Programme Law Of 18 July 2025 – tax measures

With the publication of the Programme Law of 18 July 2025 in the Belgian Official Gazette of 29 July 2025, the federal government is taking another step in the implementation of its tax reform agenda. The law introduces a wide range of measures, covering areas from movable income taxation and corporate tax to VAT, registration duties and the embarkation tax. It also includes provisions relating to overtime, (para)fiscal regularisation and a new anti-abuse rule concerning the securities tax (TSA). Some of the planned reforms enter into force immediately, while others will be phased in, with a view to achieving a more structural reform of the tax landscape. What follows is an overview of the tax measures and their concrete entry into force.

PERSONAL INCOME TAX

MOBILE INCOME TAX & INVESTMENTS

LIQUIDATION RESERVES & VVPRbis (art. 32 to 34 Programme Law)

• Liquidation reserve established by 31 December 2025
  • 20% upon distribution before the 3-year holding period;
  • 6.5% (instead of 20%) upon distribution after the 3-year holding period (but before 5 years);
  • remains 5% upon distribution after the 5-year period.
• Liquidation reserves established as from 2026:
  • general rate of 30% upon distribution before the 3-year period (what about the already paid 10% (?));
  • 6.5% upon distribution after the 3-year period.
    Distributions made at the earliest upon liquidation remain tax-exempt.
• Deadline for 20% rate under VVPRbis regime:
  The application of the reduced withholding tax rate of 20% under VVPRbis is limited to capital contributions made before 31 December 2025.

Entry into force: dividends granted or made payable as from 29 July 2025.

CARRIED INTEREST (art. 6 to 22 Programme Law)

New specific tax regime:

• The "carried interest" paid to a natural person (regardless of the payment structure) will be taxed as movable income at a rate of 25% (for private equity fund managers).
  Entry into force: income granted or made payable as from 29 July 2025.

Scope of application:

• ‘Carried interest’ (art. 17, § 1, 6°, CIT92) = return above the ‘normal return’ (for a passive investor) obtained by a ‘carried interest beneficiary’ from a ‘carried interest vehicle’.
• New definitions: “carried interest vehicle” (AIFM) + “carried interest beneficiary”.
• Income relating to shares acquired through share options (under the Share Options Act – regardless of grant date) falls outside the scope of the ‘carried interest’ regime.

Limitation on establishing a liquidation reserve when a company holds carried interest shares / units (including the year of disposal of these shares / units) “insofar as they are thus indirectly held by a carried interest beneficiary" – entry into force as from tax year 2026.

EMPLOYMENT TAXATION

EXTENSION OF FAVOURABLE REGIMES FOR OVERTIME (art. 65 to 69 Programme Law)

Extension until 31 December 2025 of the following tax incentives relating to overtime:

• A maximum of 120 net voluntary overtime hours (“recovery overtime”) will be allowed;
• A tax benefit may be obtained for up to 180 overtime hours that are subject to the statutory overtime premium.

Entry into force: 1 July 2025.
 

CORPORATE INCOME TAX

DIVIDEND RECEIVED DEDUCTION (DRD) (art. 35 to 37 Programme Law)

• €2.5 million threshold maintained
  The alternative minimum participation condition remains at €2.5 million (no increase to €4 million).
• New qualitative criterion
  A new condition is added: participations of €2.5 million or more between large companies (acquirer is not ‘small’ under the relevant legislation) must now qualify as a fixed financial asset, implying a durable investment relationship.
  This may exclude short-term or highly liquid portfolio investments (e.g., listed shares) from the DRD.
• Deferred structural reform
  Contrary to the coalition agreement’s intention to replace the deduction system with an exemption, the deduction regime will temporarily remain. A switch to an exemption system is postponed.
• Impact on withholding tax
  The new qualitative condition also applies to withholding tax exemption on outbound dividends to foreign group entities (see Tate & Lyle case law), potentially limiting cross-border benefits.

Entry into force: AY 2026, with an anti-abuse provision for financial year-end changes implemented from 3 February 2025.

For the modified minimum participation requirement (re: withholding tax): as of 29 July 2025.

EXIT TAX (art. 23 to 31 Programme Law)

• Extension to shareholders:
  The concept of a “fictitious liquidation” will also apply to shareholders. Shareholders will be taxed (liquidation dividend) upon company migration or cross-border asset transfers.
• Tax credit mechanism:
  A mechanism is introduced to avoid double taxation — tax on the fictitious dividend may be credited against future actual distributions.
• Reporting obligation:
  Companies must issue individual tax slips to shareholders. Failure to do so results in an additional assessment charged to the company.
• Deferral option for EEA transfers:
  Shareholders can opt to defer taxation where the transfer occurs within the European Economic Area, in line with fundamental EU freedoms.

Entry into force: for transactions occurring as from 29 July 2025.

VAT (VALUE-ADDED TAX)(art. 52 to 55 Programme Law)

• Renovation: 21% VAT will apply to fossil-fuel heating systems (gas, fuel oil, etc.), regardless of the age of the dwelling.
  • A transitional measure will be provided: “Those who already have a signed quotation dated before 1 July 2025 will still be able to benefit from the reduced rate, provided that the installation takes place before 1 July 2026.”
  • Special scheme for ‘the installation of hybrid systems invoiced at a global price’: 35% of the total price will be excluded from the reduced rate.
• VAT rate on coal will increase from 12% to 21%.
• The current 6% VAT scheme for demolition and reconstruction will be replaced with a broader regime that also applies to deliveries.
  For deliveries, however, the surface area cap will be tightened from 200 m² to 175 m².
  Additionally, the above-mentioned exclusion of delivery with installation of fossil-fuel heating systems also applies here.
• For reconstructed dwellings sold under the demolition and reconstruction scheme, the exclusion applies as from 1 July 2025 (unless quotations were signed before 1 July 2025), since the new rules apply to VAT that became chargeable from that date onwards (Circulars 2025/C/47 and 2025/C/48).

Entry into force: 29 July 2025

 

VARIOUS DUTIES & TAXES

FLIGHT TAX (art. 2 to 3 Programme Law)

A single rate (€5) for both intra-EU and extra-EU flights,
with the short-distance flight rate (€10) maintained.

Entry into force: 29 July 2025 (‘actual embarkation’)

The recently amended FAQ further shows that, by way of transition, the Administration accepts a longer declaration and payment period for registered airlines:

• no later than 31 October 2025 for each departure subject to the €5 rate taking place in July 2025;
• no later than 28 November 2025 for each departure subject to the €5 rate taking place in August 2025;
• no later than 31 December 2025 for each departure subject to the €5 rate taking place in September 2025.

TSA (Tax on Securities Accounts)(art. 63 to 64 Programme Law)

• A new anti-abuse provision will be introduced for “conversions” or “transfers”,
  where the presumption of abuse will be rebuttable.
• No abuse, for example, in the case of:
  • donation to children
  • division beyond the will of the acquirer (e.g. divorce)
• New obligation for Belgian intermediaries or liable representatives to report conversions or transfers to the tax authorities.

Entry into force: 29 July 2025

First reporting by Belgian intermediaries required no later than 31 December 2025.
 

REGISTRATION DUTY(art. 4 to 5 Programme Law)

• Increase of registration fee in the context of “procedures for obtaining nationality” from €150 to €1,000 (amount to be indexed further).

Entry into force: 29 July 2025
 

PROCEDURE

Protection for first offence in good faith (income taxes): (art. 38 to 39 Programme Law)

No tax increase shall be imposed for a first offence made in good faith (mandatory).
Good faith is presumed rebuttably (if bad faith or fraud is proven, tax authorities may impose an increase).

Exception: not applicable in case of ex officio assessments (burden of proof reversed).

• Repeat violations: A second offence within 4 years will automatically result in a standard fine.
  • In its circular, however, the tax authorities clarify that multiple infringements, established during one and the same audit (for example concerning several assessment years) and which are of the same nature and gravity, are to be regarded as a single infringement.
• Note: 'force majeure' (as provided in art. 226, scale A, of RD/ITC1992) is not considered an 'infringement / offence'.

Entry into force: tax assessments “established as from 29 July 2025”.

PERMANENT FISCAL REGULARISATION (art. 40 to 51 and art. 56 to 62 Programme Law)

• New permanent (para)fiscal regularisation scheme with increased rates:
  • 30% (previously 25%) for non-prescribed capital
  • 45% (previously 40%) for prescribed capital

Note: no advantageous rate for regularisations in cases of ‘good faith’.

In addition, a social regularisation will be possible. On the non-prescribed social security contributions, an additional social levy must be paid, amounting to 20% of these professional earnings. No social entitlements are acquired in return.

  Entry into force: 29 July 2025