High quality and availability of RD Ranking Availability
Высокотехнологические исследовательские центры : High quality and availability of R&D Ranking Availability of latest technology Capacity for innovation Availability of scientists and engineers 14 Quality of scientific research institutions 5 Belgium 8 Netherlands 6 10 8 17 Germany 20 3 10 41 France 11 8 15 11 UK 7 13 3 14 (The Global Competitiveness Report World Economic Forum 2012) 13
Уровень качества (Source: f. Di Intelligence, from the Financial Times Ltd)
ПОСЕТИТЕ НАШ ВЕБ-САЙТ! www. investinflanders. be Thomas Castrel Заместитель Директора Департамент Внутренних Инвестиций Flanders Investment & Trade Tel: +32 2 504 87 77 | Fax: +32 2 504 88 70 Gaucheretstraat 90 | BE-1030 Brussels-Belgium
Invest in Belgium Tax aspects of doing Business in Belgium Marc De Mil – Federal Public Service Finance
Belgium Main Tax Incentives Corporation • Notional Interest Deduction (NID) • Numerous fiscal treaties to avoid double taxation • Innovative measures to support R&D § Patent income deduction § Investment deduction for R&D related investments and patents § Income tax reduction for researchers § Ruling practice : legal certainty for investors Shareholder • No taxation on capital gain Management • Reduction of employment costs for expatriates, with simple proceedings
23 Belgium Effective (Average) Corporate Tax Rate (ECTR) 2012* *(based on asset and source of finance) Especially in Belgium, the ECTR is considerably below statutory tax rates (-8, 1%) Sources : Taxation trends in the EU 2012 edition, Eurostat Tax Rates of OECD Countries, AEI International Tax Database, OECD Tax Database and World Bank
24 Belgium Effective (Average) Corporate Tax Rate (ECTR) 2012* UK Japan France USA Netherlands Germany Italy Belgium *(based on asset and source of finance) Especially in Belgium, the ECTR is considerably below statutory tax rates (-8, 1%) Sources : Taxation trends in the EU 2012 edition, Eurostat Tax Rates of OECD Countries, AEI International Tax Database, OECD Tax Database and World Bank
Notional Interest Deduction What is it? § A notional interest calculated and deducted yearly from the taxable basis § Used to off-set operational or financial income (thus lowering effective tax rate) Who? Companies subjected to § Corporate tax § Non-residents / Corporate Tax
Notional Interest Deduction How does it work ? Annual Tax Deduction = EQUITY X RATE
Notional Interest Deduction EXAMPLE 1: (Return on Equity: 4%) P&L Account Profit before tax N. I. D. (3%) Taxable Corporate Tax (33, 99 %) Effective Tax Rate Assets Group Financing 100. 000 Before N. I. D. 4. 000 / 4. 000 1359 33, 99 % Liabilities Share Capital 100. 000 After N. I. D 4. 000 - 3. 000 1. 000 340 8, 5%
Notional Interest Deduction EXAMPLE 2: Net Result (Return on Equity) ≤ 3% Effective Tax Rate 0% 4 % (Previous slide) 8, 5 % 5% 13, 5 % 6% 17 %
Notional Interest Deduction Qualifying » equity ? § Equity = total equity as defined under Belgian GAAP (includes retained earnings) § in the opening balance sheet of the taxable period § “adjusted” to avoid double use and abuse. Interest Rate ? Fixed yearly for 2012 (Tax Year 2013) : 3 % § + 0, 5 % 3, 5 % (SME)
Extensive tax treaty network
Dividend withholding tax exemption Parent company – Ukrain (treaty partner) • No WHT • 10% shareholding • No LOB • 12 months Belgian subsidiary
Unique tax features for R & D People üWage withholding tax exemption üTax allowance for additional employee üInnovation premium üExpatriate tax regime Belgian R & D Centre üInvestment deduction üR&D Tax credit üAccelerated depreciation üTax exoneration for regional grants üDeduction of gifts üFavourable transfer pricing rulings Activities Investments üPatent Income Deduction Patents
Patent Income Deduction What is it ? Deduction of 80% of the income from patents from the taxable basis, resulting in an effective tax rate of maximum 6. 8% on this income. Who can benefit ? Belgian companies and Belgian establishments of foreign companies.
Patent Income Deduction Patents concerned. Applies to patents or supplementary protection certificates: self-developed by a Belgian company or branch in R&D centers (*) in Belgium or abroad; acquired by a Belgian company or branch provided they are being further developed in R&D centers (*) in Belgium or abroad; licensed to the Belgian company or branch provided they further develop in R&D centers (*) in Belgium or abroad. (*) R&D center must qualify as branch of activity.
Patent Income Deduction Calculation of the deduction. for patents that are licensed: 80% of the patent income received, to the extend the income is at arm’s length; for patents that are used in the production process: deemed deduction of 80% of the at arm’s length royalty that would have been received had the patents been licensed to unrelated third parties;
Investment deduction for investments in R&D centres and patents Investment deduction in R&D centres For assets which aim to promote R&D of new products and advanced technologies which are environment-friendly In one go: 15. 5% of the investment value Spread deduction: 22. 5% of the annual depreciation Investment deduction in patents In one go: 15. 5% of the investment value No spread deduction Ø Carry forward in case of insufficient profits, for an unlimited period.
Partial exemption salary withholding tax for researchers Principle: the withholding tax is normally retained on the remuneration paid to the researchers, but the employers are exempt from paying a part to the Belgian Treasury (more financial resources for the research activities) Researchers: Masters degree or equivalent Exemption: 75% of the withholding tax for all researchers
Expatriate status § For foreign executives and managers temporarily detached in Belgium : § Tax free expatriate allowance (cost of living, cost of housing, tax equalization) § operational entity: 11. 250 € / an § HQ or R&D centre: 29. 750 € / an § Reimbursement of non-repetitive expenses (installation costs, moving expenses, school fees) § unlimited amount tax free § « Travel exclusion » : § workdays performed outside Belgium: tax free in Belgium
Expatriate status § For employers § No tax, no social security contributions on expatriate allowances and reimbursement of expenses § Deductible from corporate income
Tax Ruling Characteristics of the Belgian ruling § § § § Ruling on all kind of taxes (Corporate, Personal, VAT, . . ) Case-by-case ruling in a new open culture Legal certainty for investors In accordance with international rules Open to potential AND existing investors Legally binding for a 5 year renewable period Economic “substance” required
Contact Federal Public Service Finance Fiscal Department for Foreign Investments Rue de la Loi, 24 (Parliament Corner) Federal Public Service Finance 1000 Brussels - BELGIUM Fiscal Department for Foreign Investments Rue de la Loi, 24 (Parliament Corner) Marc DE MIL 1000 Brussels - BELGIUM Email: marc. e. demil@minfin. fed. be Marc DE MIL Tel. : +32 257 870 19 Cell : +32 4707 870 19 Email: marc. e. demil@minfin. fed. be Tel. : +32 257 870 19 Cell : +32 4707 870 19
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