Since 3 March 2020 different authorities (EU, national, local) took measures in Belgium to reduce the spreading of the COVID-19 virus. In order to overcome the economic impact of these decisions, many compensating measures were taken.
We provide you with an overview of the most relevant actions that were taken by the competent authorities, updated on a regular basis.
1. Tax related measures
Compensation for mandatory closure of businesses
Update 28 April 2021
In order to mitigate the financial impact for these companies, the Flemish Government announced that businesses in the Flemish region can request a compensation. Businesses which were mandatorily closed entirely were initially entitled to a lump-sum compensation of €4,000 while businesses which could remain open on weekdays were entitled to a compensation of €2,000. Companies that are still required to remain closed after 4 April 2020, are entitled to an additional compensation of €160 per day. A compensation of EUR 2,000 is also foreseen for businesses that do not need to close but that can demonstrate that the turnover has decreased with at least 60% in a period of one month as of the reopening compared to a reference period last year. Funds are also made available in the Walloon and Brussels region for similar measures. The compensations granted in the framework of aid measures taken by the regions, communities, provinces and municipalities are, under certain conditions, exempt from taxes. This tax exemption applies until 31 December 2021. Compensations that were previously treated tax exempt but are reimbursed to the respective region shall not be considered a tax deductible expense.
Ruling on tax-free allowance for teleworking
Update July 2021
Due to the measures taken in the fight against the coronavirus, the Ruling Commission has been willing to provide a ruling confirming that the employer can temporarily give its employees, regardless of their job category, a tax-free allowance of up to EUR 126,94 per month to cover the costs caused by teleworking, such as heating, electricity, paper, etc.
On 14 July 2020, the Belgian tax administration issued a circular letter allowing, under certain conditions, such a tax-free allowance in case of regular and structural homeworking carried out by employees, even without a ruling. If employees work at home for at least 5 working days per month, the employer may grant a lump-sum homeworking allowance of up to EUR 126.94 per month. As a result of indexation, this amount will increase to 129.48 euros per month from 1 April 2020.
On 26 February 2021 the tax administration issued a new circular letter for employees who work at home which transcends the issue of home working in the context of the COVID-19 and which replaces the previous one. The circular letter foresees on the one hand a fixed office allowance covering various office expenses for a maximum of EUR 129.48 per month (to be increased to EUR 144.31 for the months of April up to and including September 2021) and on the other hand a reimbursement of the purchase price of office furniture/computer equipment. For more information reference can be made to our article on this subject.
Deferral of tax payments Deferral of tax payments
Updated July 2021
At the beginning of the coronavirus in 2020, the Belgian government took various measures to defer the payment date for corporate income tax, personal income tax, legal entities tax, wage withholding taxes, VAT and certain excise duties. At present, no similar measures have been announced for 2021 yet.
Companies facing financial difficulties as a direct result of the Corona virus pandemic, regardless of their activity or sector, can however still request a number of tax and social security support measures from the Federal Tax Authorities, which should allow companies to bridge these temporary financial difficulties.
All Belgian registered businesses (both companies and self-employed individuals) are entitled to these measures if it can be shown that they have incurred nuisance from the spreading of the Corona virus and the correlating measures, which can be either direct (e.g. significant decrease in turnover) or indirect (as a consequence of a chain-reaction, e.g. partner companies suspending business). Companies which are in structural financial distress (i.e. companies already facing financial difficulties prior to the Corona outbreak in Belgium) can in principle not benefit from these measures.
The support measures consist of (i) a further deferral of payment, (ii) a waiver of late payment interest and (iii) a waiver of late payment fines. These measures can be requested for VAT, wage withholding tax, corporate income tax, personal income tax and legal entities tax. A company can request to apply (one or more of) these measures using a form specifically issued for this purpose and should submit a separate request for each individual debt. The form can be found on the website of the Federal Tax Authorities here. In principle, a request can only be lodged after the receipt of an assessment notice or a request for payment. Application of these measures has been extended to 30 June 2021.
It should be noted that these supportive measures are conditional upon the timely, correct and complete filing of the relevant tax return. Hence, it is of utmost importance that the relevant tax formalities (e.g. VAT return, income tax return) are duly and timely complied with.
On 5 July 2021, the tax administration announced that an individual repayment plan can still be requested for debts resulting from COVID-19. In this way, payments can be spread over up to 24 months and, in exceptional cases, 36 months. Large companies can even request an instalment plan of up to 50 months.
In addition to the above, various measures are also announced at the regional levels.
The Flemish Government has for example announced that the payment of the immovable property tax (onroerende voorheffing / précompte immobilier) for 2020 is deferred for approximately four months (i.e. until 30 April 2021) for companies active in the Flemish Region. No late payment interest will be charged for that period. The deferral is granted automatically and companies may disregard the payment term of 31 December 2020 mentioned on the assessment notice. Self-employed persons can flexibly request a payment plan and, if necessary, a waiver of interest on late payments.
For some additional measures regarding the payment of inheritance and registration duties, reference is made to the section 'Filing deadlines postponed' below.
Following the federal decisions to prevent the coronavirus, cities and municipalities also provide support measures for the self-employed and entrepreneurs affected. A compilation of a.o. the fiscal measures of the Flemish cities and municipalities can be found on the website of VVSG here. However, it is recommended to have a look at the website of your municipality.
Deferral of prepayments Deferral of prepayments
If self-employed persons and companies are in a tax paying position and do not make timely prepayments of income taxes, a tax increase will be imposed. Each quarter a prepayment can be made and each prepayment leads to a tax credit which reduces the tax increase suffered if no prepayments would have been made. A prepayment made in the first quarter results in a higher tax credit than a prepayment made in a later quarter. Many self-employed persons and companies are currently facing liquidity problems due to the corona crisis and can therefore not make prepayments. In order to avoid that they are being penalized if they only prepay the taxes later this year, the tax credits for the last two quarters of 2020 are increased.
The measure shall apply to prepayments relating to a taxable period ending between 30 September 2020 and 31 January 2021 included. For companies, the tax credit for prepayments of corporate income taxes increases in the third quarter from 6% to 6.75% and in the fourth quarter from 4.5% to 5.25%.
For the self-employed persons, the tax credit for prepayments of personal income tax increases from 2% to 2.25% in the third quarter and from 1.5% to 1.75% in the fourth quarter.
This measure does not apply to:
- companies that repurchase own shares, make a capital reduction or attribute/pay dividends between 12 March and the end of the relevant period;
- companies that pay a variable remuneration between 12 March 2020 and the end of the relevant period to the main representative of the executive directors, to the chairman of the executive board, to the main representative of the other persons in charge of the management or to the main representative of the persons in charge of the daily management;
- taxpayers that hold a direct participation between 12 March 2020 and the end of the relevant period in companies that are established in certain tax haven countries;
- taxpayers that pay amounts of € 100,000 or more between 12 March 2020 and the end of the relevant period to companies established in certain tax haven countries if it is not demonstrated that these payments were made in the context of an actual and genuine transaction
Abolition of December advance payment for VAT and wage withholding tax
Update April 2021
VAT taxable persons filing periodical VAT returns (i.e. monthly or quarterly VAT returns) are no longer required to pay the advance payment of the VAT normally due for the month December or for the last quarter in December of that year. As a result, the VAT due on the transactions carried out in December respectively Q4 of a given year shall only have to be paid to the Belgian State by the 20th of January of the following year. The December advance payment has equally been abolished for the wage withholding tax.
Filing deadlines postponed
Update 10 February 2021
In 2020 the Belgian tax authorities allowed various extensions for the filing deadline of income tax returns, VAT returns, IC sales listings, annual client listing and CRS/FATCA reporting. It remains to be seen whether similar administrative tolerances will be granted in 2021.
Update 15 January 2021
Due to the security measures in place in Belgium in relation to the second wave of the coronavirus (as of 1 November 2020), notary offices and citizens are not always able to complete all (tax) formalities on time. The Flemish Tax Administration therefore provides, as a general measure, an extension of the deadline until 30 April 2021 if the deadline would normally expire between 1 November 2020 and 30 April 2021. It is not necessary to apply for this postponement. This implies that:
- no tax increase for a late inheritance tax return will be imposed if this tax return is filed no later than 30 April 2021. If, for example, an inheritance tax return should have been filed by 28 November 2020 at the latest, this deadline is now extended to 30 April 2021.
- no tax increase will be imposed if the period within which a deed must be submitted for registration is exceeded. If, for example, two parties agree to sell an immovable property and this sale should be registered by authentic deed on 28 November 2020, this deadline is now extended to 30 April 2021. In addition, the period of time to comply with the conditions to maintain a favourable regime is extended until 30 April 2021 as well. This also implies that the payment of the registration duties can be postponed to the same extent
In the Walloon and Brussels region, the Tax Administration announced that the deadline for submitting an inheritance tax return (and consequently for paying the inheritance taxes) is temporarily suspended for a period not exceeding four months, provided that it expires between 1 November 2020 and 31 January 2021. In both regions, the term of payment of one month for certain registration duties, and, if applicable, for the fines, is extended for a period of four months, provided that this term expires in the period from 1 November 2020 to 31 January 2021. For more information, reference can be made to circular letter 2020/C/138 which can be found here.
Deferral of DAC6 reporting obligation
On 25 May 2018, the Council of the European Union (the Council) adopted the Mandatory Disclosure Directive ((Directive (EU) 2018/855), also known as DAC6). DAC6 introduces mandatory disclosure rules for EU-linked intermediaries and – under certain circumstances – taxpayers. As follows from the Directive, arrangements of which the first step is implemented between 25 June 2018 and 1 July 2020 must be reported before 31 August 2020. From 1 July 2020 onwards reporting is required within 30 days. In view of the COVID-19 situation, and in view of a political agreement reached between the EU Member States on an (optional) postponement of this obligation, the Belgian tax authorities decided to grant a postponement of 6 months by way of an administrative tolerance. Concretely, this results in the following deadlines for the notifications to be made to the Belgian competent authority:
- The reportable cross-border arrangements of which the first step is implemented between 25 June 2018 and 1 July 2020 have to be reported before 28 February 2021.
- The 30-day reporting period starts on 1 January 2021 for:
- Reportable cross-border arrangements being made available for implementation, being ready for implementation, or when the first step in the implementation has been made between 1 July 2020 and 31 December 2020;
- Intermediaries that have directly or indirectly provided aid, assistance or advice with respect to designing, marketing, organising, making available for implementation or managing the implementation of a reportable cross-border arrangement between 1 July 2020 and 31 December 2020.
- The first periodic report in respect of "marketable" arrangements should be submitted on 30 April 2021 at the latest.
This delay applies to federal taxes and regional taxes for which the Belgian tax administration is responsible. For Flemish taxes, such as Flemish inheritance taxes and certain registration duties, a similar delay has been granted by the Flemish tax authorities.
At the end of January 2021 a further delay was announced: arrangements to be reported during the months of January and February 2021 should be reported by 28 February 2021. The penalties provided for non-timely submission will not be applied during this period.
Loss-carry back temporarily allowed due to corona
Update 24 July 2020
In principle, tax losses can only be carried forward and no carry-back to previous tax years exist in Belgium. However, in order to improve the cash position of businesses and companies, a one-time possibility is introduced to carry-back the losses incurred during the COVID-19 crisis to compensate the taxable profits of the previous financial year.
The loss incurred in the COVID-19 year should be estimated prudently as an over-estimation will result in a (non-tax deductible) tax increase (personal income tax) or in a (non-tax deductible) separate assessment (corporate income tax) becoming due.
Self-employed persons and businesses subject to personal income tax are allowed to carry back the loss expected in income year 2020 due to the corona crisis to income year 2019. The loss-carry back takes the form of an 'economic exemption' which needs to be claimed through a separate form since tax return form has ready been published in the Belgian Gazette. The exemption cannot result in a negative outcome. The amount that has been exempt is added to the taxable basis in 2020 (assessment year 2021) in order to avoid a double deduction of the same loss.
The following taxpayers are excluded from this rule:
- Enterprises that were already in difficulties according to art 2, §1, 4/2 when corona started (i.e. on 18 March);
- Taxpayers that are taxed on lump sum taxable basis.
Companies will be able to off-set the estimated loss incurred in the subsequent (i.e. the COVID-19) year from the taxable profit realised during a financial year closing between 13 March 2019 and 31 July 2020. Technically, the taxable reserves in the corporate income tax return are reduced for the amount of the estimated loss through the creation of a tax exempt reserve. The exemption cannot be higher than the adjusted result of the taxable period with an absolute max of 20mio€.
The amount that has been exempt is added to the taxable basis (through an increase of the taxable reserve) in the subsequent COVID-19 year in order to avoid a double deduction of the same loss. In addition, the taxable basis will be increased (through a disallowed expense) if the amount of the exemption is taxed in a subsequent year at a lower tax rate than the rate applicable at the moment the estimated loss was used to off-set the taxable basis. This measure was introduced in order to neutralize the benefit of this lower tax rate.
The following companies are excluded from the rule:
- Companies that distribute a dividend, repurchase own shares or perform a capital (or similar) reduction between 12 March 2020 up to and including the filing of the CIT return in relation to assessment year 2021;
- Companies subject to a special tax regime;
- Companies that hold a direct participation between 12 March 2020 up and including the filing date of the CIT return in relation to assessment year 2021 in a company established in certain tax haven countries;
- Companies that pay amounts of € 100,000 or more between 12 March 2020 up and including the filing date of the CIT return in relation to assessment year 2021 to companies established in certain tax haven countries if it is not demonstrated that these payments were made in the context of an actual and genuine transaction;
- Companies that were already in difficulties according to art 2, §1, 4/2 when corona started (i.e. on 18 March).
Update 2 December 2020
Companies are allowed to exempt part of their profits realised in assessment years 2022, 2023 and 2024 by booking these profits to an exempt "reconstruction reserve" for the purpose of strengthening their solvency which was affected by the COVID-19 crisis. This reconstruction reserve thus allows future profits to be treated in a fiscally advantageous manner, provided certain conditions are fulfilled.
The measure does not apply to:
- Companies that distribute a dividend, repurchase own shares or perform a capital (or similar) reduction between 12 March 2020 up to and including the filing of the CIT return in relation to the assessment year in which the reconstruction reserve was accounted for;
- Certain companies subject to a special tax regime;
- Companies that were already in difficulties according to art 2, §1, 4/2 when corona started (i.e. on 18 March).
The reconstruction reserve only remains tax exempt to the extent that:
- the reconstruction reserve is accounted for and maintained in a separate reserve account;
- The company does not hold a direct participation in a company established in certain tax haven countries between 12 March 2020 up and including the last day of the taxable period in which the reconstruction reserve is benefitted from;
- The company does not pay amounts of € 100,000 or more to companies established in certain tax haven countries between 12 March 2020 up and including the last day of the taxable period in which the reconstruction reserve is benefitted from (unless it is not demonstrated that these payments were made in the context of an actual and genuine transaction);
- Equity and employment are maintained.
Base rate investment deduction temporarily increased
Update January 2021
The investment deduction is a tax deduction that comes on top of the deduction of the depreciation of eligible assets. In order to benefit from the investment deduction, certain conditions need to be fulfilled. The one-time investment deduction is calculated as a percentage of the acquisition value related to the investments. The base rate for investments by small and medium-sized enterprises (SME) is 8 percent. In order to encourage investments by these enterprises, this base rate was increased to 20 percent calculated on the acquisition or investment value of fixed assets acquired or created between January 1, 2018 and December 31, 2019. Due to the COVID-19 outbreak and in order to stimulate investments in these difficult times, the base rate is set at 25% for investments made between 12 March 2020 and 31 December 2020. This measure has meanwhile been extended for investments made prior to 31 December 2022.
If the company has no sufficient taxable basis to use this investment deduction, this one-time investment deduction for SME's can in principle only be carried forward for one year. Due to the negative financial impact of COVID-19, companies that could not (fully) use the investment deduction in relation to investments made in the period 2019-2021, will likely not be able to use any unused investment deduction in the subsequent year. For the investments made until 31 December 2021, the unused investment deduction can therefore exceptionally be carried forward for two years instead of one year.
In order to support certain sectors, employers have the possibility to grant consumption vouchers to their employees. These vouchers will be tax exempt in the hands of the employees and – contrary to other vouchers – fully tax deductible in the hands of the employer. More information regarding the conditions and the duration can be found in two Circular letters issued by the Tax Administration on 22 October 2020 and 12 March 2021 ( Circular letter no. 2020/C/131 and Circular letter 2021/C/25 ).
Period to incur expenses for tax shelter postponed
Update July 2021
Belgian companies and Belgian permanent establishments of foreign companies can benefit from a tax exemption if they invest in European audiovisual works or performing arts, provided a number of conditions are met. The amount of the final tax exemption is based upon the value of the tax shelter certificate to be provided to the investors. The value of this certificate is based upon the amount of qualifying expenses the producer spends in the EER and of the direct and indirect expenses incurred in Belgium. As of the signing of the agreement between the investor and the producer, the producer in principle has 18 months or 24 months to incur expenses. In order to support this sector, some additional measures have been taken as well, such as the possibility to change the agreement in order to designate another work or art, the possibility for investors with liquidity problems to partially forego their investment or to postpone their payment with three months and more flexibility regarding the periods in which the expenses can be made for agreements concluded until 30 September 2021.
Flexibility on recording a bad debt reserve
Bad debt reserves that are recorded during the financial year and relate to a loss that is not certain but probable, can only be treated tax exempt (i.e. are only tax deductible) if certain conditions are met. This implies a.o. that the debtors to which the loss relates should clearly be individualized. The probability of the loss should moreover appear from special events that took place during the taxable period and are still present at the end of this period. General or fixed bad debt reserves do not comply with these conditions.
A circular letter was issued on 23 March 2020 by the Belgian Tax Authorities stating that the coronavirus constitutes a special event that justifies the recording of a bad debt reserve if a debtor does not pay its invoice as a result of the measures taken by the Government. Each debtor should still be assessed separately but flexibility may be applied when assessing the difficulties for recovering outstanding debts from debtors whose turnover has significantly decreased as a result of the restrictive measures imposed by the federal government.
International measures for certain employees living cross-border and working at home
Update July 2021
Although income from employment is generally taxable in one's "home" state, employees which are active in a cross-border context (e.g. Dutch residents working in Belgium or vice-versa) are often taxed in the country in which they are economically active (the "work" state), provided that a minimum amount of the (professional) time is effectively spent in that country (specific conditions apply depending on the country in question).
Considering the general advice of the Belgian (and foreign) authorities to telework to the largest extent possible, the period spent in the work state by these employees could significantly decrease, which could potentially limit the work state's right to tax the professional income, or even entirely shift this right to tax to the home state of the employee concerned. It is thus very important to keep record of the days that the employee(s) concerned have worked from their home office, in order to assess any changes to the applicable tax regime.
Specific agreements have been made regarding employees commuting between Belgium on the one hand, and Germany, France, Luxembourg or the Netherlands on the other hand.
Belgium and the Netherlands have agreed that - for the purposes of the application of article 15, § 1 of the double tax treaty concluded between Belgium and the Netherlands - working days for which remuneration was received and on which the employee worked at home solely because of measures taken by the Dutch or Belgian government to fight the COVID-19 pandemic, are deemed to be spent in the Contracting State in which the employee would be employed without these measures. This fiction cannot be applied to working days which, independently of these measures, the employee would have spent at home or in a third state. In particular, it cannot be applied by employees who, in accordance with their employment contract, generally exercise their employment from home. Employees who use the fiction are obliged to apply it in a consistent manner in both Contracting States and to maintain evidence (e.g. a written confirmation from the employer with respect to the days that an employee has been working at home due to the COVID-19 measures). This fiction can only be applied to the extent that the salaries for the days that were spent working at home are effectively taxed by the normal work state. The agreement is effective as of 11 March 2020 until 30 September 2021. The agreement also contains provisions with respect to payments that an employee receives during a temporary unemployment.
On 6 May 2020, a similar fiction is agreed upon between Belgium and Germany concerning article 15, § 1 of the Belgian-German double tax treaty for the days that an employee is working at home as a result of the COVID-19 measures taken by the Belgian and German Governments. Similar conditions apply. The agreement applies until 30 September 2021.
Article 11, § 1 of the Belgian-French double tax treaty provides that salaries, wages and other similar remuneration are taxable only in the Contracting State on whose territory the personal activity, which is the source of such income, is exercised. On the basis of the rules on frontier workers laid down in the additional Protocol to this double tax treaty, the salaries, wages and other similar remuneration of a French employee working in the Belgian frontier zone are in principle taxable in France (i.e. the State of residence) if the employee has a permanent home exclusively in the frontier zone of France. However, there are several conditions that have to be met. One of the conditions is that the French frontier worker must not leave the Belgian frontier zone for more than 30 days per calendar year in the physical exercise of his/her activity. Article 7(b) of the Protocol contains a list of cases which are not taken into account for the application of this 30-day rule, including cases of force majeure beyond the control of the employer and the employee. Already on 13 March, the Belgian and French authorities agreed that the COVID-19 situation will be such a case of force majeure as of 14 March 2020. As a result, the presence of a French frontier worker in his place of residence in France (in particular to telework there) will not be taken into account for the calculation of the 30-day period. The measure applies until 30 September 2021. This agreement concerns only the French frontier worker but does not provide a solution for other employees working from home. That is why Belgium and France also agreed on 15 May 2020 to give all other employees resident in a Contracting State who habitually carry out their activity (full-time or part-time) in the other State the possibility of using the same fiction as mentioned above (under similar conditions). This possibility applies from 14 March 2020 until 30 September 2021.
Employees commuting between Belgium and Luxembourg are taxable on their professional income in the work state if any professional activity physically carried on outside this work state is limited to a period of maximum 24 days, unless force majeure can be shown. In light of the current limitations on travel, the Belgian and Luxembourg authorities have expressed their intention to qualify the present situation as such force majeure: the period spent by the employee in his home state for the purpose of teleworking, will not be considered for the calculation of the aforementioned 24-day limitation. In addition, an agreement has been reached on 19 May 2020 between Belgium and Luxembourg that is similar to the agreement that Belgium concluded with the Netherlands, Germany and France for other employees that work cross-border. The agreement applies from 11 March 2020 to 30 September 2021.
On 17 June 2020, the Belgian tax authorities published FAQ on the impact of corona on cross-border employment which can be viewed here. According to the FAQ, home working days due to the pandemic are not disregarded for employees residing in Belgium and generally working in another country than France, Germany, Luxembourg or the Netherlands. Hence, the former country of work may not keep its taxation right.
Flexibility on the application of the grandfathering clause under the new interest limitation rule
With effect from 1 January 2019, Belgium introduced a new interest limitation rule in line with the Anti-Tax Avoidance (ATAD). According to this rule, any "exceeding borrowing costs" are only tax deductible up to the maximum of 30% of the taxpayer's EBITDA or EUR 3 million. A Grandfathering was introduced for existing loans: loans that are concluded prior to 17 June 2016 are excluded from this rule if no essential changes have been made on or after this date. Essential changes include a.o. a change in the parties, the interest rate, the duration or the amount borrowed.
The exceptional situation caused by Covid-19 and the measures imposed in that respect by the federal government will inevitably have an adverse effect on the liquidity and solvency of some companies. In this context, specific payment methods (e.g. a deferral of interest or capital payment) may be authorised for certain loans. A circular letter now clarifies that the authorisation of specific payment arrangements for loans concluded before 17 June 2016 should not be considered as a fundamental change when:
- the taxpayer can demonstrate that the payment problems are the result of the crisis caused by COVID-19, and
- the terms of payment appear in an approved application to a financial institution or are included in a supplementary agreement.
In other words, these loans will be able to continue to benefit from the grandfathering rule.
These payment problems, which are the result of a general liquidity and solvency problem, may be reflected in particular in a fall in turnover or activity, temporary or total unemployment among staff or temporary closure as a result of the measures imposed by the federal government as part of the fight against COVID-19.
Tax credit for remission of rent
Update April 2021
A landlord who grants a (partial) remission of rent to his tenant may enjoy a tax advantage if amongst others the following conditions are met:
- at least 40 % of the rent for the months March, April and May 2021 is waived;
- the tenant is a self-employed person (in the main profession), a small company or a small association; and
- the tenant had to close its business due to the measures imposed by the federal government as a result of the covid-19 pandemic.
If the conditions are fulfilled, a tax reduction of 30% of the remitted rent can be claimed. A maximum of €5,000 per month per lease can qualify for the tax reduction and a maximum of €45,000 per landlord. For corporate income tax purposes, the benefit is granted in the form of a non-refundable tax credit.
The waiver must be laid down in a written agreement between the tenant and the landlord. The tax administration has provided a model agreement that can be consulted here. The agreement should be sent to the tax administration on 15 June 2021 at the latest.
In order to further assist companies in the sectors that are obliged to close for a longer period, a new Bill has been approved that grants the same tax advantage for the rent that is voluntarily waived for the months of of June, July, August or September 2021. Unlike the tax benefit for the months April up to June, this measure requires that, in the month for which the rent is waived voluntarily, the enterprise has had to close for at least one day on a mandatory basis.
The question can be raised whether such remittance can qualify as an abnormal or benevolent advantage. The Minister of Finance confirmed in a Parliamentary Question that no advantageous or benevolent advantage is present in case the rent is partially or wholly remitted because a taxpayer is forced to close its business due to the pandemic. Whether the cost associated with the remittance is tax deductible for the landlord depends on the circumstances. However, if the landlord remits the rent in order to obtain or maintain taxable income, a condition that is in principle fulfilled according to the Minister, this cost can be considered tax deductible.
If the addendum to the rental agreement stipulates that the tenant does not have to pay rent during one of the periods of mandatory closure, the waiver is the simple application of the addendum and the waived rent should – according to the accounting standards committee - not be recorded.
Measures to stimulate the donation of medical supplies and computers
Updated May 2021
The Belgian Government has asked all Belgian civilians and companies to donate their medical material and supplies to hospitals, in order to cover possible shortages.
In this respect one should know that taxable persons who deducted VAT on the manufacturing or purchase of items donated for free are in principle obliged to adjust the deducted VAT via a self-supply subject to VAT. This additional VAT cost could discourage companies from donating medical supplies.
For this reason, the Belgian VAT authorities have now decided that a donation of medical supplies to hospitals will not lead to a VAT adjustment. This measure will apply to supplies made since 1 March 2020 up until 1 September 2020.
The aforementioned tolerance applies to the following goods:
- Medical devices as referred to in Royal Decree 18 March 1999 (e.g. instruments intended for diagnostic and therapeutic purposes, devices intended for clinical research, ...)
- Protective equipment for healthcare workers and patients (mouth mask, protective clothing, disinfectants, ...)
Please note that the measure does not apply to the donation of pharmaceutical drugs.
The medical supplies must be donated to one the following institutions:
- Healthcare institutions as referred to in the coordinated law of 10 July 2008. Pursuant to this law, hospitals must meet certain standards and must be approved / recognized by the FPS Public Health (this concerns in particular those institutions whose medical care services normally fall within the scope of the exemption envisaged by Article 44, § 2, 1°, a) of the VAT Code);
- Associations of hospitals as referred to in Royal Decree 25 July 1997;
- Hospital groups as referred to in Royal Decree 30 January 1989;
- Mergers of hospitals as referred to in Royal Decree 31 May 1989: and
- Locoregional clinical hospital networks as referred to in the law of 28 February 2019.
- Certain institutions mentioned under article 44, §2,
2° of the Belgian VAT Code:
- Retirement homes
- Homes for people with a disability
- Schools and universities
- Humanitarian aid organizations (for their interventions relating to COVID-19)
- Approved institutions referred to in Regulation 2020/491
- Other government institutions
In order to benefit from this VAT measure, the company should be able to provide proof that the medical supplies were donated free of charge to one of the institutions mentioned above. The proof must consist of a document in which the hospital confirms that the donated medical supplies were used to provide care or were donated to another institution.
In addition, this document must be drawn up in twofold for each donation, dated and signed by both parties and should contain the following details:
- Name, address and VAT number of the benefactor;
- Name, address and company number of the beneficiary;
- Complete description of the donated goods; and
- Amount of goods.
This document replaces the document required by article 3 of Royal Decree n° 1, which establishes that business assets were used for other purposes than the economic activity by the benefactor.
It should also be noted that the following guidelines apply for the aforementioned document:
- Multiple donations can be merged by mentioning the different types of medical supplies and their amount. The benefactor can even replace the complete description of the donated goods by attaching the original receipt for the medical supplies to the document.
- One summarizing document / overview containing all the donations of one month will also be accepted by the VAT authorities, if the summarizing document is drawn up before the 15th day of the following month and reference is made to the month in which the medical supplies were actually donated.
- It is not required to register this document in the accounts of the benefactor, but it should be kept in case of VAT-audit.
In order to mitigate shortages of computers in Belgian schools, a similar measure was adopted to stimulate the donation of computers to schools established in Belgium. The same documents are required as for donations of medical supplies. This measure will also apply for supplies made since 1 March 2020 up until 31 December 2020.
Income tax consequences
Update 24 July 2020
If the donator is subject to corporate income taxes (resident and non-residents) or is subject to personal income tax (residents/non-residents) as a self-employed person, the donation of the above mentioned medical goods done between 1 March 2020 and 31 July 2020 will not qualify as an abnormal or benevolent advantage and the costs associated with the donated medical goods will be tax deductible. A similar measure is introduced for donations of computers to schools established in Belgium between 1 March 2020 and 31 December 2020.
Please note that other natural persons subject to personal income tax (resident/non-resident) that donate these medical goods and computers to certain institutions can exceptionally and temporarily receive an increased tax deduction.
Reduced 6% VAT rate (instead of 21%) on the supply, intra-Community acquisition and import of certain PPE's
In order to stimulate the supply of goods which are required to comply with the preventive measures in the fight against the COVID-19 pandemic, the Federal Government has decided to temporarily apply the reduced VAT rate of 6% (instead of the standard VAT rate of 21%) on the supply, intra-Community acquisition and import of:
- face masks, classified under the CN codes 4818 90 10 00, 4818 90 90 00, 6307 90 98 10, 6307 90 98 91, 6307 90 98 99 and 9020 00 00 10. As from 1 January 2021 the combined customs nomenclature has changed with an impact on the classification of face masks. As from this moment, this measure applies to face masks classified under the following CN codes: 4818 9010 00, 4818 9090 00, 6307 9010 00, 6307 9093 11, 6307 9093 19, 6307 9093 20, 6307 9093 90, 6307 9095 11, 6307 9095 19, 6307 9095 20, 6307 9095 91, 6307 9095 95 and 9020 0010 90, and
- hydro alcoholic gels classified under the CN codes 2207 20 00, 3808 94 10, 3808 94 20 and 3808 94 90.
This measure will apply as from 4 May 2020 until 31 December 2020. This period has been further extended, and accordingly will also apply to all supplies, intra-Community acquisitions and imports of the abovementioned goods for which VAT becomes due as from 1 January 2021 until 30 June 2021 (see Circular letter no. 2021/C/39 of 3 May 2021).
This national measure complements the European Commission's decision – in the fight against COVID-19 – to temporarily waive customs duties and VAT for State bodies and charitable organizations when importing medical devices and protective equipment from third countries.
VAT exemption for supplies of medical equipment to public bodies and certain organizations
The European Commission already decided to waive VAT and customs duties on imports of necessary medical equipment destined for distribution free of charge by State bodies or approved organizations through its decision of 3 April 2020. With its decision of 28 October 2020, the European Commission has extended the application of this measure until 30 April 2021.
VAT exemption for COVID-19 vaccines and testing kits
The Council has adopted amendments to the VAT Directive to allow EU Member States to temporarily exempt COVID-19 vaccines and testing kits, as well as closely related services, from VAT when sold to hospitals, medical practitioners and individuals.
This measure only concerns COVID-19 vaccines which have been authorized by the Commission or by the EU Member States and COVID-19 testing kits that comply with the applicable EU legislation.
The measure will apply until 31 December 2022.
EU Member States may also apply a reduced VAT rate to testing kits and closely related services, if they choose to do so (instead of a zero rate). This possibility was already available for vaccines.
The Belgian Minister of Finance has in this respect decided that COVID-19 vaccines and in vitro diagnostic medical devices for this disease are subject to a 0% VAT rate. This measure applies as from 1 January 2021 until 31 December 2022.
The supply, intra-Community acquisition and import of the following goods is subject to the 0% VAT rate (see Circular letter no. 2021/C/3 of 11 January 2021):
- COVID-19 vaccines that have been granted a European market authorization and are registered as medicines by the Minister of Public Health, and
- Diagnostic tests for this disease, such as PCR tests (nucleic acid test) and antigen tests via a sample taken from the nose, serological tests via blood sampling and (antibody) self-testing. The diagnostic tests must meet the requirements of the EU in the field of medical devices for in vitro diagnostics (see a.o. Directive 98/79/EC of the European Parliament and of the Council of 27 October 1998 on in vitro diagnostic medical devices and Regulation 2017/745 of the European Parliament and of the Council of 5 April 2017 on medical devices, amending Directive 2001/83/EC, Regulation (EC) No 178/2002 and Regulation (EC) No 1223/2009 and repealing Council Directives 90/385/EEC and 93/42/EEC).
This 0% VAT rate also applies to services which are closely linked to the aforementioned vaccines and medical devices (e.g. taking the test, analysis of the test at the assigned lab, administering a vaccine). This means that no VAT shall be due on the services of medical, paramedical, pharmaceutical and support staff in the vaccination centers.
The Minister of Finance has also decided that the provision of personnel by a city, municipality or CPAS to a first-line zone in the context of the organization and operation of vaccination centers can also take place under the 0% VAT rate (and so that no VAT would be due).
Hairdressers - modification to the calculation of the VAT forfeit for Q4 2020
Update 21 December 2020
Men, women and men-women hairdressers can benefit from a modification to the calculation of their forfeit to adapt their turnover to the corona crisis.
The number of type services that should be taken into account on the calculation sheet for 2020 (box II) that serves as a base for the VAT return related to Q4 2020 are:
- For men: 307 instead of 1140
- For women: 144 instead of 534
Deduction of input VAT on costs relating to cars which are used for both private and professional purposes (company cars)
Update May 2021
Due to the exceptional situation created by the Covid-19 lockdown and mandatory teleworking, the semi-flat rate (semi-forfaitaire) calculation method for the deduction of input VAT on costs relating to cars which are used for both private and professional purposes (calculation method 2) is distorted.
Therefore, the VAT authorities allow taxable persons who normally apply calculation method 2 to deduct input VAT on the basis of the general flat rate of 35% (calculation method 3). Taxable persons can also combine calculation method 2 and calculation method 3 for multiple cars, despite this in principle being prohibited. The other application conditions for methods 2 and 3 remain of course in place.
It is important to note that these measures only apply to calendar year 2020.
As of 2021, the taxable persons concerned (who applied calculation method 3 or a combo of calculation method 2 and 3) can again switch to calculation method 2.
Temporary reduced rate for the fine and interests on late payment of VAT
Update May 2021
As a one-off support measure for businesses, the interest on the late payment of VAT debts is reduced to 4% per year (instead of 9,6%) during the second quarter of 2021 (i.e. 1 April until 30 June 2021). In addition, the proportional fine for the late payment of VAT has been reduced from 15% to 10% during the same period (i.e. Q2 of 2021).
Reduced thresholds for VAT refund
Update May 2021
In order to mitigate potential liquidity issues for taxable persons as a result of the Covid-19 restrictions, the thresholds for the refund of deductible VAT amounts exceeding the VAT amount due as shown in the periodic VAT returns, have been reduced. Contrary to other VAT related Covid-19 relief measures (excl. the abolishment of the December advance payment), this measure is permanent and has entered into force on 1 April 2021.
The reduced refund thresholds apply to all taxable persons with a right to deduct input VAT who file monthly or quarterly VAT returns. In addition to reaching the new threshold, the VAT return must in any case be submitted by the 20th of the month following the period to which the VAT return relates and the box 'refund request' should be ticked in the VAT return concerned in order to get a reimbursement of the outstanding VAT credit.
The new VAT refund thresholds are:
- EUR 50 (instead of EUR 245) if the VAT refund is requested in the VAT return relating to the last month or quarter of the calendar year;
- EUR 400 (instead of EUR 615) if the VAT refund is requested in the VAT return relating to one of the first three quarters (of the calendar year) by a taxable person who files quarterly VAT returns;
- EUR 400 (instead of EUR 1.485) if the VAT refund is requested in the last monthly VAT return of one of the first three quarters (of the calendar year) by a taxable person who files monthly VAT returns;
- EUR 50 (instead of ERU 245) if the VAT refund is requested by a taxable person filing monthly VAT returns and holding an authorization for monthly refund of its VAT credit; or
- EUR 50 (instead of EUR 245) if the VAT refund is requested by the taxable person-starter (i.e. within 24 months as from the date on which he commenced its activity) filing monthly VAT returns.
Temporary reduced VAT rate for restaurant and catering services
Update May 2021
As most hotels, restaurants and bars were closed since October 2020, the VAT rate for certain restaurant and catering services has been reduced to 6%.
The reduced VAT rate specifically applies to all services whereby foods and/or drinks (incl. alcoholic beverages) are provided to customers for on-site consumption. This includes regular bars and restaurants (including bars and restaurants in hotels, offices or sport clubs), food trucks and caterers.
The reduced VAT rate is applicable for all restaurant and catering services for which VAT becomes due from 8 May until 30 September 2021.
2. Employment related measures
Updated on 2 March 2021
Telework mandatory for non-essential undertakings
Teleworking is in the second lockdown period (starting 2 November 2020) compulsory in all companies, associations and services for all staff members, until 1 April 2021, unless it is impossible due to the nature of the function or due to reasons of continuity of the business, activities or services. The employer will provide staff members who are unable to telework with a certificate or any other evidence confirming the need for their presence at the workplace.
Businesses, private and public companies and services necessary for the protection of the vital interests of the nation and the needs of the population as described in the Royal Decree of 1 November 2020, as well as producers, suppliers, contractors and subcontractors of goods, works and services essential to the activity of these companies and services, are not subject to the mandatory telework.
All companies, associations and services shall however take appropriate and timely preventive measures to ensure the rules of social distancing and to provide a maximum level of protection. The staff members as well as third parties shall be informed of these measures and staff members will be provided with the appropriate training.
A recently updated "Generic Guide to prevent the spread of COVID-19 at work", is made available on the website of the Federal Public Service Employment, Labour and Social Dialogue, supplemented by guidelines at sectoral and/or enterprise level, and/or other appropriate measures offering at least an equivalent level of protection.
Employers who do not comply with these government measures risk severe sanctions. The social inspection and police have the task of monitoring compliance with the government's measures.
Pretracing foreign employees in construction, cleaning, agricultural, horticultural and meat processing industry
Every employer or user performing activities in the construction, cleaning, agricultural and horticultural work and meat processing sector who temporarily uses an employee or self-employed person residing or living abroad, is obliged to collect and keep up to date a register including a number of data of said employee or self-employed person as of the start of the works.
As an employer or user in the construction, cleaning, agriculture and horticulture and meat processing sector, you must ensure that the Passenger Locator Form has been completed for those employees, prior to the starts of the works in Belgium.
Core cabinet of 12 February 2021
The core cabinet of the Federal Government decided on 12 February 2021 to extend the November 2021 measures until the end of June 2021, and additional economic support measures were approved.
Temporary unemployment due to force majeure COVID-19
Temporary unemployment due to force majeure – simplified procedure reinstated
On 6 November 2020, the federal government decided to reintroduce the simplified temporary unemployment procedure due to force majeure (COVID-19) for all employers and employees as from 1 October 2020 until 31 March 2021.Consequently, all temporary unemployment due to COVID-19 can again be considered as temporary unemployment due to force majeure, whereby force majeure is to be interpreted broadly. It is irrelevant whether the employer is recognised as an exceptionally hard-hit company or belongs to an exceptionally hard-hit sector.
The employees will receive a benefit equal to 70% of their average capped salary (the cap is € 2,754.76 per month), regardless of the reason of temporary unemployment. In addition, the employees receive a supplement of € 5.63 per day paid by the National Unemployment Office on top of their unemployment benefit. Until 31 March 2021, a reduced payroll tax of 15% will be deducted from the unemployment allocation.
Temporary unemployment due to force majeure – childcare and quarantine
Temporary force majeure unemployment due to COVID-19 also includes temporary unemployment due to childcare and due to quarantine. Temporary unemployment can thus also be invoked for employees who are not sick, but who have to stay at home because of quarantine and for employees who are unable to work because of childcare because the crèche, school or centre for the disabled is closed by a government measure. In the latter case, the employees will provide the employer with a certificate of closure due to COVID 19 provided by the institution.
Temporary unemployment – artists and temporary employees for events
It is possible to apply for temporary force majeure COVID 19 'events' if one can prove a promise on an employment contract (dated 15 April 2020 at the latest) for an event that should have taken place between 14 March 2020 and 31 August 2020. A more recent FAQ list on the website of the NEO extends this period until 31 March 2021.
The existing temporary unemployment system can be applied on a day by day basis. In some sectors, however, there is a clear need for a part-time unemployment system, and it is therefore useful to build in extra flexibility. Hence, temporary unemployment in half days will be possible in the cleaning sector (service vouchers) and school transport sectors.
Support of employers
Government partially financing the holiday pay for temporarily unemployed employees
Days of temporary unemployment are equated with days worked for the calculation of holiday pay. In implementation of the social partners' agreement, the government will intervene in the financing of vacation allowance for temporarily unemployed workers.
Compensation for social security contributions Q3
A compensation was be granted to employers in certain severely affected sectors or employers who have had to close down on the basis of the Ministerial Decisions of 28 October 2020 and 1 November 2020. The compensation was be equivalent to the basic net employer contributions and the student solidarity employer contributions due for the 1st or 3rd quarter of 2020 (whatever is the most favourable amount). The compensation was capped per company.
This also applied to suppliers of these companies insofar as they can demonstrate a loss of turnover of at least 65%.
This initiative has ended.
Postponement of payment social security contributions until 15 December 2020
Employers who were obliged to close in the first COVID-19 wave, as well as employers who shut down on their own initiative and employers who saw their economic activity significantly reduced for Q2 of 2020, were eligible to benefit from deferral of payment of social security contributions. The deferral concerned the contributions due as from 20 March 2020 until the end of Q2 of 2020.
The deferral of payment ended on 15 December 2020.
Amicable repayment plan for social security contributions Q3 and Q4
An adopted legislative proposal extends the possibility for employers affected by the socio-economic consequences of COVID-19 to request an amicable repayment plan for the payment of social security contributions to Q3 and Q4 of 2020.
In contrast to the "traditional" amicable instalments, no contribution surcharges, flat-rate additions and/or interest will be charged for the delayed payments.
Possibility to delay monthly advances on social security contributions until the end of the quarter
An adopted legislative proposal stipulates that the flat-rate additions in the event of failure to comply with the obligations relating to the payment of advances are not due for Q3 and Q4 of 2020, which makes it possible to defer the payment of monthly advances until the due date for balances of quarterly social security contributions.
On 22 January 2021, the Council of Ministers approved a preliminary draft law whereby the non-payment of the advances for Q1 and Q2 of 2021, as in the previous quarters, will not give rise to sanctions.
The core cabinet also foresees a reduction in the employer's contribution for the events sector. In order to support the preparation of the reopening of the event sector (incl. cultural and marriage sector), the employer contribution for employees will be reduced. These measures are not yet operational. We will keep you informed.
Via the existing Burnout Assessment Tool (BAT), organizations and companies can map the risk of burnout, and individual employees can also measure how high their risk of burnout is. When employees get a flashing red light, it is recommended to take preventive action. The BAT will be made more known through a campaign.
Support of employees
Supplementary allowance for sick employees
A supplementary benefit will be granted to employees incapacitated for work if the incapacity allowance is lower than 70% of the average gross monthly salary (capped at 2,754.76 EUR). In that case, the allowance will be increased to this amount. The supplement will be achieved by means of a supplement of 5.63 EUR per day.
Supplement on top of the end-of-year premium
The Federal Government foresees a new supplement in 2021 for employees with low wages who have been temporarily unemployed for a long time (more than 52 days since the start of the corona crisis), and who are employed in a sector that is still closed down on 1 March 2021. This one-off premium amounts to a maximum of € 780 gross. The concrete amount depends on the number of days of temporary unemployment in the months of January, February and March 2021.
The pension measures that ended on 30 September 2020 are being extended. Building up both the statutory pension and pension in the second pillar will be safeguarded for workers who are temporary unemployed.
This will entail the extension of a special legal measures that previously applied in the context of the COVID-19 crisis and which ensured that affiliated employees could continue to benefit in the same way during the period of temporary unemployment from the accrual of the supplementary pension and from coverage for death, health care, incapacity for work and/or invalidity, even if the pension regulations did not provide for this. The supplementary pension and other coverages continued as if the workers were employed, with the calculation parameters (e.g. the reference salary) applicable on the eve of the period of temporary unemployment. The employer had to expressly indicate if he did not wish to implement this measure. Even in that case, the coverage for death foreseen in the plans remains guaranteed.
The new pension measures will also ensure that pensioners who take on additional jobs as employees or self-employed workers, can combine their pension with a benefit for temporary unemployment or a bridging right. It also prevents pensioners who temporarily return to work, for example in the care sector or education sector, from losing part of their pension.
Support of the self-employed
"Double crisis bridging right" until 31 December 2020
The double crisis bridging right is intended for self-employed persons, helpers and assisting spouses working in sectors which have had to cease all or part of their self-employed activity because of the COVID measures. Self-employed persons, helpers and assisting spouses who are active in sectors dependent from the abovementioned sectors and who have had to fully stop their self-employed activity altogether also benefit from the double crisis bridging right. Self-employed persons from the latter category who only partially interrupt their self-employed activity are eligible for the relance bridging right, but not for the crisis bridging right.
The "double crisis bridging" right will be applicable until December 2020 for all sectors that are closed. For a self-employed worker without a family, this amounts to 2,583.40 EUR per month. For a self-employed worker with a family, this amounts to 3,228.20 EUR per month.
If the self-employed person did not have to close down and is not dependent on a compulsorily closed sector, the self-employed person can fall back on the possibilities that the traditional bridging law provides. The classic form of bridging law applies in the event of forced interruption where the self-employed person has to stop his activity due to external circumstances. The COVID-19 crisis falls under this definition. The amounts are however lower than the double crisis bridging right.
The relance bridging right is available for self-employed persons who were obliged to stop their activities for at least one full calendar month due to the closure measures and were allowed to resume these activities at the earliest after 3 May. This right is also extended until 31 December 2020.
New bridging right as of 1 January 2021
There will be a new bridging right from 1 January 2021, which will always be invokable in times of crisis. To be eligible, a strong decrease in turnover will need to be demonstrated.
Temporary improvement of the classic bridging right
In addition to the extension of the crisis bridging right and the introduction of a new bridging right, the classic bridging right will be temporarily improved by, among other things, making it more accessible to starters and by providing for the preservation of pension accrual.
Extension of the supplementary allowance for sick self-employed workers
The personal scope of the supplementary allowance for sick self-employed workers will be extended. This means that not only single self-employed workers and self-employed workers with a family burden can make use of it, but also cohabiting self-employed workers. In concrete terms, this is a additional allowances of more than 300 EUR per month.
Moratorium on the payment of social security contributions
Any self-employed person affected by the COVID 19-measures, can submit a written request to his social security fund to postpone the payment of his social security contributions by one year, without any increases being charged and without any impact on benefits. This application must be submitted before 15 December 2020.
The measure applies to the provisional contributions of Q1, Q2, Q3 and Q4 of 2020 and to the regularisation contributions of quarters of 2018.
Waiver of increases
Self-employed persons who do not pay their provisional social security contributions for Q1, Q2, Q3 and Q4 of 2020 by 31 December 2020 will not have to pay any increases for late payment. The same applies to the delayed payment of regularisation contributions to be paid in the course of 2020. Those increases will automatically lapse. Therefore, the self-employed person does not have to submit an application. However, increases are due if those contributions have still not been paid by 31 March 2021.
Reduction of provisional contributions
Self-employed persons experiencing difficulties as a result of the COVID-19 crisis may request a reduction in their provisional social security contributions for the year 2020 if their professional income is below one of the statutory thresholds.
Exemption of social security contributions
Self-employed persons who are unable to pay their social security contributions may apply for the exemption from contributions. This exemption from payment can be applied for the provisional contributions for the Q1, Q2, Q3 and Q4 of 2020, as well as the regularisation contributions of quarters of 2018 which expire during the course of 2020.
Self-employed workers who have been granted a moratorium on the payment of social security contributions will be able to qualify for amicable repayment plans while retaining the right to reimbursement of health care costs until 31 December 2021.
The cabinet also decided on some new measures with relation to the support of self-employed:
- Temporary improvement of the traditional bridging right by, among other things, making it more accessible for starters and retaining pension accrual.
- Payment plans for self-employed persons who have been granted a deferment of payment of social security contributions, while retaining the right to reimbursement for health care, until 31 December 2021.
3. Banking & Finance
Updated 15 March 2021
- Legal basis: the Law of 27 March 2020 'granting authorization to the King to provide a state guarantee for certain credits to combat the consequences of the coronavirus'
- Agreement between the federal government and the National Bank of Belgium (NBB)
- EUR 50 billion guarantee programme for all new additional loans and credit lines with a maximum term of 12 months (excluding refinancing loans) granted by Belgian banks (or Belgian branches of banks) until 31 December 2020 to viable non-financial undertakings in financial difficulties as a result of the coronavirus crisis.
- Details and specific conditions set out in the Royal Decree of 14 April 2020 on the granting of a state guarantee for certain credits to combat the consequences of the coronavirus crisis.
- Credit institutions must allow for payment deferral of (i) facilities granted to undertakings and (ii) mortgage credits granted to natural persons (see below, 1.2.).
Key take-aways are:
- Portfolio approach: each credit institution receives an "envelope", e. a share in the total amount of the state guarantee within the limits of which it can build up a portfolio of guaranteed credits. The envelope amount is determined on the basis of the credit institution's market share on 31 December 2019;
- Risk mutualisation: dividing the exposure to
potential financial loss by granting the guarantee to all new
credits with a term of maximally 12 months accorded by the Lender
to a Borrower between 1 April 2020 and 31 December 2020.
- Per se excluded credit agreements: refinancing;
drawings granted before 1 April 2020; credit agreements that are
"deselected" by the Lender (opt-out possibility); and
credits allocated only to the Borrower's non-Belgian
- Thus, a guaranteed credit must be used for the purpose of activities inside Belgium. The funds can therefore not be transferred to activities outside Belgium (e.g. cashpooling).
- The "Lender" is a Belgian credit institution or a Belgian branch of a foreign credit institution.
- The "Borrower" must be a non-financial undertaking
registered in the Belgian Crossroads Bank for Enterprises. Also
eligible are SMEs, self-employed persons and non-profit
organisations, except in case such Borrower:
- Was experiencing financial difficulties before the COVID19-crisis;
- Was in default with regard to current credits or tax payments or social security contributions on 1 February 2020 or had less than 30 days arrears on aforesaid debts on 29 February 2020;
- Was subject to active credit restructuring with one or more credit institutions on 31 January 2020;
- Is considered, on the basis of available information, "an undertaking in difficulties" in the meaning of Article 2(18) of the Directive 651/2014;
- Per se excluded Borrowers: governmental entities, financial counterparties, persons whose main or exclusive activity consists of offering credits on a professional basis and holdings of financial entities.
- Per se excluded credit agreements: refinancing; drawings granted before 1 April 2020; credit agreements that are "deselected" by the Lender (opt-out possibility); and credits allocated only to the Borrower's non-Belgian activities.
- Maximum amount per Borrower: on a consolidated basis, the lowest of either EUR 50 million or an amount equal to the liquidity needs during a period of 12 months (or 18 months for SMEs). The limit of EUR 50 million can only be exceeded upon request by the Borrower and acceptance by the King. The Ministerial Decree of 29 April 2020 sets out the procedure for requesting such deviation.
- Share of losses: the banking sector and the
State each will shoulder part of the losses:
- up to 3% losses: fully covered by the financial sector;
- between 3% - 5% losses: 50/50 covered by the financial sector/State;
- over 5 % losses: 20/80 covered by the financial sector/State
The State guarantee will only intervene for those losses that cannot be recovered from Borrowers, third parties or in any other way.
Updated 15 March 2021
The State guarantee is one of two pillars of a general support package. The second pillar is a payment deferral granted by the Belgian banking sector in respect of facilities granted to undertakings (and mortgage credits granted to natural persons).
The payment extension applies to all usual types of credit, except leasing and factoring (unless a bilateral agreement between the undertaking and the leasing resp. factoring undertaking is agreed upon). The payment extension applies only to the principal amount; interest still has to be reimbursed. No administrative costs or handling fees are attached. The extension is granted to financial undertakings, SMEs, the self-employed and non-profit organisations that meet certain conditions, similar to those applicable in respect of the state guarantee (see above).
Initially, this second pilar support measure would end on 31 March 2021 but is in meanwhile extended until 30 June 2021. The payment extension is only available for companies who were financially "healthy" on 30 September 2020. In principle the total duration of the payment extension granted since the beginning of the COVID-19 crisis cannot exceed 9 moths. However, a new extended payment deferral is possible for companies meeting certain requirements ("Charter 3 payment extension").
SME guarantee scheme
Updated 15 March 2021
The federal government also specifically pays attention to the financial needs of small and medium-sized companies (SMEs). SMEs often require longer term credit, exceeding a term of 12 months.
Therefore, an additional (SME) guarantee scheme is created for credit agreements with a term up to 5 years. The legal basis for this guarantee scheme is laid down in the Law of 20 July 2020. Due to the severe consequences of the COVID-19 crisis, specific modifications to the framework were made by the Royal Decree of 24 December 2020.
Updated 15 March 2021
For self-employed individuals (main and secondary occupation) and assisting spouses who have been struck financially as a result of the COVID-19 crisis, a number of support measures have been introduced.
- Bridging right in case of discontinuation of activities during
- By 31 March 2021, requests must be submitted for the months of July, August and September 2020.
- By 30 June 2021, requests must be submitted for the months of October, November and December 2020.
- Bridging right for the self-employed in case of quarantine or child care in 2020;
- Bridging right for the self-employed:
- specifically for January 2021 (requests to be submitted before 30 September 2021)
- for February 2021 and March 2021 (requests to be submitted before 30 September 2021)
- Bridging right for decrease in turnover of self-employed
persons (January to March 2021): there must be a turnover loss of
at least 40 % in the calendar month preceding the month for which
the support is requested, compared to the same month in the
reference year 2019.
- Requests to be submitted before 30 September 2021.
Note that these federal support measures stand independent from the support provided at regional level (see below).
Other initiatives at federal level
Updated 15 March 2021
- Payment extension in respect of mortgage credit agreements, entered into by natural persons
- Payment extension in respect of consumer credit agreements
- To prevent credit insurers from cutting back on their activities the federal government, Assuralia (the federation of insurance undertakings) and the private trade credit insurers have concluded a reinsurance programme whereby the Belgian State will guarantee part of the possible losses that credit insurers have to swallow. To do so, it turned to Credendo, the state-owned credit insurer. More information can be found on the website of Assuralia (NL/ FR).
Updated 15 March 2021
Flemish protection mechanism
Self-employed persons and undertakings confronted with a decrease in turnover of at least 60% between 1 January 2021 and 31 January 2021, or that had to close their business during this period, are eligible for the protection mechanism.
The support amounts to 10% of the turnover made during the same reference period in 2020. Depending on the number of employees, the amount is capped (cap ranging between EUR 7,500 and EUR 40,000). The minimum amount of support is EUR 600.
Requests can be submitted until 15 March 2021.
Self-employed persons (main occupation) and SMEs located in the Flemish region that are in need of additional working capital as a result of the COVID-19 crisis, can obtain a subordinated loan with PMV (Participatiemaatschappij Vlaanderen). The loan amount can range between EUR 25,000 and EUR 2,8 million (potentially increased to EUR 4,3 million if an additional investor or financier comes in the picture).
The subordinated loan must cover the financing need of at least 1 year. For credits up to 12 months, banks are the primary partner to offer credit, covered by the state guarantee (see above).
The maximum term of the credit is 3 years.
The conditions and interest rate differs depending on the target group (start-ups and scale-ups on the one hand; SMEs and self-employed on the other hand).
Corona crisis guarantee
The existing generic guarantee scheme was enlarged: to the existing capacity of EUR 300 million, EUR 100 million was added. This support measure allows undertakings that are unable to pay their personnel, purchase raw materials or pay invoices, to find financing for their working capital from the bank.
The guarantee scheme offers a 75% coverage of the commitments in exchange for a one-off premium of 0.25% (instead of the usual rate of 0.5%). The maximum guarantee amount is EUR 1,5 million.
In 2020, the existing statutory Flemish Gigarant guarantee set up by PMV was increased to EUR 3 billion to grant guarantees covering all forms of credits of more than EUR 1,5 million that have a term of maximum 6 years. Requests to make use of this guarantee scheme can be submitted until 15 April 2021.
Updated 15 March 2021
Premium for investment
In order to encourage and support companies active in the fight against the pandemic, the Walloon Region is making available a premium for any investment made in the manufacturing of coronavirus-related products. This bonus is aimed at companies (SMEs or large companies) carrying out an investment programme in the Walloon Region for the manufacture of coronavirus-related products (medicines, vaccines, treatments, pharmaceutical principles, diagnostic tools).
The minimum amount of the investment is set at EUR 50,000 per company. The aid intensity is set at 50% of eligible costs. Please note: the company will have to submit its application for the bonus by 31 April 2021 at the latest.
The Walloon Government has set up a new financial product, called a "ricochet" loan, for companies and self-employed people who need cash. This product enables a loan of up to EUR 45,000 to be taken out at a favourable rate. It allows you to combine when you apply to a bank for a loan:
- a guarantee from SOWALFIN, covering 75 %of the envisaged bank loan of maximum EUR 30,000
- a SOWALFIN subordinated loan of up to EUR 15,000 at 0% interest.
If the partner bank grants the loan the SOWALFIN subordinated loan/bank guarantee is automatically and instantly granted. This feature allows the funds lent to the company's business account to be made available quickly and in one go, together with the bank loan.
Updated 15 March 2021
Through the Brussels Guarantee Fund, strong support of the cash flows of affected companies is provided for by government guarantees on bank loans, for a total amount of EUR 20 million.
Note: the Brussels guarantee is complementary to the federal state guarantee.
Loans to Brussels undertakings having more than 10 fte
Finance&invest.brussels supports Brussels undertakings with more than 10 full-time equivalents through loans. These loans are intended to help undertakings that are facing a shortage of capital due to the COVID-19 crisis.
The "Proxi loan" is intended to mobilise the savings of citizens to finance SMEs through a tax credit on one or more loans granted by a Brussels resident to an SME. The Proxi loan allows borrowers (self-employed people or managers of SMEs with an economic activity in the Brussels-Capital Region) to take out a low-interest loan of up to 250,000 euros for a fixed term of five or eight years from a private individual (a relative, family member or other person interested in the activity, etc.).
Premium non-essential sectors
The Brussels region offers support to the companies of certain sectors that had to close down in November 2020 due to the COVID-19 crisis. A request for this premium, which can amount to EUR 5,000, can be submitted until 25 March 2021.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.