Some of the new measures adopted include an anti-abuse provision to combat notional interest being deducted twice, a practice known as double-dipping.
To do away with that particular practice, capital contributions will no longer be taken into account in the basis for calculating the risk capital allowance of companies that benefited from the contribution if the company injecting the capital took out a loan to fund the capital increase and deducts the interests of that loan as an expense.
The objective is to prevent a double deduction: on the one hand by the company that injects the capital, in the form of an allowance for the interests on the loan taken out and, on the other hand, by the beneficiary company, in the form of a risk capital allowance.
Henceforth, the basis for calculating the risk capital allowance in cases where a company higher up in the chain of a cascade of companies within the same group funds the capital injection by means of a loan will no longer be taken into account.
Furthermore, article 205ter, § 2, 92 Income Tax Code (92 ITC) has been supplemented with two specific anti-abuse measures which respectively exclude claims and capital injections by a non-resident taxpayer, or by a foreign company based in a country that does not exchange information with Belgium from the basis for calculating the risk capital allowance, unless the company can demonstrate that the transactions were effected for legitimate economic or financial purposes.
According to the explanatory memorandum, the inability to receive information from a country where non-residents or foreign companies are based hampered the application of the general anti-abuse measure referred to in article 344 of the 92 ITC and warranted the enactment of specific anti-abuse measures.
The new measures will come into effect as of the 2019 fiscal year and will affect tax periods starting on 1 January 2018 at the earliest, on the understanding that any changes made on the date financial years commencing on 26 July 2017 were closed will be pointless.