Reform of the investment deduction from 2025

What is the investment deduction?

The investment deduction offers a tax advantage to companies investing in new tangible and intangible fixed assets for their business activities in Belgium. The acquisition or investment value of qualifying assets can be deducted from the company's taxable profit at a certain percentage.

Currently, there is a regular investment deduction of 8%. This investment deduction only applies to investments made by sole proprietors, liberal professionals and small companies. On the other hand, increased percentages apply for, among other things, investments in digital fixed assets, investments in security, energy-saving investments, environmentally-friendly investments in research and development, etc. The scope and percentages of these increased investment deductions differ per category.

The investment deduction reform provides for three tracks. These include:

• A general track concerning the basic deduction,

• A targeted track covering certain thematic deductions,

• A specific track containing the technology deduction.

Basic deduction under the general track

Under the general track, the one-off deduction for investments by sole traders, liberal professions and small businesses remains in place. However, the 8% rate is increased to 10%.

Investments with a negative climate and environmental impact for which alternative options are available on the market will be excluded from the basic deduction. The Council of Ministers will periodically draw up a list of excluded investments.

Besides the basic deduction of 10%, the increased investment deduction of 20% for digital fixed assets is also included under the general track. This measure is also not applicable to investments by large enterprises.

There is no prior application for a certificate required for the application of the investment deduction under the general track.

Targeted track with thematic deductions

In addition to the general track, a targeted track will be set up with four thematic deductions. These include investments in energy efficiency and renewable energy, zero carbon transport, environmentally friendly investments and support for digital investments related to the three previous categories.

The percentage of the increased thematic deduction will be 40% for natural persons and small companies and 30% for large companies.

For each thematic deduction, the Council of Ministers will draw up a list of eligible investments every three years. These lists will be updated as proposed by experts from the relevant administrations and in consultation with the regions.

Companies wishing to benefit from one of the thematic deductions must obtain a certificate indicating that the investment qualifies as an eligible investment as stated in the relevant list.

Specific track: the technology deduction

Finally, the legislator has included the current investment deduction for environmentally friendly investments in research and development under the technology deduction.

If applied once to the full amount of the investment, the technology deduction will be 13.5%. If the deduction is spread over the depreciation of the investment, the deduction will be 20.5%. These percentages also apply to the allocation of this tax benefit through the tax deduction for environmentally friendly investments in research and development.

As with the thematic deductions, the application of the technological deduction requires the application for a certificate from the competent regional administration.

Limitation of the exemption to pay withholding tax

Currently, there is a limitation on the application of the tax deduction for environmentally friendly investments in research and development and patents, on the one hand, and the partial wage withholding tax exemption for researchers, on the other hand. This limitation means that the calculation basis of the tax deduction is corrected by the amount of withholding tax not forwarded.

This limitation would be extended to the application of the investment deduction. The amount of the non-transferred withholding tax could then no longer form part of the acquisition value of the investment taken into account for the application of the investment deduction.

Transferability

The rules on the portability of the investment deduction remain unchanged. This means that the basic deduction will only be transferable in corporate tax for one year. The thematic deductions, on the other hand, will be transferable indefinitely.

Entry into force

The reform of the investment deduction applies to assets acquired or created as of 1 January 2025. Similarly, the limitation on the application of the investment deduction and the exemption of the withholding tax on income from business activities applies to investments obtained or created from 1 January 2025.

If you have any questions regarding the application of the investment deduction, please contact one of our experts using the contact form below. Do you need help with your company's digital development and setting up specific applications? Then you can also count on our partner Ballistix.digital.