Corporate Tax Return (ISOC) in Belgium: Practical Guide

Introduction

Every company established in Belgium is subject to corporate income tax (ISOC) on its worldwide profits. The annual corporate tax return is a fundamental obligation, and non-compliance results in significant penalties.

Tax rates

Standard rate

The standard corporate tax rate is 25% since tax year 2021 (income 2020). This rate applies to the company's taxable profit.

Reduced rate for SMEs

Small companies (within the meaning of Article 1:24 of the CSA) benefit from a reduced rate of 20% on the first EUR 100,000 of taxable profit. The conditions are:

• The company must qualify as a small company (not exceeding more than one criterion: turnover of EUR 9 million, total balance sheet of EUR 4.5 million, 50 employees)
• The director must receive a minimum remuneration of EUR 45,000 (or at least equal to the profit if lower)
• The company cannot be an investment company or hold shares for more than 50% of revaluation value
• The company cannot be held more than 50% by another company

The taxable base

Determining taxable profit

Taxable profit is determined starting from the accounting result and applying tax corrections:

Main disallowed expenses

• Fines and penalties (with exceptions)
• Non-deductible taxes (corporate tax, additional municipal tax)
• Car expenses: limited to a percentage depending on CO2 emissions
• Restaurant expenses: deductible at 69%
• Business gifts: deductible at 50%
• Social benefits: certain benefits granted to staff
• Excessive interest: in cases of thin capitalization

Deductions and exemptions

Innovation income deduction

Income from patents, protected software, and other intellectual property rights benefits from an 85% deduction, reducing the effective tax rate to approximately 3.75%.

Investment deduction

SMEs can benefit from an investment deduction of 13.5% (ordinary rate) on certain investments, particularly in energy savings, research and development, and security.

DBI deduction (Definitively Taxed Income)

Dividends received from other companies can be deducted at 100% under the DBI regime, subject to certain conditions (minimum participation of 10% or acquisition value of EUR 2.5 million, holding period of at least one year).

Carried forward losses

Tax losses can be carried forward without time limitation. However, since 2018, a cap applies: beyond EUR 1 million in profit, prior losses can only absorb 70% of the excess profit.

Filing procedure

Filing deadlines

The corporate tax return must be filed within the deadline set annually by royal decree, generally the last day of the month following the general meeting that approves the annual accounts, with a minimum of 6 months after the financial year closing.

Mandatory electronic filing

The return must be filed mandatorily electronically via the Biztax platform of the FPS Finance. The form includes:

• The accounting result
• Tax corrections (disallowed expenses, reserves, etc.)
• Applicable deductions
• Calculation of the taxable base

Advance payments

Why make advance payments?

To avoid a tax surcharge, companies must make advance tax payments. The surcharge is 6.75% of the non-prepaid tax amount (with degressive advantages based on payment date).

Due dates

The four quarterly due dates are:

• AP1: April 10
• AP2: July 10
• AP3: October 10
• AP4: December 20

Bonifications are higher for payments made at the beginning of the year.

Conclusion

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