total) shall no longer be deemed as moveable assets.

To provide some relief to the many sectors affected by these limitations, a transitional arrangement has been provided for those already receiving copyright income in the year 2022. In practical terms, this means they can still apply the old scheme in 2023, therefore only being de facto excluded from 2024. However, the absolute limit will be capped at EUR 35,110. The 50% cost flat rate, however, will also only apply to the first EUR 9,360 bracket. The 25% cost flat rate will then apply to the bracket between EUR 9,360 and EUR 18,720.