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31 July 2018 Belgium reaches agreement on 2018/19 budget including on the timing of interest limitation rule under EU ATAD On 24 July 2018, the Belgian Federal Government reached political agreement on the 2018/2019 budget and job creation measures (Press conference 24 July 2018: Dutch – French). One of the budgetary measures agreed on relates to the interest limitation rule provided for by the first European Union Anti-Tax Avoidance Directive (ATAD). The interest limitation rule was transposed in December 2017 as part of the Belgian corporate tax reform.1 Under the interest limitation rule, the tax deductibility of net interest charges is limited to the higher of (i) €3,000,000, or (ii) 30% of the taxable EBITDA (earnings before interest, taxes, depreciation and amortization). The transposition of the interest limitation rule was initially scheduled for 2020. However, the ATAD in principle requires Belgium to apply the rule as of 2019. The entry into force can only be postponed if a Member State already has national rules which are equally effective. It was unclear whether Belgium could rely on the current thin capitalization rules in order to postpone the entry into force of the interest limitation rule until 2020. The entry into force of the interest limitation rule is being brought forward to 2019 (financial years starting on or after 1 January 2019) in order to fully comply with the ATAD and to avoid potential action from the European Commission. EY Belgium closely tracks developments on corporate tax reform and has a dedicated website with additional information, Alerts and thought leadership regarding the tax reform. 1 See EY Global Tax Alert, Belgian Parliament adopts corporate tax reform, dated 2 January 2018.
Document ID: 2018-5918 |
