The 14 steps for calculating the Belgian corporate income tax.

The first step : aggregating taxable basis.

In the first step, you make the sum of following components: the reserved profit, the rejected expenses and the dividends. You do not need to consider exempt reserves (provisions), exempt capital gains or exempt depreciation in the calculation.

The second step : filtering out profits by origin.

In the second step, you need to distinguish between Belgian profits, foreign profits that are not exempted by a treaty regime and foreign profits that are exempted by such a regime. At this stage, the deduction of losses is also carried out, whereby you must respect certain attribution rules (as laid down in article 75 of the Royal Decree in execution of the Income Tax Code, abbreviated art. 75 KB/WIB92 (Dutch) - AR/CIR92 (French) or KD/EStGB'92 (German). 

The third step : specific deductions

In the third step, you can deduct from the taxable base the profits that are exempt from Belgian tax by virtue of a double tax treaty.  In addition to this deduction, there is also the deduction for export, total quality management (measure aimed at recruiting a staff member who focuses on these issues) and internship in the company (measure to train young people) and the deduction of donations.

The fourth step : the DRD deduction

A company that owns shares and receives dividends (in the broad sense of the word) from them can benefit from the DRD deduction. DRD means Dividends Received Deduction and indicates that it is sufficient for the tax authorities that there has already been a taxation at the level of the distributing company. The deduction is possible as long as there is still a positive sum after the third operation. There are, however, some conditions: it must be a participation of at least 2.5 million euros or 10% participation. In addition, you must hold the shares in full ownership for at least one year. There is a lot of "small print" in the DRD regime, so it is best to check whether you meet all the conditions or exceptions.

The fifth step : the patent deduction

You should take this step into account until the end of June 2021. After that, the patent deduction regulation expires. You can still enjoy a deduction for income from patents of which the applications were filed before July 1, 2016. The deduction is equal to 80% of the income.

The sixth step : the deduction for innovation income.

If your company receives income from intellectual property rights (patents, plant breeders' rights, copyrighted computer programs) you can enjoy a deduction. However, there is a condition that you developed (or improved) the rights in whole or in part yourself or subcontracted them to an unrelated company. The amount of the deduction is determined by a mathematical formula: 85% of net innovation income x (eligible expenses/total expenses). The deduction does not have to be taken all at once but you can spread it over seven years.

The seventh step: the investment deduction

Depending on the investments you make, you can take a one-time or spread investment deduction. This concerns investments in new tangible and intangible fixed assets that you use for your professional activity in Belgium. A number of goods, such as dual-use cars or more general fixed assets whose depreciation is spread over less than three taxable periods, are not eligible for the investment deduction. Small companies enjoy (except for specific investments) an 8% investment deduction but this has been temporarily increased (until December 31, 2022) to 20%.

The eighth step: the group contribution

The group contribution system allows you to shift profits between affiliated companies or even towards the Belgian establishment of the affiliated foreign company. The company that 'hands over' the profit can then deduct a group contribution. This is intended to bring a certain neutrality to a group of companies, now that there is no fiscal consolidation in Belgium. 

From the ninth operation onwards, there is a restriction on the deduction.  This is referred to as the 'basket'. In the following operations, a number of deduction mechanisms are introduced to allow the offsetting of transfers. The deductions that take shape in the ninth, tenth, eleventh, twelfth, thirteenth and fourteenth operations are limited to 1 million euros + 70% of the balance remaining after the eighth operation.

The ninth step : the notional interest deduction

The NIA (notional interest deduction) system was intended to make venture capital more fiscally advantageous. In the beginning it was a generous system but now it has been eroded to the point where it is a lot less advantageous. In the ninth step, the interest deduction is deducted from the year itself.

The tenth operation: transferred DRD

In this step, you can offset the carried forward DRD deduction. 

The eleventh operation: innovation income deduction carried forward

In this step, you can offset the innovation income deduction carried forward. 

The twelfth operation: professional losses carried forward

In this step, you can offset the deduction of professional losses carried forward. 

Thirteenth operation: NIA carried forward indefinitely

Certain notional interest deductions can be carried forward indefinitely. In the thirteenth operation, you can offset them.

Fourteenth operation: limited in time transferable NIA

In this last operation, you can offset the limited time transferable NIA.

After going through these 14 steps, you have the net tax result to which you can then apply the corporate tax rates.