Federal coalition agreement: the 4-course meal of 2025, with a pinch of tax

With the federal government having finally set up its new kitchen, its chef is now busy crafting a new menu. While the full dinner is still being prepared, we can already serve up some key fiscal highlights.

Adjustment tot the liquidation reserve

Small companies may set aside all or part of their after-tax accounting profit in a separate liability account as a liquidation reserve. Additionally, a one-time levy of 10% must be paid upon the creation of this reserve. The main advantage of this regime is that the reserved funds can later be distributed at a preferential tax rate  (compared to the standard 30% withholding tax rate).

The federal coalition agreement now announces changes regarding the waiting period and the withholding tax rate on such distributions:

The managerial remuneration

Companies can currently benefit from a reduced corporate tax rate of 20% on the first tranche of 100 000 EUR of taxable profits, provided they meet certain conditions. One of these conditions concerns the allocation of a minimum non-indexable gross annual remuneration of 45 000 EUR to at least one manager. This threshold will  now be increased to 50 000 EUR and will become subject to indexation.

Furthermore, up to 20% of this gross remuneration may consist of benefits in kind, such as the free provision of a home.

The solidarity contribution / capital gains tax

The most controversial and discussed announcement is the introduction of a capital gains tax on financial assets. A 10% solidarity contribution on future realized capital gains on such assets will be be introduced for individuals. For corporate owners, there will be no change. The contribution applies to capital gains accrued as of the measure’s entry into force. Historical capital gains will thus remain exempt. This raises questions, particularly in the area of valuation methodology.

In this context, the federal government provides a 10 000 EUR foot exemption for small investors, which is indexed annually.

For taxpayers with a participation of at least 20% in a company, a graduated rate applies. There is an exemption on the first 1 000 000 EUR, after which the rate gradually increases:

The DTI regime

The exemption regime for definitively taxed income (DTI regime) provides for a tax-free distribution of profits from subsidiaries to parent companies, provided that the profits have already been taxed at source. To qualify for this regime, the parent company must own at least 10% of the subsidiary’s shares or have a holding of at least 2 500 000 EUR.

The coalition agreement raises the threshold to 4 000 000 EUR, resulting in fewer distributions being eligible for the DTI scheme. It also introduces the condition that the participation must constitute a financial fixed asset and not a mere investment.

These restrictions will only apply to and between large companies.

Conclusion

The federal coalition agreement introduces both new tax recipes and familiar classics in a modernized form. However, it is important to emphasize that we are still referring to a political agreement and not final legal texts. The government aims to have a draft bill on the table by the end of March or early April 2025 so that parliament can proceed to a vote before the summer recess.

Sesil Velieva and Evert Moonen
De Langhe Attorneys