Following the recent outbreak of COVID-19 and the financial impact of the health measures that were necessary in response thereto, different support measures have been adopted in Belgium to alleviate the cash flow issues and the financial difficulties that companies, enterprises and self-employed individuals are facing as a result of this. We hereby provide you with an overview of the (para) fiscal measures adopted in Belgium up until now in this context. While some of these measures were specifically adopted in the framework of COVID-19, others entail the explicit confirmation of the application of already existing measures in the context of COVID-19. Some of these measures will only be available upon reasoned request, whereas others are automatically applicable to all Belgian taxpayers. Finally, we will also cover the impact that COVID-19 might have on certain existing tax rules.
1. Support measures that are automatically applicable
1.1. Federal support measures: extension of filing and payment deadlines
The Belgian tax authorities have granted an extension to the deadlines for the filing of certain tax returns and for the payment of different taxes without any late payment interest being due. The new deadlines can be consulted on the website of the Ministry of Finance and are as follows:
- The filing deadline for tax returns due for corporate income tax, legal entity tax or non-residents' tax for which the filing deadline was 16 March 2020 or later, is extended until 30 April 2020.
- An additional period of two months is granted for the payment of personal and corporate income tax, legal entity tax and non-residents' tax on top of the normal payment period. The latter measure is applicable with respect to tax assessments issued as of 12 March 2020.
- The filing deadline for VAT returns/intra-community statements due for February 2020 is extended until 6 April 2020. The filing deadline for VAT returns/intra-community statements due for March 2020 (and for the first quarter of 2020 in case the taxpayer only has to file a VAT return quarterly) is extended until 7 May 2020. In addition, the deadline for filing the yearly client listing, which is normally due by 31 March 2020, is extended until 30 April 2020.
- A payment deferral of two months is granted for any VAT due. Hence, the payment deadline for the VAT due for February 2020 is extended until 20 May 2020 and the payment deadline for the VAT due for March 2020 (and for the first quarter of 2020 in case the taxpayer only has to file a VAT return quarterly) is extended until 20 June 2020.
- The deadline for the payment of the payroll tax that is due with respect to February 2020 is extended until 13 May 2020. The deadline for the payment of the due payroll tax that is due with respect to March 2020 or the first quarter of 2020, is extended until 15 June 2020.
1.2. Regional support measures
On a regional and local level different tax measures were adopted. For example, in the Flemish Region, the assessments relating to real property tax for enterprises will only be sent in September, whereas they are usually sent around this time. Moreover, the Flemish tax authorities granted a payment deferral of four months with respect to the annual road/circulation tax due by enterprises for 2020. At a local level, different cities have announced that no tourist tax would be due during the present period. We expect that other similar measures will be adopted at regional and local level.
2. Support measures available upon reasoned request
2.1 Tax measures
At a federal level, support measures were adopted with respect to payment arrangements for outstanding tax debts of enterprises in financial difficulties as a result of COVID-19. At present, these support measures are as follows:
- First, the establishment of an instalment payment plan. In case such an instalment payment plan is granted, no late payment interest will, in principle, be due if the latter is also requested by the taxpayer in question (see support measure (ii) below), which is an important difference with respect to "normal" instalment payment plans.
- Second, an exemption from late payment interest. Such a measure can be requested individually or together with the request for an instalment payment plan, to avoid the late payment interest that would be due in case such an instalment payment plan is obtained.
- Third, a waiver of fines relating to non-payment of taxes.
The aforementioned measures can be requested with respect to the following taxes (i) payroll taxes, (ii) VAT, (iii) corporate income tax, (iv) personal income tax and (v) legal entity tax.
It is important to note that these measures can be requested by every Belgian taxpayer (not only SMEs) irrespective of the type of activities that are carried out (i.e., not only for taxpayers in sectors that are struck particularly hard by COVID-19, such as event organizers, travel agencies, etc.).
In order to benefit from the said support measures, the taxpayer requesting such measures must demonstrate that it is experiencing financial difficulties as a result of COVID-19 (e.g., a decrease in revenue/turnover, a considerable decrease in orders/reservations, but also repercussions from difficulties faced by a partner organization). To this end, the request will have to be justified by way of a short explanation of the impact of COVID-19 and be supplemented by any relevant supporting documents. Given that a clear link with COVID-19 will have to be proven, requests made by enterprises having structural payment problems not related to COVID-19 will not be allowed.
Regarding the formalities, the request for (one or more) of the abovementioned support measures has to be filed by submitting a specific form by e-mail or letter to the competent Regional Tax Collector prior to 30 June 2020. In particular, one form has to be submitted per tax debt for which one or more of the support measures is requested. The relevant form and contact details of the competent Regional Tax Collector can be found on the website of the Federal Public Service Finance. The tax authorities will provide a response within 30 days after filing the request.
Note that support measures that are granted might be revoked in case (i) the payment plan is not respected by the taxpayer (unless the taxpayer contacts the local tax authorities in a timely fashion); or (ii) a collective insolvency proceeding arises (e.g., bankruptcy, judicial reorganization).
In addition, note that support measures do not relieve an enterprise from its obligation to file its tax returns within the extended filing deadlines, as outlined under point 1.1 above. In fact, compliance with the obligation to submit a complete and timely tax return is a precondition for benefiting from the support measures regarding the tax liabilities related to such tax return.
2.2. Social security measures
First, employers facing difficulties paying their social security contributions due for the first and second quarter of 2020 can request an instalment plan. The possibility of obtaining such an instalment plan is not a measure specifically introduced in the framework of COVID-19, but it is explicitly confirmed that COVID-19 is a factor that allows employers to obtain such a measure. Note, however, that late payment interest will be applied for as long as the social security contributions are outstanding. The request for an instalment plan must be made by filling in a specific form, which can be found on the Belgian Social Security website and directly filed there.
Second, self-employed individuals confronted with financial difficulties due to COVID-19 can request different supporting measures. First, they can request a deferral of payment of their social security contributions without any surcharges being due for late payment. This deferral entails that the contributions due for the first quarter of 2020 have to be paid before 31 March 2021 and that the contributions due for the second quarter must be paid before 30 June 2021. The request has to be filed with the individual's social insurance fund. In addition, they can request their social insurance fund to lower their provisional social security contributions if their self-employed income is expected to drop below the legal threshold used for the calculation of these contributions. Finally, self-employed individuals in main occupation, and assisting spouses who are no longer able to pay their social security contributions, can request an exemption from such contributions, which can be granted wholly or in part.
3. Impact of COVID-19 on certain tax regimes and procedures
3.1 Impact of COVID-19 on ongoing tax audits
The Ministry of Finance has announced that all non-essential on-site audits are postponed and that only the audits necessary to safeguard the interests of the State are maintained. Audits that can be carried out remotely will also continue. If you are currently confronted with an ongoing tax audit, it is advised to make contact with the competent inspector to discuss the impact of COVID-19 and to ask for a postponement of the audit or a delay for providing information, if need be.
3.2 Impact of COVID-19 on rulings and court procedures
The Ruling Commission has confirmed that it remains fully operational. However, under the present circumstances, pre-filing or ruling requests should not be filed on paper in the coming weeks. Any such requests should, by preference, be filed by email to firstname.lastname@example.org. In addition, pre-filing meetings are not currently possible but officials remain available by telephone, Skype or email.
With respect to court proceedings, the current general rule is that only urgent cases and civil proceedings (including tax proceedings) that can be dealt with in writing are being dealt with and considered by the courts (in principle until 19 April 2020). Pleadings and appearances before the court should, where possible, be replaced by communication in writing. For more information, please reach out to the attorney dealing with your case.
3.3 Impact of COVID-19 with respect to the tax regime for frontier workers
In the protocol to the Double Tax Treaty that Belgium concluded with France and Luxembourg, a specific regime is provided for frontier workers. In a nutshell, under such a regime a frontier worker (i.e., an employee living in the frontier region of one of the countries and working in the frontier region of the other country) will only be taxed on their salary in their state of residence, provided that the frontier worker does not work more than a specific number of days (being 30 days under the Double Tax Treaty between Belgium and France and 24 days under the Double Tax Treaty between Belgium and Luxembourg) outside of the frontier region of their work state.
Due to COVID-19 many frontier workers will, however, be forced to work from home and hence not in the frontier region of their work state. Belgium has therefore agreed with both France and Luxembourg that the presence of the frontier workers at home due to COVID-19 will, as of 14 March 2020, not be taken into account for the application of the aforementioned rule given that the current situation can be considered as a case of force majeure.
3.4 Home/telework allowances for employees working from home
Employers can grant a homework allowance to cover costs that their employees incur while working from home. If the employee is working from home on a recurrent basis, such a lump sum allowance can be considered as a tax-free reimbursement of "costs proper to the employer" for an amount of up to EUR 126.94 per month. Given that many employees are forced to work from home due to COVID-19, employers can consider granting such an allowance to their employees. However, to ensure that the allowances paid will be considered as a reimbursement of "costs proper to the employer," it is recommended to file and obtain a ruling from the Ruling Commission.
Being aware of the current situation and the many requests that will probably be filed in this regard, the Ruling Commission has taken different measures to ensure the quick handling of requests regarding homework allowances granted due to COVID-19. More specifically, a "fast-track procedure" has been adopted and an example request form has been published on the website of the Ruling Commission. It is important to note in this regard that the lump sum homework allowance confirmed by such a "fast-track ruling" may only be granted as long as the health measures taken in the framework of COVID-19 are in force and, hence, not for five years, as is usually the case for homework allowances. Also note that such a ruling is not binding upon the social security services. Nevertheless, we expect that, given the current circumstances, the social security services would not be too strict with respect to providing evidence that the relevant employee was working from home.