Belgium makes tax breaks for companies more environmentally friendly

The Belgian government reached an agreement on Friday on the greening of investment tax credits for companies, De Tijd and De Standaard reported on Tuesday. "Companies that invest in their future and thus secure jobs and growth deserve our support," said Finance minister Vincent Van Peteghem (CD&V).

Investment tax credits allow companies to deduct part of their investment costs from their profits and thus pay less tax, regardless of regular depreciation. To encourage companies to become more sustainable, the Belgian government will update the lists of green investments eligible for the deduction every three years. Existing rules will also be adapted.

Basic deduction

First, the basic deduction for sole traders and SMEs will be increased from 8 to 10 per cent. This applies, for example, to investments in buildings, machinery or transport. The basic deduction can be increased by another 10 per cent for digital investments in invoicing, customer relationship management, e-commerce and cybersecurity.

Second, a new thematic deduction for green investments will be introduced at 40 per cent for sole traders and SMEs and 30 per cent for larger companies. Four types of investment will qualify: efficient energy use and renewable energy; zero-emission transport, such as electric delivery and freight vehicles; other green investments, such as more efficient water systems; and green digital investments, such as software that monitors energy consumption.

Technology deduction

Third, the existing deduction for research and development and patents will be renamed the technology deduction. They will now be fixed percentages rather than indexed to inflation. The one-off investment deduction for patents and environmentally friendly investments in research and development will have a rate of 13.5 per cent. If the investment deduction for environmentally friendly investments in research and development is spread over several years, the rate is 20.5 per cent.

"The system will be much simpler," says Danny Van Assche, CEO of Unizo, which represents self-employed people in Flanders, calling it a good compromise between legal certainty and innovation. The new regulation will cost the budget an additional 100 million euros and will come into force on 1 January 2025.



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