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In the context of the federal budget agreement and following the earlier harmonisation of the tax regimes applicable to VVPRbis and the liquidation reserve introduced by the Programme Law of 18 July 2025 (shortening of waiting periods and alignment of tax rates), the governing parties have announced a forthcoming increase in the tax rate applicable to favourable profit distributions by small companies.
The ultimate objective is clear: to further align the different mechanisms allowing profits to be extracted from a company in a tax-efficient manner, while at the same time increasing overall tax revenues.
This Tax Insight provides a practical and forward-looking overview of the new rules, with particular attention to the increase to an effective tax rate of 18%, without losing sight of the key points of attention applicable to dividend distributions.
1. Liquidation reserve
1.1. Principle (unchanged)
Small companies may allocate (part of) their profit after corporate income tax to a liquidation reserve, subject to the payment of an anticipatory levy of 10%. This reserve may subsequently be distributed:
- as a dividend (going concern), or
- upon liquidation (without additional withholding tax).
1.2. New tax rates and waiting periods
The reform introduces a distinction depending on the date on which the liquidation reserve (LR) is created. The increase in the overall tax burden from 15% to 18% upon distribution after the three-year waiting period will only materialise at the earliest in 2029, given that historically created liquidation reserves (for the financial year linked to AY 2025 or erlier) will remain unaffected.
Optimisation therefore remains possible for liquidation reserves created in respect of financial years closing no later than 30 December 2025.
For these so-called “historical liquidation reserves”, a choice remains available between accessing cash sooner (after three years) or waiting to benefit from the lowest tax rate (after five years).
For liquidation reserves newly created for the financial year linked to AY 2026 or later, the 5% rate disappears entirely and a 9.8% withholding tax will apply upon distribution after three years (at the earliest from 2029). Moreover, for newcreated liquidation reserves, a distribution within three years is particularly disadvantageous from a tax perspective.
| Creation of the LR for the financial year linked to: | Distribution within 3 years | Distribution after more than 3 but within 5 years | Distribution after 5 years | Liquidation |
|---|---|---|---|---|
| AY 2025 or earlier | 20% | 6.5% | 5% | 0% |
| AY 2026 or later | 30% | 6 | 0% |
1.3. FIFO principle (key point of attention)
When liquidation reserves are distributed, the FIFO principle (first in, first out) applies mandatorily: the oldest reserve is deemed to be distributed first.
This significantly limits the scope for selective planning and may result in an intended tax rate being unattainable in practice.
1.4 Specific anti-abuse provision
In order to counter abuses whereby companies are liquidated and liquidation reserves are distributed at 0%, and the same or a similar activity is subsequently continued through another company (for example as a company director), a specific anti-abuse provision is introduced so that a distribution at 0% is no longer possible in such cases.
2. VVPRbis regime
2.1. Principle (unchanged)
The VVPRbis regime allows small companies to distribute dividends at a reduced withholding tax rate, provided that:
- the dividends relate to new registered shares;
- issued in exchange for a cash contribution as from July 2013; and
- a statutory waiting period is respected.
2.2. New regime as from 2026
A distinction is made depending on the date of the cash contribution. The intermediate 20% rate disappears entirely for new contributions made as from 2026.
| Date of cash contribution | Profit distribution – 2nd financial year after contribution | Profit distribution – 3rd and subsequent financial years |
|---|---|---|
| Before 1 January 2026 | 20% | 15% if granted before 1 January 2026 \ 18% if granted after 1 January 2026 (*) |
| From 1 January 2026 | 30% |
(*) The increase of the current VVPRbis rate from 15% to 18% will also apply to profits accumulated in the past. However, as the relevant legislation will not be published before 1 January 2026 and withholding tax cannot be levied retroactively, the decisive moment will be the date on which the implementing legislation is effectively published.
Optimisation therefore remains possible by carefully timing dividend distributions. Naturally, the statutory waiting period calculated from the date of the VVPRbis capital contribution must always be respected.
3. Corporate law constraints remain essential
Irrespective of the applicable tax regime, every distribution remains subject to the mandatory provisions of the Belgian Code of Companies and Associations (BCCA):
- Net assets test: the company’s equity may not become negative as a result of the distribution;
- Liquidity test: the management body must justify that the company will remain able to meet its debts for at least the next 12 months;
- Proper decision-making and documentation are crucial (management report, minutes).
In addition:
- the applicable waiting period (3 or 5 years) must always be strictly respected;
- failure to do so may lead to tax recharacterisation and directors’ liability.
4. Conclusion
The harmonisation of the VVPRbis regime and the liquidation reserve marks a new phase in the tax planning of small companies. The announced increase to an 18% tax rate makes it even more important to plan ahead, ensuring that tax choices are always aligned with the underlying corporate law reality.
A case-by-case analysis remains essential to determine which route – dividend distribution, liquidation reserve, or a combination thereof – is most appropriate in your specific situation.
