Belgium

The standard Belgian corporate income tax rate is 25%, applicable to both Belgian resident companies and Belgian permanent establishments of foreign companies. Belgium does not levy a separate branch remittance tax, meaning that profits repatriated by a Belgian branch to its foreign head office are not subject to additional taxation at source.

A reduced rate of 20% applies to the first EUR 100,000 of taxable profit of qualifying small and medium-sized companies, subject to several cumulative conditions.

First, the company must qualify as a small company under Belgian company law. This requires that the company does not exceed more than one of the following thresholds:

• an average workforce of 50 FTE (full-time equivalent) employees;
• an annual turnover of EUR 11.25 million (excluding VAT); or
• a balance sheet total of a maximum EUR 6 million.

Where the company forms part of a group, these thresholds must be assessed on a consolidated basis, which may limit access to the reduced rate for companies operating within larger structures.

So-called “micro companies” obviously qualify for the reduced rate as well (i.e. maximum 10 FTE employees, EUR 700,000 turnover and EUR 350,000 balance sheet total).

Second, the company must grant a minimum annual remuneration of at least EUR 50,000 to at least one company director (tax year 2026). Where the company’s taxable income is lower, the remuneration must be at least equal to that taxable income. This requirement reflects a policy choice to ensure a minimum level of taxation at the level of individuals through personal income tax and social security contributions. Startups are generally exempt from this requirement during their first three financial years, which facilitates access to the reduced rate in the early stages of business activity.

Finally, companies with a significant investment profile may be excluded. In particular, where the value of financial participations exceeds 50% of the company’s equity, access to the reduced rate of 20% will be restricted.

Belgium applies a system of advance tax payments. Companies are expected to make quarterly prepayments during the financial year. If insufficient prepayments are made, a surcharge is applied to the final tax liability. For tax year 2026, the surcharge amounts to 6.75%, which makes advance payments an important element of corporate tax planning and cash flow management. The earlier in the year the prepayment is made, the larger the credit against the surcharge.

Belgium has implemented the OECD Pillar Two framework through the transposition of the EU Minimum Tax Directive into Belgian law by the Law of 19 December 2023. The regime introduces a 15% minimum effective tax rate for large multinational and domestic groups meeting the relevant EUR 750 million consolidated revenue threshold.

The Belgian legislation includes the three core mechanisms of the Pillar Two framework:

• the Qualified Domestic Minimum Top-up Tax (QDMTT), which ensures that profits generated in Belgium are taxed at a minimum effective rate of 15%;
• the Income Inclusion Rule (IIR), which allows the parent entity to top up taxation on low-taxed subsidiaries; and
• the Undertaxed Profits Rule (UTPR), which acts as a backstop where the IIR is not applied.

The QDMTT and IIR apply to financial years starting on or after 31 December 2023, whereas the UTPR applies to financial years starting on or after 31 December 2024.

From a compliance perspective, the Belgian Pillar Two regime introduces several reporting obligations. These include:

• a Pillar Two notification requirement for entities falling within the scope of the regime;
• a QDMTT return and related top-up tax reporting obligations; and
• a GloBE Information Return (GIR), generally due within 15 months after the end of the reporting year, or 18 months during the transition year.

In practice, these obligations require companies to collect and process a significant amount of financial and tax data across multiple jurisdictions. This often requires extensive coordination between tax, finance and IT departments, as well as the implementation of new internal reporting systems and data collection procedures.

Belgium has also implemented safe harbour rules in line with OECD guidance, aimed at simplifying compliance in certain situations, particularly during the initial years of application. However, these simplifications remain subject to strict technical conditions and do not eliminate the need for detailed analysis.

The Belgian regime furthermore includes specific compliance formalities, including notification requirements, filing obligations and advance payment obligations relating to Belgian top-up taxes. The Belgian tax authorities have also issued administrative guidance, including Circular Letter 2025/C/68, providing practical clarification regarding the application of the regime, calculation methods, safe harbour rules and compliance obligations.

In parallel, Belgium has strengthened its anti-base erosion framework under the EU Anti-Tax Avoidance Directive (ATAD). In this context, Belgium applies controlled foreign company (CFC) rules, which may result in the taxation of certain undistributed profits of low-taxed foreign entities at the level of the Belgian parent company. The Belgian CFC regime was revised by the Program Law of 22 December 2023 and now follows a stricter approach focusing more explicitly on passive income and insufficiently taxed structures.

A company is generally considered Belgian tax resident if its registered office or centre of management is located in Belgium. In practice, the place of effective management is determined based on factual circumstances, such as where strategic decisions are taken and where the company is effectively managed.

Belgian resident companies are generally taxed on their worldwide income, whereas non-resident companies are taxed only on Belgian-source income, typically to the extent attributable to a Belgian permanent establishment or another Belgian taxable (economic or geographic) nexus.

The taxable base is determined on an accrual basis and broadly follows the company’s Belgian GAAP accounting result, subject to specific tax adjustments, exemptions and deductions. In principle, all company income forms part of the taxable base, including distributed profits.

Capital gains are generally taxable unless a specific exemption applies.

Capital gains on shares may benefit from the participation exemption regime provided that:

• the participation amounts to at least 10% or has an acquisition value of at least EUR 2.5 million;
• the shares are held for at least one year; and
• the subsidiary meets the subject-to-tax requirement.

Foreign-source income is generally included in the taxable base, subject to relief under tax treaties, EU law or domestic exemptions. Key relief mechanisms include treaty exemptions for foreign permanent establishments and foreign real estate income, the participation exemption for qualifying dividends and, in certain situations, foreign tax credits for interest and royalties.

Belgium also applies CFC rules. Under these rules, certain undistributed profits of low-taxed foreign entities or establishments may become taxable in Belgium, particularly where insufficient economic substance exists.

Belgian tax law furthermore contains a specific provision targeting certain service payments made to non-residents. Under strict conditions, professional income derived from services rendered to a Belgian business may become taxable in Belgium, especially where links of interdependence exist between the parties.

Belgium does not allow tax loss carry-back. Tax losses may in principle be carried forward without time limitation, subject to the basket-rule limitation and certain anti-abuse restrictions, including in tax-driven changes of control situations.

Belgium also applies a limited form of group relief, allowing current-year losses to be transferred between qualifying Belgian group companies or Belgian permanent establishments. This does not constitute full fiscal consolidation, as each entity remains subject to separate tax filings.

In practice, cross-border structures require careful analysis and documentation, particularly regarding permanent establishments, treaty protection, withholding taxes and the interaction between Belgian domestic law, EU law and double tax treaties.

The main indirect tax in Belgium is Value Added Tax (VAT). The standard VAT rate is 21%, while reduced rates of 12% and 6% apply to specific categories of goods and services, including certain food products, pharmaceuticals, energy supplies, hospitality services and renovation works for older residential buildings.

VAT generally applies to:

• the supply of goods and services in Belgium;
• intra-EU acquisitions of goods; and
• imports of goods from outside the European Union.

VAT is levied throughout the supply chain, with businesses collecting and remitting the tax to the authorities, while the final economic burden is borne by the end consumer.

Businesses carrying out taxable activities in Belgium are generally required to register for VAT purposes and comply with various reporting obligations, including periodic VAT returns, intra-Community listings and, where applicable, Intrastat declarations. VAT returns are filed electronically and are subject to strict filing and payment deadlines. Non-compliance may result in administrative penalties, interest and, in more serious cases, assessments by the Special Tax Inspectorate (BBI).

Belgium also applies several simplification mechanisms, including the One Stop Shop (OSS) regime for certain cross-border business-to-consumer (B2C) transactions within the EU, aimed at reducing compliance burdens for internationally active businesses.

In addition to VAT, Belgium levies other indirect taxes, including registration duties (particularly on real estate transfers), customs and excise duties on products such as alcohol, tobacco and energy products, insurance premium taxes and stock exchange taxes on certain securities transactions. Belgium furthermore applies several regional and sector-specific indirect taxes, including vehicle registration taxes and environmental levies.

Belgium levies withholding taxes primarily on dividends, interest and royalties. The standard domestic withholding tax rate is generally 30%, although reduced rates or exemptions may apply depending on the type of income, status of the beneficiary, domestic exemptions, EU directives or applicable double tax treaties.

Since 2026, Belgium has furthermore introduced a new capital gains tax regime on financial assets, applying in principle a flat-rate taxation of 10% on certain realised capital gains (for private individuals and legal entities, not companies). In practice, this system also relies partly on taxation at source mechanisms through Belgian brokers and financial intermediaries.

In a domestic context, withholding tax on investment income is generally liberatory in nature for Belgian resident individuals, meaning that they are in many cases no longer required to report the income in their personal income tax return once the withholding tax has been correctly withheld at source. This principle does not apply to companies, as corporate taxpayers must in principle still include the relevant income and the corresponding withholding tax credits in their corporate income tax return.

The obligation to withhold and remit the tax to the authorities generally rests with the paying intermediary, such as the bank, broker, paying agent or employer. For example, Belgian companies distributing dividends are themselves responsible for withholding the applicable tax and remitting it to the Belgian tax authorities.

In cross-border situations, treaty benefits and EU directives — such as the Parent-Subsidiary Directive and the Interest and Royalties Directive — may provide for reduced withholding tax rates or exemptions, subject to conditions regarding beneficial ownership, minimum holding periods and sufficient substance.

Belgium also applies several other forms of taxation at source. Payroll withholding tax is levied on employee salaries and director remuneration and generally operates as an advance payment towards the final personal income tax liability.

Other withholding-type taxes include the annual real estate property tax and certain withholding obligations applicable in international non-resident situations, although the latter are mainly relevant in cross-border contexts (e.g. withholding tax on professional income paid to non-resident artists and sportsmen).

Belgium has a General Anti-Abuse Rule (GAAR) which allows the tax authorities to disregard legal acts or arrangements where a taxpayer seeks to obtain a tax advantage contrary to the purpose of the law. In practice, the tax authorities must first demonstrate the existence of abuse, after which the taxpayer may rebut this by demonstrating sufficient non-tax or genuine economic motives.

The Belgian GAAR plays an important role in restructurings, dividend planning, financing arrangements and cross-border transactions. In recent years, Belgian case law — including decisions of the Belgian Supreme Court — has confirmed that the purpose of a tax provision may be derived not only from the parliamentary works, but also from the wording, context and overall objective of the legislation itself. This has strengthened the practical position of the tax authorities in GAAR disputes.

In addition to the general anti-abuse provision, Belgian tax law also contains numerous specific anti-abuse rules applicable to particular areas of taxation. These include transfer pricing rules, interest limitation rules, CFC legislation, withholding tax anti-abuse provisions and specific anti-avoidance measures in inheritance and registration tax matters. In practice, these specific provisions are often applied alongside the broader GAAR framework.

Particularly in international situations, the Belgian tax authorities increasingly scrutinise intra-group financing structures, intermediary holding companies and low-taxed foreign entities. The interaction between Belgian domestic anti-abuse rules, EU anti-abuse principles and OECD substance standards has therefore become a source of tax controversy in recent years.

Belgium has also implemented various transparency and reporting obligations, including DAC6 reporting, transfer pricing documentation requirements and reporting obligations relating to low-tax jurisdictions. In practice, failure to comply with these obligations may increase audit risk and trigger administrative penalties.

Tax controversies in Belgium most frequently arise in areas involving anti-abuse concepts, deductibility discussions or cross-border situations. In practice, there is also a noticeable distinction between disputes involving individuals and those involving companies or international groups. At regional level, disputes regarding inheritance tax and gift tax are also particularly common, especially in relation to valuations, simulated transactions and abuse-of-law discussions.

For individuals, common disputes typically concern personal income tax matters, such as the deductibility of professional expenses, undeclared income, the valuation of benefits in kind, foreign income reporting or discussions regarding tax residency. Disputes also frequently arise following tax audits and reassessments issued by the tax authorities, often combined with administrative penalties or tax increases.

For companies, the most common controversies generally involve transfer pricing adjustments, the deductibility of expenses, intra-group financing, hidden profit distributions, withholding tax issues and the application of anti-abuse provisions. In recent years, the Belgian tax authorities have increasingly focused on international structures, foreign entities and substance-based analysis, particularly in relation to low-tax jurisdictions, hybrid entities and cross-border reorganisations.

VAT disputes also represent a substantial part of Belgian tax litigation. These cases often concern the deductibility of input VAT, VAT qualification issues, filing irregularities or reassessments imposed following audits. Compared to income tax disputes, VAT cases are often more technical and procedural in nature.

Cross-border disputes regularly involve the existence of a Belgian permanent establishment, treaty interpretation, withholding tax relief or beneficial ownership discussions. In practice, disputes often arise where foreign companies perform activities in Belgium without formally recognising a taxable presence.

Another recurring source of controversy concerns the interpretation of tax legislation itself. Many disputes ultimately stem from differing views between the taxpayer and the tax authorities regarding how a particular provision should apply to a specific factual situation.

Recent legislative reforms are also likely to generate additional controversy. One notable example is the new shareholder-level exit tax introduced in 2025 in relation to certain migrations or reorganisations of companies, which is expected to trigger disputes regarding treaty compatibility and cross-border restructurings. In addition, Belgium introduced a new capital gains tax regime in 2026 on financial assets, which is also likely to become an important source of future tax disputes, particularly given the many open interpretational and practical questions surrounding its application.

Belgian tax controversies are primarily governed by the Belgian Income Tax Code of 1992, administrative practice and case law. Depending on the type of tax involved, VAT legislation or other indirect tax provisions may also apply.

For income tax, the administrative appeal procedure is a mandatory preliminary step before a taxpayer can bring a direct tax dispute before the courts. The appeal must generally be filed within 12 months (plus three working days) following the date on which the tax assessment was sent to the taxpayer. If the deadline is missed, the assessment in principle becomes final, although in limited situations taxpayers may still request ex officio relief within a five-year period.

During the administrative phase, taxpayers may request access to their tax file, submit additional supporting documentation and request a meeting with the tax authorities. In practice, informal discussions with the administration often play an important role in narrowing the dispute before litigation is considered. The tax authorities will generally issue their administrative decision within approximately six months, although more complex cases frequently take longer.

If no agreement is reached, the taxpayer may initiate judicial proceedings within three months after that before the competent Court of First Instance. Decisions may subsequently be appealed before the Court of Appeal and ultimately before the Belgian Supreme Court, which only reviews legal and procedural issues rather than the factual merits of the case. Constitutional issues may also arise, particularly where a taxpayer alleges a violation of equality or non-discrimination principles. In such cases, preliminary questions may be referred to the Belgian Constitutional Court during ongoing tax litigation.

For VAT disputes, the procedure is generally somewhat less formalistic. In practice, taxpayers enjoy more procedural flexibility and are not always required to await a formal administrative decision before initiating judicial proceedings. As a result, VAT disputes often move more rapidly towards court proceedings compared to direct tax controversies.

Tax litigation in Belgium is generally document-driven and formalistic, with procedural deadlines and evidentiary rules playing a decisive role in practice. Court proceedings are also known to be lengthy, partly due to the Belgian courts being overloaded with work, combined with structural underfunding.

Considering Belgium’s three official languages — Dutch, French and German — strict language rules also apply in tax litigation. The competent court and the language of the proceedings are generally determined based on the taxpayer’s registered seat, domicile or the territorial competence of the tax administration involved. Incorrect language use may lead to procedural complications or even nullity issues.

Yes, although the range of alternative dispute resolution methods is rather limited.

A first important instrument to avoid tax controversy in Belgium is the advance tax ruling system. Advance tax rulings are primarily preventive in nature and are widely used in practice to obtain upfront certainty before implementing complex transactions or structures. Belgium has a particularly active ruling practice, and pre-filing contacts with the ruling authorities are common. Taxpayers frequently seek confirmation regarding restructurings, financing arrangements, participation exemption issues, cross-border structures and other more complex tax matters. In practice, the advance ruling system plays an important role in reducing uncertainty and avoiding disputes before they arise.

In addition to the traditional administrative appeal and tax court procedures, Belgium also provides for a fiscal mediation procedure. This mechanism allows taxpayers to request the intervention of the Fiscal Mediation Service during an ongoing dispute with the tax authorities. The mediation service acts as an intermediary between the taxpayer and the administration in an attempt to facilitate a pragmatic solution or improve communication between the parties. While the mediation service does not have decision-making powers and cannot overrule the tax authorities, it may help resolve procedural deadlocks or clarify misunderstandings before litigation escalates further.

In the international context, treaty-based procedures are particularly important. Once the ordinary domestic administrative procedure has been exhausted, taxpayers may seek relief through the Mutual Agreement Procedure (MAP) under the applicable double tax treaty. Through this mechanism, the competent authorities of the relevant states attempt to resolve situations of double taxation or taxation not in accordance with the treaty. In certain cases, EU dispute resolution mechanisms may also apply for certain cross-border tax disputes within the European Union.

That said, despite the increasing focus on alternative dispute resolution and cooperative compliance, tax court proceedings remain the core of tax controversy practice in Belgium. While there is a general trend to avoid litigation due to the length, cost and complexity of court procedures, judicial proceedings ultimately remain the final and most important mechanism for resolving substantive tax disputes where no agreement can be reached with the tax authorities.