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Measures List
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Measure Name
Date when measure came into force
Reform of tax system relating to movable income 2012/01/01
reform of tax system relating to movable income 2013/01/01
Results 1 - 2 of 2.

Generic Tax Name Personal income tax
Tax name in the national language Impôts sur le revenu des personnes physiques ou des ménages / Belastingen op het inkomen van individuen of huishoudens
Tax name in English Taxes on individual or household income
Member State BE-Belgium
Tax in force since 1962/11/20
If abolished, date on which the tax ceases to apply
Business version date 2013/01/01
Version date 2013/03/15
This file was last updated on 2013/05/02

Type of tax
Direct taxes Personal income tax
Corporate income tax
Other

Indirect taxes VAT
Excise duty (EU harmonised)
Alcoholic beverages
Energy products and electricity
Manufactured tobacco
Other

Social security contribution Employers
Employees
Other
 
Legal base

Income Tax Code 1992, articles 3 to 178.

Law of 10.08.2001 (B.O.J.20.09.2001) with reform of personal income tax.

For further details on Personal income tax, please refer to the ‘Tax Survey' publication on the website of Federal Public Service Finance - Belgium available at:

http://docufin.fgov.be/intersalgen/thema/publicaties/memento/memento.htm

 
Who sets
The tax rate is set by




The tax base is set by




The reliefs are set by




Comments
 
Beneficiary





Comments

A substantial part of the revenue is earmarked and transmitted to the regional authorities (Regions and Communities).

Part of the revenues is transferred to special purpose vehicles (SPV) owing to securitisations of fiscal claims in 2005 and 2006.

Since 2009 : part of the withholding tax on earned income has been attributed to the alternative financing of social security.

 
Geographical Scope

Belgian territory.

 
Taxpayers
Domestic-source income of non-residents is Taxed
Not Taxed
Comments

Employment incomes of married couples are Taxed jointly
Taxed separately
Comments


Comments
  • Personal income tax is due by the inhabitants of the Kingdom, i.e. the persons whose domicile or whose seat of wealth is located in Belgium. Unless evidence to the contrary can be provided, all individuals listed in the National Register of Individuals are considered inhabitants of the Kingdom.
  • The municipality where the taxpayer is domiciled on January 1st of the tax year is the "tax municipality", which determines; the rate of the local surtax.
 
Tax object and basis of assessment
As general rule, taxable income under personal income tax includes























Comments
Benefits in kind : company cars

In case a company car is provided, the taxable benefit is assessed, as of 1 January 2012, on the basis of the list value, multiplied by a percentage related to the age of the car, and multiplied by a coefficient based on the carbon dioxide emission of the car. The formula in order to calculate the benefit in kind per year is the following (as of January 2012) :

6/7 * List value * Age percentage * CO2 coefficient

 
Owner-occupied immovable property

Since 1 January 2005, the cadastral income of the dwelling house is no more taxable, except if interest on a loan contracted before 1 January 2005, are still deducted.

 
Interests from deposits

The first 1,830 euro (for 2012 income) bracket of a yearly income from ordinary savings deposits is exempted from withholding tax on movable property if the beneficiary is a natural person.

Each spouse or legal cohabitant is entitled to the exemption. The double exemption also applies when only one savings account has been opened in the name of both spouses or legal cohabitants.

 

Capital gains on immovable property

Short-term capital gains on immovable property are taxable.

 

Capital gains on movable property

In principle not taxable but :

for capitalisation SICAVs/BEVEKS having invested at least 40% (25% as from December 2012) in interest-bearing debt securities (notably bonds, Treasury certificates) and having a European passport, capital gains obtained through the repurchase of own shares or through a partial or total distribution of the social assets of the SICAV/BEVEK, are liable to the 21% withholding tax (*) in respect of the part corresponding to, on the one hand, the interest received by the SICAV/BEVEK and, on the other hand, capital gains generated by the debt securities portfolio, after deduction of losses.

(*) As from 1 January 2013, the rate of the withholding tax is 25%.

 

Annuities from life insurance

Contracts concluded in the context of life insurances combine a tax advantage granted where premiums or contributions are paid, with a taxation upon withdrawal, i.e. where the capital or the annuity resulting from premiums capitalisation are paid out. Where life insurance is used for the reinstatement of a mortgage loan, withdrawals are taxed when the capital is fully rebuilt.

 

Occasional profits and proceeds

The profits and proceeds not connected with a professional activity are considered here. Are not concerned:

  • profits and proceeds obtained through the normal management of one’s private fortune,
  • gains from gambling and lotteries.

The total amount of occasional profits and proceeds is taxable after deduction of actual expenses.

 

Prizes ans subsidies are only taxable in as far as they exceed 3,660 euro.


Income considered Domestic income
Worldwide income (subject to double-tax relief)
Comments
 

Benefits in kind
The following benefits in kind are usually (partially or fully) taxable












Comments

They include loans made to the taxpayer bearing no or less interest than the basic interest rate determined by royal decree; use of company car; free occupation of a dwelling; free supply of heating and electricity.

Are not taxable some minor benefits like small gifts received on certain festive occasions and some commuting expenses paid by the employer (partial or total exemption).

The employer's financial intervention in meal, sport and culture vouchers is an exempted social advantage for the beneficiary, provided some conditions are met.

Eco-vouchers can also be tax exempted. These vouchers must be registered and granted in the framework of a collective agreement either sectoral or concluded within the company. If there is no collective agreement, a written individual agreement is required. The exemption is limited to 250 euro per year.



Comments

Tax unit: In Belgium, the tax unit is the adult, single or married, with children or other dependent persons. The legal cohabitants are assimilated to spouses.

 

Taxable income includes real-estate income, income from movable property, miscellaneous income and earned income. There are specific rules for the calculation of the net income for each of these categories.

Certain income was sometimes classified in different categories, such as copyright. A new tax regime applies now to copyright in order to specify the income category it belongs to.

 

1. Real estate income - General rules

The taxable amount of the real property is established separately for each spouse and the jointly owned property is apportioned on a fifty-fifty basis between the spouses. 

The taxable amount of real estate income is determined, according to the case, either on the basis of the cadastral income or on the basis of the rent. The net amount is then obtained by deducting interests on loans. The taxpayer's dwelling-house represents a special case: the taxable income thereof is granted a lump-sum relief and the advance tax payment on property pertaining to it, is partly creditable against the taxpayer's income tax liability.

 

2. Income from movable property

Movable income has been subject to a first reform applicable to income allocated as from 1 January 2012. The key elements of this reform were the giving up of the principle of the withholding tax on income from movable property as a final tax, the increase to 21% of the rate of the withholding tax on some interest and dividends, and the introduction of an additional levy of 4% on high movable income. The report of movable income became compulsory in principle and the debtor of the income had to communicate to a central contact point the information relating to interest and dividends allocated, e.g. the identification of the beneficiaries of the income.

Given the numerous problems related to the concrete application of this reform, the latest has been changed for income allocated in 2012 and given up for income allocated as from 1 January 2013: the principle of the withholding tax as a final tax has been restored, the additional levy of 4% has been abolished and the standard rate of the withholding tax has been increased to 25%.

The compulsory report of all movable income (and miscellaneous movable income) was planned initially in the 2013 tax return, except for movable income on which the additional levy of 4% would have already been withheld. Finally, an exemption from reporting has been maintained for interest and dividends on which a withholding tax on income from movable property has been levied and of which the cumulated amount does not exceed the threshold of 20,020 euro.

The amount of the chargeable movable income is established for each spouse separately. Income from jointly owned movable property is apportioned according to the property law.

 

3. Miscellaneous income

This category of income includes all income with the common characteristic of not being earned by performing a professional activity. Among categories of miscellaneous income, only current maintenance payments are included in the aggregated taxable income. All other miscellaneous income is taxed separately.

The amount of the taxable miscellaneous income is determined separately for each spouse. Any shared income is apportioned according to the property law.

 

4. Earned income

There are seven categories of professional earnings: employee salaries and wages; company director remunerations; profits from agricultural, industrial and commercial activities; proceeds from a liberal profession; profits and proceeds from former professional activities; replacement income; copyright.

The net income is determined in six stages:

  • deduction of social security contributions;
  • deduction of actual or lump sum expenses;
  • economic exemptions, notably tax measures in favour of investment and/or employment;
  • clearance of losses;
  • awarding of the “assistant spouse” quota and the marital quotient;
  • compensation of losses between spouses.

 

COMPUTATION OF THE TAX - General principles

Tax calculated according to the rate schedule

- allowance for dependents

- tax credits for expenses entitling to a tax incentive

- tax credit for replacement income

- tax credit for overtime pay

= reduced "base" tax

 

- tax credit for foreign income

= "principal" on ATI (aggregated taxable income)

 

+ tax on separately taxed income

= "principal"

 

- withholding taxes, tax credits, advance payments and other items to be set off

+ increases for no or insufficient advance payments

- bonus for advance payments

= « State » tax

 

+/- regional and municipal surtaxes

+ tax increases

= amount payable by or to the taxpayer (*)

 

(*) The amount eventually paid by or refunded to the taxpayer such as stated on the notice of assessment in respect of personal income tax, includes the tax, the balance of the special social security contribution and the balance obtained after applying the social exemption for the patient's contribution towards medical costs.

 

Since 2004 the tax has been fully computed per spouse.

 
Deductions, Allowances, Credits, Exemptions
Deduction for professional expenses.
The deduction is:





Comments
Actual expenses

The deductibility of professional expenses is a general principle which applies to all categories of income, including replacement income.

May be deducted, expenses the taxpayer has incurred or borne during the assessment period with a view to acquiring or preserving taxable income, provided he can establish the reality of such expenditures and the amount thereof.

 
Lump sum expenses

For certain categories of earned income, the law provides lump sum expenses which substitute actual expenses, unless the latter are higher.

The basis for calculation of the lump sum expenses is the gross taxable amount, less social security contributions and contributions assimilated thereto

For company managers, the lump sum deduction is set at 3% of the basis of calculation, with a maximum of 2,280 euro.

For remunerations paid to the assisting spouse, the lump sum deduction is set at 5% of the basis of calculation, with a maximum of 3,790 euro.

The same 3,790 euro limit applies to the lump sum expenses which may be awarded to employees and members of a liberal profession; these are calculated according to the scale below.

 

Basis of calculation

Professional expenses

in euro

lower limit

above the limit

                        0

    -

  5,490

                        0

28.7%

5,490

-

10,910

1,575.63

10%

10,910

-

18,150

2,117.63

5%

18,150

-

and more

2,479.63

3%

 

An additional deduction for lump sum expenses can be granted to employees when the distance between their home and their work is at least 75 km.

Distance between home and work

Additional fixed amount

 

 

 

 

75

125

175

 75 km

-

100 km

101 km

-

125 km

126 km

 

and more

   


Deductions from the tax base
The following items are usually (partially or fully) deductible

















Comments

Deduction for sole own dwelling (new system since 2005)

This deduction applies to loans raised on or after 1 January 2005 in order to acquire or maintain the taxpayer’s dwelling house. It must be the taxpayer’s sole dwelling house, which means that he cannot own other real estate by 31 December of the year in which the loan contract was entered into. The dwelling must be located in a Member State of the European Economic Area.

The deduction applies to interest on loans, capital repayments or life insurance premiums assigned to the amortisation of the mortgage loans and outstanding balance insurance premiums. The mortgage loan and the life insurance must have been taken out with a company having its seat in the European Economic Area.

Unlike loans raised before 1 January 2005, the deduction is not limited according to the total earned income. The maximum amount of the deduction, per taxpayer and per taxable period, is made up of the basic deduction and of increases:

  • for 2012 income, the basic deduction amounts to 2,200 euro. It remains acquired to the taxpayer whatever changes in his real estate holdings may be after 31 December of the year in which the loan contract was entered into.
  • this amount is increased during the first ten years of the loan contract. This increase amounts to 730 euro for 2012 income.

The basic amount is also increased where at least three children are dependent on the taxpayer on 1 January of the year following the year in which the loan contract was entered into. This increase amounts to 70 euro for 2012 income.

These increases no longer apply as from the taxable period during which the taxpayer becomes owner, occupier, emphyteutic lessee, superficiary owner or usufructuary of a second dwelling. The increases are then definitively lost.

The deduction applies to the total net income.

  

Deductible interest of loans

Interest on loans is eligible for relief when they relate to debts incurred for the sole purpose of acquiring or maintaining real property. In the case of an acquisition of property by inheritance, the interest accruing from a loan taken out with a view to paying inheritance tax is deductible to the extent that it relates to that property.

The deductible amount may not exceed the amount of the taxable income from real property. Where a taxpayer has incurred a loan before 1 January 2005 in order to buy a dwelling house, for example, and has no other income from immovable property, the deductible interest may not exceed the indexed cadastral income of that dwelling house.

Where newly built houses or important renovation works are involved, an additional deduction of mortgage interest may be granted (see below). This deduction remains applicable to loans contracted before 1 January 2005.

Where the loan entitles to the deduction for sole own dwelling, the deductible interest of loan are therein included and are not deducted from the real estate income.

 

Additional deduction of mortgage interests

The following rules only apply to interest on loan not taken into account for the deduction for sole own dwelling.

Interest on loans specifically raised for acquiring or maintaining real estate can be deducted from taxable real estate income up to the amount of the latter. The remainder is eligible for an additional deduction when the loan has been entered into in order to finance a new construction or important renovation works. This deduction applies to the total net income.


Life insurance premiums and mortgage capital repayments (before 1 January 2005 or not benefiting the deduction for sole own dwelling system)

The life insurance premiums in question concern other contracts than those taken into account for the deduction for sole own dwelling. Consequently, this applies to contracts entered into before 1 January 2005 and after this day but not taken into account for the deduction for sole own dwelling.

These premiums entitle to a tax credit, provided some conditions are met.

The deductible amount for each spouse is limited:

  • to 15% of the first bracket of 1,830 euro of earned income, and to 6% beyond;
  • with a maximum of 2,200 euro.

 

This limit applies to the combined life insurance premiums and mortgage capital repayments, minus the premiums and the repayments benefiting the deduction for sole own dwelling limited to the basic amount.

In principle, life insurance premiums entitle to the tax credit for long-term savings, which is granted at the 30% rate.

They can entitle to the increased tax credit for savings for house purchase, which is granted at the marginal rate, if some conditions are met. 

Consequently, the increased tax credit for savings for house purchase only applies to mortgage loans raised before 1 January 2005. As far as mortgage loans raised after this date are concerned, the deduction for sole own dwelling applies.


Allowances
The basic yearly allowance for an individual amounts to: 6,800.00  EUR/National currency
The basic yearly allowance for a couple amounts to: 6,800.00  EUR/National currency
Additional allowance for 1st child 1,440.00  EUR/National currency
Additional allowance for 2nd child 2,280.00  EUR/National currency
Additional allowance for 3rd child 4,610.00  EUR/National currency
Additional allowance for additional child 5,150.00  EUR/National currency
Additional allowance for old age dependents 2,890.00  EUR/National currency
Comments

The basic zero-rate band is 6,800 euro (both for a single person and for a spouse).

An additional amount of 270 euro is granted where the taxable income does not exceed 25,270 euro (for low- or middle-income taxpayers).

When the taxable income amounts to between 25,270 euro and 25,540 euro, a phasing out rule applies: the additional amount granted is progressively reduced proportionately to the difference between the taxable income and the 25,270 euro limit.

The basic exemption is increased by 1,440 euro where the taxpayer is disabled (and where the taxpayer’s spouse is disabled).

 

Exemptions for dependent children are allocated by priority to the spouse with the higher tax base.

An additional exemption of 540 euro is awarded for each dependent child who is less than three years old and for whom the tax credit for child care expenses has not been requested.

A disabled child counts for two (the child will be awarded the deduction according to his/her own rank plus the deduction granted to the child next in rank).

A child legally considered as stillborn is also considered as dependent for the year in which the death occurred. The additional exemption for each dependent child who is less than three years old, is automatically awarded for a stillborn child.

When exemptions for dependent children cannot be offset because of a too low income, they give rise to a refundable tax credit.

  

Exemptions for other dependent persons

  • ascendants and collaterals up to the second degree included, aged more than 65 : 2,890 euro
  • other dependent persons : 1,440 euro
  • disabled dependent persons, with the exception of children : 1,440 euro
  • single person with dependent children : 1,440 euro
  • spouse whose income does not exceed 2,990 euro:the year of marriage or the year of declaration of legal cohabitation, provided   the assessment is made per taxpayer : 1,440 euro

In case of joint custody, each single parent has right to the total exemption for single persons with dependent children.

 

Please note that these allowances for dependents are credited against the lower part of the personal income tax scale, contrary to other allowances which are credited against the upper part of the scale.


Credits
The basic yearly credit for an individual amounts to:
The basic yearly credit for a couple amounts to:
Additional credit for 1st child
Additional credit for 2nd child
Additional credit for 3rd child
Additional credit for additional child
Additional credit for old age dependents
There are tax credits for:

















Comments

For further details on those tax credits, please refer to the Tax survey publication on the website of Federal Public Service Finance - Belgium available at:

http://docufin.fgov.be/intersalgen/thema/publicaties/memento/memento.htm

Expenses entitling to a tax incentive

Rate and ceiling of tax credit

Long-term savings and investment in real property

“Housing-saving”

Marginal rate

Individual life insurance premiums and mortgage capital repayments, when not considered as “housing-saving”

30%-rate

Pension savings scheme

Personal premiums for group insurance contracts and pension funds

Sums paid for the acquisition of employers’ shares

Expenses for renovation in ‘zones of positive metropolitan policy’

15% of the expenses

Maximum 730 euro

Expenses for making dwellings secure against burglary and fire

30% of the expenses

Maximum 730 euro

Expenses for renovating low-rent dwelling houses

5% of the expenses for 9 years

Maximum 1,100 euro

Environment

Roof insulation (agreement signed as from 28 November 2011)

 30% of the expenses

Maximum 2,930 euro

Roof insulation (agreement signed before 28 November 2011)

 40% of the expenses

Maximum 2,930 euro

Other work aimed at energy-saving - transitional system

(agreement signed before 28 November 2011) (*)

40% of the expenses

Maximum 2,930 euro or 3,810 euro, as appropriate

“Green” loans

30% of the interest, after deduction of the interest rate subsidy

Electric vehicles:

            Cars

            Other vehicles

            Re-charging stations

 

30% of the expenses, max. 9,510 euro

15% of the expenses, max. 4,800/2,930 euro

40% of the expenses, max. 260 euro

Other expenses (tax credits granted at federal level)

Local Employment Agencies vouchers

and service vouchers

30%

Recognised Development Funds

 

5% of the expenses

Maximum 310 euro

(*) For expenses incurred in 2012 for work carried out under an agreement signed before 28 November 2011, a transitional system applies: the tax credit for work aimed at energy saving remains at the 40% rate, the possible carry-over (to the next three taxable periods) and the possible conversion into a refundable tax credit remain applicable.

As regards the expenses actually incurred and paid in 2012 for work carried out under an agreement signed before 28 November 2011 (transitional system), the measure relating to energy saving, as it existed previously, remains applicable, including the possible conversion into a refundable tax credit.

As regards the expenses relating to roof insulation paid in 2012 under an agreement signed as from 28 November 2011, the possible conversion into a refundable tax credit remains applicable.

 

 

Interest rebate

Natural persons signing a loan contract during the period from 1 January 2009 to 31 December 2011 incl. in order to pay expenses entitling to the tax credit for investments in energy-saving (the “green loans”), are granted an interest rebate of 1.5%. There is no automatic mechanism anymore linking the system of green loans and the above-mentioned tax credit. A green loan can indeed be raised for work which does not entitle or no longer entitles to the tax credit for energy saving because this tax credit has been limited in the meantime, notably as far as recently built dwellings (of less than five years) are concerned.

  

Tax credit “green loans”

“Green loans” also give right to a tax credit on the remaining interest not entitling to the interest rebate. This tax credit amounts to 30% of the interest which were actually paid during the taxable period, after deduction of the State intervention (i.e. after deduction of the ‘interest rebate').

 This tax credit applies to interest paid as from 1 January 2009.

 

(**) The tax credit for “service vouchers” can be changed into a refundable tax credit for taxpayers with income not exceeding 25,270 EUR.


Losses
Losses can be
Carried-forward for Indefinite
 Years
Carried-back for Indefinite
 Years
Transferred to spouse or partner
Comments

Losses incurred by a taxpayer in the course of previous taxable periods can be set off by him against profits from subsequent taxable periods with no time limit.

Compensation of losses between spouses :

Where the income of one of the spouses is negative, the loss can be deducted from the income of the other spouse, after taking into account all the deductions to which the latter is entitled.

The amount of the transferable losses cannot exceed the income of the spouse to whose income the deduction applies.


Exemptions
The following income is exempted from income tax























Comments

As a general rule, taxable income includes real-estate income, income from movable property, miscellaneous income and earned income.

Hereafter are developed however cases of exempted income.

A temporary exemption of personal income tax is given for premiums for innovation paid or granted from 1 January 2006 and is valid for the year 2012.

Commuting expenses have to be borne by the employee; they are deductible as professional expenses. Where these expenses are refunded by the employer, they are in principle a taxable income. The latter can partly be exempted however.  

The mileage allowance for cycling commuters is also exempted from tax up to 0.21 euro a kilometre.

The redundancy allowance which is payable by the National Employment Office and which dismissed workers can benefit, is tax exempted and exempted from social contributions (*). The exemption applies to allowances received as from 1 January 2012, provided the dismissal is notified by the employer on 1 January 2012 at the earliest.

(*) The redundancy allowance is granted to workers bound by an employment contract for workers, service vouchers or domestic workers whose contract is terminated provided the dismissal is notified as from 1 January 2012. It replaces the lump sum crisis premium.

 

As regards remunerations relating to activities performed in the framework of local employment agencies, 4.10 euro are exempted from tax for each hour worked.

 

The employer's financial intervention in meal, sport and culture vouchers is a social advantage exempted up to 100 euro a year for the beneficiary, provided some conditions are met.

 

Eco-vouchers can also be tax exempted. The exemption is limited to 250 euro per year.  

 

The system of non-recurrent advantages linked to results or "wage bonus" is tax exempted. The bonus is an additional allowance granted to each worker or group of workers in the company and linked to the results of the company (more specifically to previously defined goals, financial or not, which can objectively be ascertained). The tax exemption is granted for maximum 2,430 euro per worker. The portion of the bonus exceeding the upper limit is considered as wage.

 

Allocation granted to artists and considered at social level as lump sum settlement of expenses for performing “small-scale” artistic activities, are exempted to 2,361.52 euro per calendar year. This tax exemption follows the exemption system applied to social security contributions, and applies where those allocations are considered as well as professional income as miscellaneous income.

Although, as a general rule, replacement incomes are taxable, some social transfers are exempted. Are concerned:

  • the income support;
  • the legal family allowances;
  • maternity allowances and legal adoption premiums;
  • disability allowances chargeable to Treasury under current legislation;
  • war pensions;
  • allowances paid in respect of an incapacity for work or an occupational disease to a person losing no professional income. The allowances are automatically exempted where the degree of disablement does not exceed 20% or where the allowances are paid on top of a retirement pension. Where the degree of disablement exceeds 20%, the tax exemption is in principle limited to that percentage.


Comments

EXPENSES ENTITLING TO A TAX RELIEF

Certain expenses entitle to a tax relief. The deductions are grouped in four categories: those related to long-term savings and to real estate investments, the deductions relating to the environment, the other expenses entitling to a tax relief at federal level, regional tax incentives.

The tax advantage can take four forms:

  • a deduction from the total net income;
  • a tax credit at the marginal rate;
  • a tax credit at 30% or 45% rate (new as of 2012 income);
  • a refundable tax credit deducted from the “principal”, i.e. from the tax levied on the aggregate taxable income and on the separately taxable income, after taking into account exemptions and all the other tax credits.

 

TAX CREDITS TO BE OFFSET AGAINST THE "PRINCIPAL"

For further details on tax credits, please refer to the ‘Tax Survey' publication on the website of Federal Public Service Finance - Belgium available at:

http://docufin.fgov.be/intersalgen/thema/publicaties/memento/memento.htm  

TYPE OF TAX CREDIT

BENEFICIARY

Tax credit for increase of “own assets”

Taxpayers declaring profits or proceeds are entitled to a tax credit if they have increased the company's « own assets ».

Tax credit on low income from professionnal activities

The tax credit is computed on the net amount of the activity income, i.e. the amount of the earned income not being a replacement income or a separately taxed income, after deduction of the actual or lump sum professional expenses. Income from an occasional independent activity is not taken into account either.

Wage income is not taken into account except for statutory civil servants. Wage income not taken into account is entitled to a reduction in personal social security contributions and to the refundable tax credit for low-income workers.

Tax credit for low-income workers

This refundable tax credit is intended for low-income workers (and company managers subject to the employees' social security system) entitled to the employment bonus.

!t amounts to 5.7% of the reduction in personal security contributions which is actually granted on remunerations earned during the taxable period.

Service vouchers The portion of the tax credit for service vouchers which could not be offset, is refundable.
Dependent children

When exemptions for dependent children cannot be offset because of a too low income, they give rise to a refundable tax credit. The double exemption for disabled children and the additional exemption for children under three are to be taken into account. The refundable tax credit is computed for the spouse with the highest income and is limited to 420 euro per dependent child.

Energy-saving expenses

The part of the tax credit relating to some energy-saving expenses paid in 2012, which cannot effectively be granted to the taxpayer because of insufficient taxable income, is converted into a refundable tax credit.

As regards the expenses actually incurred and paid in 2012 for work carried out under an agreement signed before 28 November 2011 (transitional system), the measure relating to energy saving, as it existed previously, remains applicable, including the possible conversion into a refundable tax credit.

As regards the expenses relating to roof insulation paid in 2012 under an agreement signed as from 28 November 2011, the possible conversion into a refundable tax credit remains applicable.

 

 
Rate(s) Structure
The following personal income tax rates apply to aggregate annual income (allowances not included)
Bracket 1 From  0.00  EUR/Natcur
To  8,350.00  EUR/Natcur
Rate: 25.00 %
Bracket 2 From  8,350.00  EUR/Natcur
To  11,890.00  EUR/Natcur
Rate: 30.00 %
Bracket 3 From  11,890.00  EUR/Natcur
To  19,810.00  EUR/Natcur
Rate: 40.00 %
Bracket 4 From  19,810.00  EUR/Natcur
To  36,300.00  EUR/Natcur
Rate: 45.00 %
Bracket 5 From  36,300.00  EUR/Natcur
To   EUR/Natcur
Rate: 50.00 %
Comments

A global zero-rate band, varying according to the composition of the household, is tax exempted. This global band consists in the first place of the basic zero-rate band granted to each of the spouses. This band is then increased by the exempted income for dependents and for certain specific family situations.

Where the global zero-rate band of one of the spouses exceeds the income it is credited against, the balance can be transferred onto the other spouse’s income in order to be credited against his/her income.

These exemptions are calculated "from the bottom up".


Regional taxes
Regional taxes are (rate in capital region) A lump-sum amount: 0.0  EUR/Natcur
A percentage of income:
A tax surcharge:
Comments

The tax credit in the Flemish Region has been abolished as from tax year 2012 and no other Region has introduced regional surtaxes.


Local/municipal taxes
Local taxes are (rate in capital city) A lump-sum amount:
A percentage of income:
A tax surcharge: 7.0 %
Comments

Rate in capital city : 6.00% to the municipalities and 1.00% to the 'special administrative district' of Brussels (i.e. the Brussels Agglomeration which includes 19 municipalities of the Brussels-Capital Region).

Municipal surcharges are calculated at the appropriate rate which is specific to each municipality and which is based on the “principal”.

In tax year 2013 the local surtax varied between 0% and 9% of the federal PIT amount (7,42% on average).


Special surcharges
There are special surcharges in the form of:
Surcharge 1 : Name: Special social security contribution
A lump-sum amount:
A percentage of income:
A tax surcharge:
Comments

The special social security contribution is levied on the salaries of employees (or their counterparts) whose net taxable household income exceeds 18,592.01 euro a year. Unlike other social security contributions, it is not deductible.

See the separate tax file relating to it.


Separate taxation
Separate taxation applies to the following items: Employment income
Income from business or self-employed activities
Income from sport and entertainment activities 16.5 %
Benefits in kind (company car, meal cheques, etc)
Pension income
Owner-occupied immovable property
Dividends 25.0 %
Interests from government bonds 21.0 %
Interests from corporate bonds 21.0 %
Interests from special saving accounts 21.0 %
Interests from deposits 15.0 %
Royalties
Income from renting immovable property
Income from renting movable property
Capital gains on immovable property 16.5 %
Capital gains on movable property
Inheritance
Annuities from life insurance
Prizes and awards 16.5 %
Scholarships
Income from occasional activities 33.0 %
Revenues from donations and gifts
Revenues from lotteries and games activities
Comments

The law has provided for separate taxation in respect of three categories of income:

  • income from movable property,
  • most miscellaneous income,
  • certain types of non-periodical income: capital gains, arrears, dismissal compensation, amounts paid on due date in respect of group-insurance contracts, life insurance contracts or pension schemes, regional employment premiums.

 

These incomes escape aggregation and are taxed at special rates. Total aggregation (inclusion of this income in the ATI - aggregated taxable income - and application of the progressive rate) is nonetheless applied where doing so is to the taxpayer’s advantage.

The choice is made for separately taxable income as a whole.

 
Income from movable property

The assessment rates vary between 10% and 25% according to the case.

  

Assessment rates of the main income from capital and movable property (2012 income)

DIVIDENDS EXCEPT SURPLUSES

From shares issued as from January 1st, 1994 by a public call for funds

21%

From shares issued as from January 1st, 1994, provided that the newly issued shares are attributed in consideration of cash contribution, that they are in registered form as from the date of their issue, that they are the object of an open deposit or that they are registered on a securities account with a clearing house

21%

From shares distributed by investment companies, except in the case of total or partial repayment of a company's capital or in the case of an acquisition of own shares

21%

From so-called AFV-shares (fiscal advantages shares), but only where such shares are quoted on a stock exchange and where the company paying the income has irrevocably waived the transfer of the benefit resulting from the exemption of corporate tax, or distributed by companies of which a part of the capital has been injected by a PRICAF (*)

21%

From dividends distributed by a cooperative participation company in the context of a participation scheme (Act of 22 May 2001 concerning employee equity participation and employee participation in the capital and the profits of their enterprise).

21%

From other shares

25%

LIQUIDATION SURPLUSES

10%

 SURPLUSES FROM REPURCHASE OF OWN SHARES

 21%

 INCOME FROM ORDINARY SAVINGS DEPOSITS

15% 

 INTEREST FROM GOVERNMENT BONDS 24.11.2011 - 02.12.2011

15% 

OTHER INTEREST

Income from agreements concluded as from 1 March 1990

21%

Income from agreements concluded before 1 March 1990

25%

Income from some distribution common investment funds

25%

 ROYALTIES, LIFE ANNUITIES AND TEMPORARY ANNUITIES

 

 Income from agreements concluded as from 1 March 1990

15% 

 Income from agreements concluded before 1 March 1990

25%

COPYRIGHT

15%

(*)  And of which more than 50% of the shares, representing the majority of voting rights, are in the hands of natural persons.

 

Miscellaneous income

The tax rates applying to these incomes are the following:

 

Rates of separately taxed miscellaneous income (2012 income)

Type of income

Tax rates

Occasional profits and proceeds

33%

Allowances “research workers”

33%

Prizes and subsidies

16.5%

Prizes attached to debenture bonds

25%

Income from sublease or from transfer of a lease

 

15% for post-March 1990 contracts and 25% in the other cases

 Income from permission to place advertising boards

Idem 

 Income from permission to place GSM masts (*)

 15%

Income from sporting rights (fowling, fishing, shooting)

15% for post-March 1990 contracts and 25% in other cases

Capital gains from built property

16.5%

Capital gains from unbuilt property

 

33% if the capital gains are realised less than 5 years after the acquisition, 16.5% in the other cases

 Capital gains on the transfer of an important parcel of shares

16.5% 

 

(*) Income from the permission to place GSM masts is treated as miscellaneous movable income insofar as it has been received as from 1 January 2012. The separate rate also applies to the legal entities income tax.
Earned income

In many cases earned income which can enjoy the separate taxation is taxed at an average rate, calculated by dividing the reduced “base tax” by the aggregate taxable income. The reduced “base tax” is the tax subsisting after application of the tax credits for replacement income and overtime pay.

 

Separate taxation of earned income (2012 income)

Type of income

Tax rate

Salary arrears, replacement income arrears

the previous year’s average rate

Gross termination compensation

the previous year’s average rate

Redeployment allowances

the previous year’s average rate

Prepaid holiday pay

the current year’s average rate

Arrears of maintenance payments

the current year’s average rate

Fee arrears

the current year’s average rate

Capital gains from professional activities

16.5%

Gross regional employment premiums < 180 euro per month

10.38%

Young sportsmen’s remunerations, first 18,000 euro gross bracket

16.5%

Volunteer sporting activity as a self-employed secondary activity, first 18,000 euro gross bracket

 33%

 Setting-up allowance for general practitioners (*)

 16.5%

  (*) A setting-up allowance amounting to 20,000 euro is granted to general practitioners who decide to set up in an area with a lack of general practitioners.


Capitals and annuities from a group insurance contract

In case a capital is paid out, a separate taxation is made for the paid-out capital where a group insurance is liquidated. There are different taxation methods depending on whether the capital is liquidated at the “usual date” or earlier.

 “Usual date” means:

  • the retirement of the beneficiary;
  • from the age of 60;
  • the death of the insured.

 


Taxation upon the liquidation of the capital of a group insurance

Liquidation of capital or surrender value upon usual termination or assimilated date

 

Contributions made until 31.12.1992

Contributions made from 01.01.1993

employer’s contributions

separate taxation, 16.5% rate

separate taxation

16.5% rate

10% rate (*)

employee’s contributions

separate taxation, 16.5% rate

separate taxation, 10% rate

Liquidation of capital or surrender value before legal date

employer’s contributions

taxation at marginal rate

taxation at marginal rate

employee’s contributions

taxation at marginal rate

taxation at 33% rate

(*)   As far as the capitals liquidated as from 01.01.2006 are concerned, the entire capital is taxed at a 10% rate where the liquidation takes place at the earliest at the legal retirement age, in favour of the beneficiary who actually kept on working at least until this age. In order to verify fulfilment of that condition, a reference period of three years before the legal retirement age has been defined. In case of liquidation resulting from the death after the retirement age, the 10% rate remains acquired where the deceased actually kept on working until this age.


Withholding taxes
The tax is withheld when paid to residents on: Dividends: 25.00 %
Final Creditable
Interests from governments bonds: 21.00 %
Final Creditable
Interests from corporate bonds: 21.00 %
Final Creditable
Interests from special saving accounts: 21.00 %
Final Creditable
Interests from deposits: 21.00 %
Final Creditable
Comments

Situation for tax year 2013:

Movable income has been subject to a first reform applicable to income allocated as from 1 January 2012. The key elements of this reform were the giving up of the principle of the withholding tax on income from movable property as a final tax, the increase to 21% of the rate of the withholding tax on some interest and dividends, and the introduction of an additional levy of 4% on high movable income. The report of movable income became compulsory in principle and the debtor of the income had to communicate to a central contact point the information relating to interest and dividends allocated, e.g. the identification of the beneficiaries of the income.

Given the numerous problems related to the concrete application of this reform, the latest has been changed for income allocated in 2012 and given up for income allocated as from 1 January 2013 : the principle of the withholding tax as a final tax has been restored, the additional levy of 4% has been abolished and the standard rate of the withholding tax has been increased to 25%.

The compulsory report of all movable income (and miscellaneous movable income) was planned initially in the 2013 tax return, except for movable income on which the additional levy of 4% would have already been withheld. Finally, an exemption from reporting has been maintained for interest and dividends on which a withholding tax on income from movable property has been levied and of which the cumulated amount does not exceed the threshold of 20,020 euro.

For further details, see the corresponding file (withholding tax on income from movable property).



Comments
 
Tax due date

The withholding tax on movable property must be paid within two weeks after the attribution or payment of the taxable income.

The withholding tax on earned income must be paid within two weeks after the end of the month in which the income has been paid or attributed.

As regards direct taxes and the advance tax payment on property which have been assessed, the tax liability arises at the time the assessment roll became enforceable. They shall be paid within two months after the date of dispatch of the tax notice. The tax due date, as regards the amounts registered in the assessment roll after submission of the tax return, is the date which can be found on the notice of assessment in respect of PIT. 

Taxpayers declaring income from a self-employed activity must make advance payments (1). Moreover, any taxpayer can make advance payments to discharge the tax which is not covered by a withholding tax: these payments entitle the taxpayer to a tax bonus.

Advance payments must be made:

  • for the first quarter, no later than April 10th;
  • for the second quarter, no later than July 10th;
  • for the third quarter, no later than October 10th;
  • for the fourth quarter, no later than December 20th.

 

Remarks:

(1) A tax increase is applied when these payments are not made or when they are insufficient.

 
Tax collector

Federal Public Service Finance.

 
Special features

The following relates to withholding tax on income earned in 2012. The data hereafter are not the most recent available but are used to determine the personal income tax on income earned in 2012.

The withholding tax on earned income is in principle withheld by the employer and paid to the tax administration.

In some cases, the employer is entitled to an exemption of payment which has no impact on the amount withheld. The employer retains the exempt amount; as a result, the exemption works as a wage subsidy to the employer. See below (section 'Exemption of payment').

 

1.    Employees’ remunerations

The tax deducted at source is withheld by the employer and computed in seven main steps:

  • deduction of the social security contributions,
  • deduction of the professional expenses,
  • application of a tariff aligned with the PIT tariff,
  • taking into consideration of the basic exempt portion of the income,
  • taking into consideration of the family situation,
  • application of the tax credits,
  • computation of the monthly amount.

 

A. Deduction of social security contributions

From the gross income are subtracted the employee’s social security fees and other levies made in pursuance of the social legislation or assimilated legal or administrative regulations. The special social security contribution is not deductible though.

 

B. Deduction of lump sum professional expenses

The annual income is then transformed into a net annual income by subtracting the lump sum professional expenses.


Professional expenses and computation of the withholding tax on earned income

Gross annual income

Professional expenses

 

on lower limit

% above lower limit

0   -        5,490.00

0

 28.7%

5,490.00   -      10,900.00

1,575.63

 10%

 10,900.00   -      18,140.00

2,116.63

 5%

 18,140.00   -      61,852.33

2,478.63

 3%

 61,852.33           and more

3,790.00

 0%

 

C. Scale

The common scale applies as it is,

  • where the beneficiary of the income is single;
  • where the beneficiary’s spouse has also own earned income consisting exclusively of pensions, annuities or assimilated benefits exceeding a monthly net amount of € 124. «Net» amount means the amount after deduction of social security contributions and after deduction of 20% of the remainder. 

From 1 January 2004, legal cohabitants have been assimilated with married people. So the term “spouse” also covers a “legal cohabitant”.

 

Computation of withholding tax on earned income – Common scale

Net taxable annual income

Basic tax

 

on lower limit

% above lower limit

         0   -      8,350

0.00

 26.75%

  8,350   -     11,340

2,233.63

 32.10%

11,340   -     16,430

3,193.42

 42.80%

16,430   -     36,290

5,371.94

 48.15%

36,290     and more

14,934.53

 53.50%

A particular provision applies:

  • where the beneficiary’s spouse has no earned income of his/her own;
  • where, on 01.01.2012, the beneficiary’s spouse has an own earned income consisting exclusively of pensions, annuities or assimilated benefits not exceeding a monthly net amount of € 124. «Net» amount means the amount after deduction of social security contributions and after deduction of 20% of the remainder.

 

The withholding tax on earned income is then computed as follows:

  • 30% of the beneficiary’s net taxable annual income is attributed to his/her spouse, with a maximum of € 9,800. The amount attributed is « Income B », the remainder being «Income A»;
  • the common scale is then applied to both Income A and Income B;
  • finally, the addition of both results gives the "base tax".

 

D. Taking into consideration of the zero-rate band

When the common scale applies as it is, the base tax computed according to that scale shall be reduced by € 1,546.15, but this reduction shall on no account result in a negative base tax.

When the particular provision applies, which divides the taxable income in two parts (one-earner families or equivalent), the basis tax obtained by adding the results of the application of the scale to “Income A” and “Income B”, shall be reduced by € 3,092.30, but this reduction shall on no account result in a negative base tax.

 

E. The family situation

Step five takes account of the family situation by granting the following tax credits:

 

Reductions of the withholding tax for dependent children and specific family situations

Number of dependent children
and peculiar family situations

Annual credit

1

396

2

1,068

3

2,844

4

5,196

5

7,680

6

10,152

7

12,636

8

15,300

for each child beyond the eighth

2,760

single person (except where the taxable income consists of pensions or prepensions)

276

widow(er) not married again, with dependent children

396

single parent family

396

disabled taxpayer

396

for ascendants and collaterals up to the second degree and aged 65 at least: for each dependent person

792

for all other dependent persons

396

Disabled children and other disabled dependent persons count for two.

A tax credit of 1,236 euro is yearly granted where the income beneficiary’s spouse has own professional income not consisting of pensions, annuities or assimilated benefits and not exceeding 206 euro per month.

A tax credit of 2,466 euro is yearly granted where the income beneficiary’s spouse has own professional income exclusively consisting of pensions, annuities or assimilated benefits and not exceeding 411 euro per month.

The ceilings of 206 euro and 411 euro per month are assessed on the basis of 80% of the gross income after deduction of the social security contributions. 

 

 F. Other tax credits

  • Where appropriate, 30% of the mandatory deductions implementing a group insurance contract or a precautionary provision for old age and premature death are deducted from the "base tax".
  • A tax credit is granted for the first 130 hours overworked by workers. The credit is computed on the basis of the “gross amount NOSS - National Office For Social Security” (i.e. before deduction of the personal social contributions) of the remunerations on which overtime pay has been calculated. The credit amounts to 57.75% where overtime pay is equal to 50% or 100%, and to 66.81% where overtime pay is equal to 20%.
  • A tax credit of 72.12 euro is granted to employees whose taxable monthly remuneration does not exceed 2,170.28 euro. 
  • A tax credit is granted to low-income workers entitled to the employment bonus (*). It is equal to 5.7% of the amount of the employment bonus actually granted.

    (*) The employment bonus is a reduction of the persona! social security contributions targeted on low-income workers. It is also granted to some workers affected by restructuring. It is a lump sum reduction that decreases progressively where the reference wage increases.

 

G. Computation of monthly amount

The amount of tax thus obtained is then divided by twelve so as to determine the amount of withholding tax to deduct from monthly earned income.

 

2. Holiday pay and other exceptional allowances

For holiday pay and other exceptional allowances paid by usual employer, the withholding tax on earned income to be deducted is calculated according to a special scale, whereby the rate varies according to the normal gross annual income and not to the income actually paid out.

 

3. Salary arrears and redeployment allowances

The withholding tax on salary arrears and on redeployment allowances is calculated according to a "reference salary".

This corresponds in principle to the annual amount of the normal gross salary the beneficiary of the income enjoyed immediately before the revision which led to the payment of the arrears.

 

4. Termination compensation

The withholding tax on earned income levied on termination compensation, is calculated according to the rules set forth above in respect of arrears.

The reference salary to be taken into account is the one upon which the calculation of the compensation was based, or, failing that, the salary which was paid to the recipient during the last period of normal activity in the service of the employer who pays the compensation.

Remark : There is no more distinction according to the amount of the termination compensation for the calculation of the withholding tax on earned income.

 

5. Company managers

Remunerations paid or allocated to company managers are liable to withholding tax on earned income.  A distinction is made between periodical and non-periodical remunerations.

 

6. Students

No withholding tax is due on remunerations paid or allocated to students with a written employment contract not exceeding fifty working days per calender year.

This tax exemption is granted only where, apart from the solidarity contribution, no social security contributions are due on the payments.

 

7. Young workers

No withholding tax is due on remunerations paid or granted to young workers who meet the conditions of eligibility for school-leavers’ unemployment benefits, provided the work is carried out under the terms of an employment contract starting in October, November or December of the preceding year and provided the gross amount of the remunerations does not exceed € 2,575 a month.

 

WITHHOLDING TAX ON EARNED INCOME – SOME SPECIAL FEATURES

Exemption of payment

 

1. Structural reduction

The law of 17 May 2007 introduced a structural exemption of payment, calculated on the basis of the gross remunerations. This exemption applies to the profit sector, the non-profit sector and autonomous public undertakings (the SNCB/NMBS Group, bpost and Belgacom).

 

The rate of this exemption has been progressively increased and has amounted to 1% since 1 January 2010. This increase does not apply de facto to the non-profit sector because the additional exemption of payment has been replaced by a payment to the "Maribel Social" Funds.

 

2. Research workers

A partial exemption of payment to the tax administration of withholding tax on earned income has been brought in with respect to remunerations paid to research workers. This exempted part that is deducted but not paid to the tax administration stays at the disposal of the employer. The research workers are allowed to set off that part (not paid to the tax administration) against their income tax liability in their tax return.

The payment to the tax administration of withholding tax on earned income is exempt up to 75% (new percentage as from January 2009) :

  • for universities and “high schools” as well as for the “Federaal Fonds voor Wetenschappelijk Onderzoek – Fonds fédéral de la Recherche scientifique”, the “FRS-FNRS” (Fonds de la Recherche Scientifique – FNRS) and the “FWO-Vlaanderen” (Fonds voor Wetenschappelijk Onderzoek Vlaanderen);
  • for scientific institutions approved by Royal Decree;
  • for private companies employing research workers collaborating with all the above-mentioned institutions;
  • for companies employing research workers having either a PhD in Applied Sciences, Exact Sciences, Medicine, Veterinary Medicine or Pharmaceutical Sciences or Civil Engineering, or a Master or equivalent in fields of sciences. Those persons shall be working on R&D programs.
  • for remunerations paid by the “Young innovative companies”.

 

3. Team bonuses and night shift differentials

Where companies’ work schedules include team work or night shifts, these companies enjoy a partial exemption of payment to the tax administration of the withholding tax on earned income that is normally deducted on the concerned workers’ remunerations.

However, the eligible companies shall withhold the entire normal amount of the withholding tax on earned income and on bonuses, and the workers are entitled to set off the same amount against their income tax liability in their tax return.

The part of the withholding tax on earned income not to be paid to the tax administration has been set at 15.6% of the aggregate taxable remunerations, including team bonuses but excluding holiday allowances, end-of-year payments and salary arrears.

 

This exemption of payment has been extended to the following autonomous public undertakings: Belgacom, bpost and companies from the SNCB/NMBS Group.

 

4. Overtime pay

 

For the employees, the tax relief consists of a tax credit implemented in the calculation of the withholding tax on earned income and for their employers in the market sector or temping sector, the advantage consists of a partial exemption of payment to the tax administration of withholding tax on earned income. The tax relief has been extended to the following autonomous public undertakings: Belgacom, bpost and companies from the SNCB/NMBS Group.

The exempted amount of withholding tax on earned income not to be paid to the tax administration amounts to:

  • 32.19% of the gross amount (basic salary) of the remunerations paid for hours overworked to which an overtime pay of 20% applies;
  • 41.25% of the gross amount of the remunerations for hours overworked to which an overtime pay of 50% or 100% applies.

This exemption applies to the first 130 hours overworked, per employee and per year.

 

5. Sportsmen

Since 1 January 2008, a partial exemption of payment of withholding tax on earned income up to 80% has been granted for remunerations paid or granted by sporting clubs to sportsmen younger than 26.

Sporting clubs may also benefit the partial exemption of payment of withholding tax on earned income for sportsmen aged 26 or older, on the understanding that half of this exemption of payment is devoted, within a given period, to the training of young sportsmen. Amounts devoted to the training of young sportsmen cover the payment of trainers’ and coaches’ wages on the one hand, and of young sportsmen’s wages on the other hand.

As from 1 July 2010, young sports men's remunerations considered as valid devoted amounts cannot exceed, per young sportsmen, eight times the minimum remuneration entitling to the status of remunerated sportsman, that is presently 8,850 euro (*).

(*) Amount applicable from l July 2011 to 30 June 2012.

 

Another change came into force on 1 July 2010: remunerations earned by the sportsman as manager, no longer entitle to the partial exemption of payment of withholding tax on earned income.

 

Lump sum credit granted by the Flemish Region

End of the lump sum tax credit which was granted by the Flemish Region.

 
Economic function







Comments

 
Environmental taxes



Comments
 
Tax revenue
ESA95 code d51a+d59fa

Year
Annual tax revenue (millions)
Currency
Tax revenue as % of GDP
Tax revenue as % of total tax revenue
2011 45,956.90 EUR 12.12
2010 43,823.10 EUR 12.00
2009 41,330.30 EUR 11.85
2008 43,506.10 EUR 12.29
2007 40,899.20 EUR 11.86
2006 39,447.10 EUR 12.08
2005 39,375.90 EUR 12.64
2004 37,633.40 EUR 12.60
2003 36,063.30 EUR 12.76
2002 35,891.00 EUR 13.05
2001 35,227.50 EUR 13.25
2000 33,447.90 EUR 12.95

Comments

The ESA95 code d51a includes subcodes which are also the subject of other files, such as "Withholding tax on movable property" and "Tax on the worker's participation in the benefit or the capital of the company".

This results in double-accounting of some tax revenue amounts, once in the PIT file and once in the file describing the associated tax.