- Coronavirus | Belgian measures for businesses
Coronavirus | Belgian measures for businesses
UPDATED 8 APRIL 2020
Since 18 March different authorities (EU, national, local) took measures in Belgium to reduce the spreading of the COVID-19 virus. In order to overcome the economic impact of these decisions, many compensating measures were taken.
We provide you with an overview of the most relevant actions that were taken by the competent authorities, updated on a daily basis.
The Belgian government, as well as the regional authorities, have taken a range of decisions to reduce the financial consequences of the COVID-19 measures.
Significant measures are:
• Special deferral of payment obligations for corporate income tax, personal income tax, wage tax, value-added tax, and excise duties;
• Special deferral of payment obligations of provisional 2020 social security contributions;
• Easier access to regimes of temporary unemployment;
• Deferral of social elections;
• Teleworking obligatory for all non-essential undertakings;
• Granting of 'nuisance premiums' for companies/independents that need to close their business.
1. Tax related measures
On 18 March the Belgian Government announced that almost all shops must close. In order to mitigate the financial impact for these companies, the Flemish Government announced that businesses in the Flemish Region can request a compensation. Businesses that are mandatorily closed entirely are entitled to a lump-sum compensation of EUR 4,000 while businesses that can remain open on weekdays are entitled to a compensation of EUR 2,000. If companies are required to remain closed after 4 April 2020, they are entitled to an additional compensation of EUR 160 per day. A compensation of EUR 3,000 is also foreseen for businesses that do not need to close but that can demonstrate that the turnover has decreased with at least 60% between 15 March 2020 and 30 April 2020 compared to the same period in the previous year. The Walloon government foresees a lump-sum indemnity of EUR 5,000 for certain businesses that have to close and EUR 2,500 for certain businesses that have to change their opening hours. Funds are also made available in the Brussels region for similar measures. These compensation payments are not taxed.
Due to the measures taken in the fight against the coronavirus, the Ruling Commission is willing to provide a ruling confirming that the employer can temporarily give its employees, regardless of their job category, a tax-free allowance of up to EUR 126.94 per month to cover the costs caused by teleworking, such as heating, electricity, paper, etc.
The Ruling Commission has prepared a standard application for this. This draft application can be found here. The Ruling Commission announced to handle the ruling request within a short timeframe.
Updated 3 April 2020
In order to alleviate the financial strains on companies, various tax payments have been deferred for all taxpayers. The European Commission has indicated on 13 March 2020 that such measures fall outside the scope of State aid control and can be put in place by the Member States immediately, without the involvement of the Commission.
The Federal Tax Authorities have announced to grant an automatic extension of the payment date for VAT and wage withholding taxes of 2 months (without penalties or interest becoming due). Consequently, these payment dates are automatically extended as follows:
VAT – extended payment date
Wage withholding tax – extended payment date
Monthly return – February 2020
20 May 2020
13 May 2020
Monthly return – March 2020
20 June 2020
15 June 2020
Quarterly return (including special VAT return 629) – Q1
20 June 2020
15 June 2020
Customs & Excises also amended the electronic customs portal PLDA and extended payment terms from one week to four weeks for (a) excise duties and packaging levy on alcohol and alcoholic and non-alcoholic beverages; and (b) import VAT. This extension of payment terms applies until 30 June 2020 and only to the abovementioned taxes in PLDA.
With respect to the payment of corporate income tax (resident and non-resident), personal income tax (resident and non-resident) and legal entities tax, the usual payment terms are automatically extended with a period of 2 months (in addition to the normal payment term and without late payment interest becoming due) for all taxes assessed as of 12 March 2020. Although this additional 2 month payment term will not yet appear on the assessment notices that were sent up to and including 27 March, the postponement also applies to these cases and the taxpayer may add the two month period itself.
Companies facing financial difficulties as a direct result of the Coronavirus pandemic, regardless of their activity or sector, can additionally request a number of tax and social security support measures from the Federal Tax Authorities and the National Social Security Office, which should allow companies to bridge these temporary financial difficulties.
All Belgian registered businesses (both companies and self-employed individuals) are entitled to these measures if it can be shown that they have incurred nuisance from the spreading of the Coronavirus and the correlating measures, which can be either direct (e.g. significant decrease in turnover) or indirect (as a consequence of a chain-reaction, e.g. partner companies suspending business). Companies that are in structural financial distress (i.e. companies already facing financial difficulties prior to the Corona outbreak in Belgium) can in principle not benefit from these measures.
The support measures consist of (i) a further deferral of payment, (ii) a waiver of late payment interest and (iii) a waiver of late payment fines. These measures can be requested for VAT, wage withholding tax, corporate income tax, personal income tax, and legal entities tax. A company can request to apply (one or more of) these measures using a form specifically issued for this purpose and should submit a separate request for each individual debt. The form can be found on the website of the Federal Tax Authorities here. In principle, a request can only be lodged after the receipt of assessment notice or a request for payment. Application of these measures should, in any case, be requested on 30 June 2020 at the latest.
It should be noted that these supportive measures are conditional upon the timely, correct and complete filing of the relevant tax return. Hence, it is of utmost importance that the relevant tax formalities (e.g. VAT return, income tax return) are duly and timely complied with. In this respect, the Tax Authorities have announced a general extension of the filing deadline (see below).
In addition to the above, measures are also announced at the regional levels.
The Flemish Government has, for example, announced that the road tax collection for the assessment year 2020 is postponed for legal entities by four months. Assessment notices sent as from 26 March onwards will immediately show a payment term of six months (instead of the usual two months). For assessment notices that were sent recently and on which a payment term of two months is mentioned, the taxpayer may add four months. No new late payment interest will be charged for that period. Self-employed persons can flexibly request a payment plan and, if necessary, a waiver of interest on late payments. In addition, the assessment notices with respect to immovable property tax (onroerende voorheffing / précompte immobilier) which are usually issued in May will be sent out as from September 2020 for legal entities. This means de facto that the payment of immovable property tax is deferred for approximately four months for companies active in the Flemish Region. Self-employed persons can flexibly request a payment plan and, if necessary, a waiver of interest on late payments. In the meantime, the Flemish Government has also exceptionally given the municipalities the opportunity to adjust the surcharges for the immovable property tax. As a result of this, the assessment notices for immovable property tax can at the earliest be sent out at the end of June whereas these notices are generally issued at the end of April/beginning of May. This means that the immovable property tax is also deferred for non-legal entities, be it for approximately a two-month period.
In the Walloon region, all (regional) tax payments are suspended as the deadlines will be extended by the period corresponding to the crisis.
In the Brussels region, the Brussels Government has announced that it will extend the 2-month payment term for immovable property tax with an additional 2 months.
Following the federal decisions to prevent the Coronavirus, cities and municipalities also provide support measures for the self-employed and entrepreneurs affected. A compilation of a.o. the fiscal measures of the Flemish cities and municipalities can be found on the website of VVSG here. However, it is recommended to have a look at the website of your municipality.
Updated 7 April 2020
If self-employed persons and companies are in a tax-paying position and do not make timely prepayments of income taxes, a tax increase will be imposed. Each quarter a prepayment can be made and each prepayment leads to a tax credit which reduces the tax increase suffered if no prepayments would have been made. A prepayment made in the first quarter results in a higher tax credit than a prepayment made in a later quarter. Many self-employed persons and companies are currently facing liquidity problems due to the corona crisis and can therefore not make prepayments. In order to avoid that they are being penalized if they only prepay the taxes later this year, the tax credits for the last two quarters of 2020 are increased.
For companies, the tax credit for prepayments of corporate income taxes increases in the third quarter from 6% to 6.75% and in the fourth quarter from 4.5% to 5.25%. This measure does not apply for companies that repurchase own shares, make a capital reduction or attribute/pay dividends between 12 March and 31 December.
For the self-employed persons, the tax credit for prepayments of personal income tax increases from 2% to 2.25% in the third quarter and from 1.5% to 1.75% in the fourth quarter.
Updated 7 April 2020
The Tax Authorities have announced a general extension of the filing deadline: the filing deadline for corporate income tax returns (resident and non-resident) and legal entities tax returns which should have been filed between 16 March 2020 and 30 April 2020, has been extended until 30 April 2020.
Also for VAT purposes, the filing deadlines have been extended. The extended filing deadlines are shown in the below table:
Extended filing date
Monthly return – February 2020
6 April 2020
Monthly return – March 2020
7 May 2020
Quarterly return – Q1
7 May 2020
The deadlines for the filing of intra-community reports are extended to the same dates. Furthermore, the general deadline for the annual filing of the VAT client listing is extended until 30 April 2020.
Due to the fact that notary offices and citizens may currently not be able to complete all the formalities in time, the Flemish Tax Administration will grant, as a general measure, an extension of two months after the end of the period in which the stricter corona measures apply (at present being 19 April 2020). This implies that:
- No tax increase for a late inheritance tax return will be imposed if the declaration is filed within two months after the end of the period of stricter corona measures. It is not necessary to request for this postponement. If, for example, an inheritance declaration should have been filed by 28 March 2020 at the latest, this deadline is now extended to 19 June 2020 (i.e. two months after the end of the period of stricter corona measures). The filing deadline is automatically extended if the more stringent measures remain in force for a longer period.
- No tax increase will be imposed if the period within which a deed must be submitted for registration is exceeded. The period is automatically extended if the more stringent measures remain in force for a longer period. If, for example, two parties agree to sell an immovable property and this sale should be registered by 28 March, this deadline is now extended to 19 June (i.e. two months after the end of the period of stricter corona measures). The filing period is automatically extended if the more stringent measures remain in force for a longer period. In addition, the period of time to comply with the conditions to maintain a favorable regime is similarly extended with 2 months.
Due to the exceptional circumstances linked to the coronavirus (COVID-19), the Tax Authorities will postpone its non-essential and/or less urgent tax audits. Only the audits necessary to protect the financial interests of the State are retained. Audits that can be carried out remotely still take place.
Updated 7 April 2020
Belgian companies and Belgian permanent establishments of foreign companies can benefit from a tax exemption if they invest in European audiovisual works or performing arts, provided a number of conditions are met. The amount of the final tax exemption is based upon the value of the tax shelter certificate to be provided to the investors. The value of this certificate is based upon the amount of qualifying expenses the producer spends in the EER and of the direct and indirect expenses incurred in Belgium. As of the signing of the agreement between the investor and the producer, the producer has 18 months or 24 months to incur expenses. The government decided to extent this period with an addition 6 month period if the producer can demonstrate that they suffer damages as a direct result of the corona measures imposed by the government.
Updated 24 March 2020
Bad debt reserves that are recorded during the financial year and relate to a loss that is not certain but probable, can only be treated tax exempt (i.e. are only tax deductible) if certain conditions are met. This implies a.o. that the debtors to which the loss relates should clearly be individualized. The probability of the loss should moreover appear from special events that took place during the taxable period and are still present at the end of this period. General or fixed bad debt reserves do not comply with these conditions.
A circular letter was issued on 23 March by the Belgian Tax Authorities stating that the coronavirus constitutes a special event that justifies the recording of a bad debt reserve if a debtor does not pay its invoice as a result of the measures taken by the Government. Each debtor should still be assessed separately but flexibility may be applied when assessing the difficulties for recovering outstanding debts from debtors whose turnover has significantly decreased as a result of the restrictive measures imposed by the federal government.
Although income from employment is generally taxable in one’s 'home' state, employees who are active in a cross-border context (e.g. Dutch residents working in Belgium or vice-versa) are often taxed in the country in which they are economically active (the 'work' state), provided that a minimum amount of the (professional) time is effectively spent in that country (specific conditions apply depending on the country in question).
Considering the general advice of the Belgian (and foreign) authorities to telework to the largest extent possible, the period spent in the work state by these employees could significantly decrease, which could potentially limit the work state’s right to tax the professional income, or even entirely shift this right to tax to the home state of the employee concerned. It is thus very important to keep a record of the days that the employee(s) concerned have worked from their home office, in order to assess any changes to the applicable tax regime.
Specific agreements have been made regarding employees commuting between Belgium on the one hand, and Luxembourg, respectively France on the other hand. Employees commuting between Belgium and Luxembourg are taxable on their professional income in the work state if any professional activity physically carried on outside this work state is limited to a period of maximum 24 days unless force majeure can be shown. In light of the current limitations on travel, the Belgian and Luxembourg authorities have expressed their intention to qualify the present situation as such force majeure: the period spent by the employee in his home state for the purpose of teleworking, will not be considered for the calculation of the aforementioned 24-day limitation. A similar agreement has been reached between France and Belgium on the 30-day rule under the Belgium-France tax treaty. For both tax treaties, this measure is effective as 14 March 2002 and applies until further notice.
Updated 25 March 2020
The Belgian Government has asked all Belgian civilians and companies to donate their medical material and supplies to hospitals, in order to cover possible shortages.
In this respect one should know that taxable persons who deducted VAT on the manufacturing or purchase of items donated for free are in principle obliged to adjust the deducted VAT via a self-supply subject to VAT. This additional VAT cost could discourage companies from donating medical supplies.
For this reason, the Belgian VAT authorities have now decided that a donation of medical supplies to hospitals will not lead to a VAT adjustment. This measure will apply until 30 June 2020.
The aforementioned tolerance applies to the following goods:
- Medical devices as referred to in Royal Decree 18 March 1999 (e.g. instruments intended for diagnostic and therapeutic purposes, devices intended for clinical research, …)
- Protective equipment for healthcare workers and patients (mouth mask, protective clothing, disinfectants, …)
Please note that the measure does not apply to the donation of pharmaceutical drugs.
The medical supplies must be donated to one the following institutions:
- Healthcare institutions as referred to in the coordinated law of 10 July 2008. Pursuant to this law, hospitals must meet certain standards and must be approved / recognized by the FPS Public Health (this concerns in particular those institutions whose medical care services normally fall within the scope of the exemption envisaged by Article 44, § 2, 1°, a) of the VAT Code);
- Associations of hospitals as referred to in Royal Decree 25 July 1997;
- Hospital groups as referred to in Royal Decree 30 January 1989;
- Mergers of hospitals as referred to in Royal Decree 31 May 1989: and
- Locoregional clinical hospital networks as referred to in the law of 28 February 2019.
In order to benefit from this VAT measure, the company should be able to provide proof that the medical supplies were donated free of charge to one of the institutions mentioned above. The proof must consist of a document in which the hospital confirms that the donated medical supplies were used to provide care or were donated to another healthcare institution.
In addition, this document must be drawn up in twofold for each donation, dated and signed by both parties and should contain the following details:
- Name, address and VAT number of the benefactor;
- Name, address and company number of the beneficiary;
- Complete description of the donated goods; and
- Amount of goods.
This document replaces the document required by article 3 of Royal Decree n° 1, which establishes that business assets were used for other purposes than the economic activity by the benefactor.
It should also be noted that the following guidelines apply for the aforementioned document:
- Multiple donations can be merged by mentioning the different types of medical supplies and their amount. The benefactor can even replace the complete description of the donated goods by attaching the original receipt for the medical supplies to the document.
- One summarizing document / overview containing all the donations of one month will also be accepted by the VAT authorities, if the summarizing document is drawn up before the 15th day of the following month and reference is made to the month in which the medical supplies were actually donated.
- It is not required to register this document in the accounts of the benefactor, but it should be kept in case of VAT-audit.
Income tax consequences
If the donator is subject to corporate income taxes (resident and non-residents) or is subject to personal income tax (residents/non-residents) as a self-employed person, the donation will not qualify as an abnormal or benevolent advantage and the costs associated with the donated medical goods will be tax deductible.
Please note that other natural persons subject to personal income tax (resident/non-resident) that wants to provide a donation in kind (i.e. medical devices and products useful in the fight against the coronavirus) to Belgian university hospitals and social welfare hospitals can exceptionally and temporarily receive a tax deduction amounting to 45% of the value of the donated goods (subject to some further limitations) if the donation exceeds a value of € 40. The value of the donation should be determined based upon the invoice received when purchasing the goods and should be provided to the hospital that receives the donation. If no such invoice is available, the market value should be determined by the hospital. The hospitals will provide the taxpayer a tax certificate.
Updated 30 March 2020
All VAT taxable persons submitting monthly VAT returns (incl. those who do not have a monthly VAT refund authorization or who are not considered to be ‘starters’), will be able to benefit from an accelerated refund of their VAT credit. As a result of this measure, the VAT credit will be refunded no later than 30 April 2020 (instead of 29 May 2020 or even 30 June 2020).
In order to benefit from the accelerated VAT refund, the following specific conditions should be met:
- VAT refund is requested by a VAT taxable person submitting monthly VAT returns;
- VAT return relating to February 2020 must be submitted by 3 April 2020 at the latest; and
- VAT return must be submitted through Intervat and the box ‘Request for refund’ (Aanvraag terugbetaling) must be ticked (VAT taxable persons can submit a corrective VAT return until 3 April 2020 in order to tick this box).
Note that, besides the specific conditions listed above, the general conditions to request a VAT refund remain applicable:
- Minimum refundable amount should be EUR 245;
- All VAT returns for the current calendar year must be submitted correctly;
- VAT authorities dispose of a bank account number of the VAT taxable person on which the refunds can be paid; and
- No objection against the refund (e.g. as a result of transfer of receivables).
Please note that this VAT credit can still be offset against other outstanding debts and can be subject to an audit afterwards.
The deadline of 3 April does not affect the possibility to submit VAT returns relating to February 2020 which do not result in a VAT credit or for which no refund is requested timely until 6 April 2020.
2. Employment related measures
Updated on 23 March
Companies have been impacted in large numbers by the corona crisis and its socio-economic consequences and are therefore often temporarily unable to (fully) employ their staff. Recourse is made to the existing regime of temporary unemployment, allowing employers to temporarily suspend the employment agreement, whereas the employees receive unemployment allocations, increased with supplementary allocations.
The Minister of Employment estimates that 1 million Belgian employees will end up in temporary unemployment. In order to manage this large influx of requests and support employers and employees, the following measures have been taken:
- the scope of temporary unemployment has widened;
- a ‘light’-version of the procedure was installed;
- the (unemployment) allocations have been simplified and increased;
- the modalities of temporary unemployment due to force majeure have been made more flexible.
These measures are explained in detail below.
- Extended scope of temporary unemployment due to force majeure (Covid-19)
The National Unemployment Office has stretched its interpretation of the systems of temporary unemployment due to force majeure in order to grant easier access. Temporary unemployment due to force majeure includes the following:
- Temporary unemployment due to Corona is considered to constitute force majeure without exception. There will therefore be an automatic acceptance of all temporary unemployment applications filed as of 13 March 2020.
Employers who are temporarily unable to provide work for their employees due to a reduction in turnover, production, customer base or orders caused by the Coronavirus can also request temporary unemployment due to force majeure, instead of temporary unemployment for economic reasons.
- Companies that (partially) close because they do not have tasks suitable for telework for (all) their employees and cannot respect the social distancing measures for the exercise of their work and organized transport;
- Employers who have already applied for temporary unemployment for economic reasons due to the coronavirus and who are now affected by government measures;
- Belgian companies affected by the effects of the coronavirus, e.g. because they are dependent on suppliers, and are unable to employ their staff because production is at a standstill;
- Employees for whom it can be clearly proven that there is no possibility to provide in daycare for their children (including the government-provided alternatives);
- Employees who are placed in quarantine on the advice of the company doctor while awaiting a possible test or can provide an attest from the attending physician prohibiting the employee from going to work without being ill for the days of enforced quarantine.
This facilitated access to temporary unemployment for reasons of force majeure applies in principle for the period between 13 March and 30 June 2020.
Many employers already followed the previously installed two-step procedure for white-collar employees, which consisted of temporary unemployment due to force majeure pending the procedure for temporary unemployment due to economic reasons. This two-step procedure is no longer necessary, since temporary unemployment due to economic reasons in the context of the Covid-19 crisis, now falls under the scope of temporary unemployment due to force majeure.
If the temporary unemployment is related to the Coronavirus and the employer has already sent a notice of temporary unemployment for economic reasons for your employees, it is possible to switch to the scheme of temporary unemployment for force majeure (motive: Coronavirus). For this purpose, the employer simply has to indicate 'force majeure' as the reason for the temporary unemployment in the “ASR scenario 5”. This is the only procedural step that is required until 5 April 2020, extendable to 30 June 2020 if the government measures are extended. If the employer states 'economic reasons' as the reason for the temporary unemployment in the ASR scenario 5, then the system of temporary unemployment for economic reasons remains applicable. This is however not recommended, since the latter procedure still requires adherence to the normal procedural steps and since a maximum duration for this system applies per calendar year.
- The light procedure for temporary unemployment due to Covid-19
The light procedure for temporary unemployment due to force majeure caused by Covid-19 can be summarized as follows:
- Temporary unemployment can be retroactively requested an applied as of 13 March 2020;
- Electronically submit a ASR scenario 5 (hours of unemployment) as soon as possible (even before the end of the month if you are already sure of the details of unemployment per employee);
- The employers no longer need to distribute the C3.2 control cards to the employees for the months of March until June;
- The only step to be completed by the employees is to request a document C3.2 from their payment institution via their website. The completed document must be returned to these payment institutions.
The light version thus no longer requires other intermediary procedural steps such as an electronic notification of force majeure to the unemployment office, or the conclusion of a CLA / company plan in the previously applicable two-step procedure. The procedure is applicable until 5 April 2020, extendable until 30 June 2020 if the government extends its measures.
- Simplified and increased (unemployment) allocations
The allocations granted to the employees have undergone significant changes as well:
- The amount of temporary unemployment allocations is increased to 70% of the (capped) average remuneration instead of 65% until 30 June 2020;
- For the time being and due to the influx of requests, the temporarily unemployed full-time employee will receive a standard amount of EUR 1,450 net. If the employee would be entitled to more, then this will be rectified later;
- The employees will receive an allocation of EUR 5,63 / day (exempted from social security contributions) per day of temporary unemployment, this is equal to an estimated EUR 150 / month. This was already the case for temporary unemployment due to economic reasons, but was not foreseen in case of force majeure. Not only will this allocation be provided in the ‘Corona version’ of the temporary unemployment due to force majeure, it will also be borne by the National Office for Unemployment instead of the employer.
- The days of temporary unemployment will be assimilated to working days for annual leave. This was already the case for temporary unemployment due to economic reasons but was not the case for temporary unemployment due to force majeure.
- There is no impact if employees have income from a secondary occupation.
The National Unemployment Office and the payment institutions will make every effort to pay these allocations in the course of April. In the meantime, those for whom it takes much longer will receive an advance payment.
The Flemish government also provides a 1-month allowance in the water, gas and electricity bill for families with at least 1 temporarily unemployed employee as a result of Corona. This allowance amounts to a total of EUR 202,68.
- Flexibility in modalities of temporary unemployment
In the case of force majeure, a company does not have to be completely closed down. In practice, this means that some employees may be temporarily unemployed and others may not. Employees can also alternate between days of unemployment and working days: e.g. a rotation system for employees for urgent work. The employees will receive their normal remuneration for the days worked.
Unemployment must always relate to a full working day.
Updated 3 April 2020
Under the circumstances created by the Covid-19 crisis, with a large physical absence of employees, a severly disrupted operation of many companies and the concern to let the elections proceed safely, the social partners have reached an informal consensus on the collective suspension of the social election procedure.
In concrete terms, the suspension implies that the procedure will be halted ('frozen') from day X+36 and that all procedural steps after X+35 will be postponed until a date to be determined in the coming days. The social partners propose to organize the voting period from Monday 16 to Sunday 29 November 2020. It is now up to the King to ratify this period.
Consequently, the current election day will not take place in May 2020. A new election date will, therefore, have to be chosen which will start on X+36 at the earliest on 23 September.
Nevertheless, any electoral acts currently in progress will have to be continued until day X+35, i.e. the submission of candidacies. This phase is usually carried out digitally through the nomination of candidates by the trade unions via the web application.
The coming days will bring clarity on the practical details and legal consequences and a ratified decision by the government.
The Ministerial Decree of 18 March 2020 made teleworking compulsory in all non-essential undertakings – that have not been shut down – for all employees whose position lends itself to teleworking.
For positions that do not lend themselves to teleworking, companies must take the necessary measures to respect the applicable guidelines, in particular keeping a distance of 1.5 m between each person. This rule also applies to transport organized by the employer.
Non-essential undertakings that are unable to comply with these measures must close down.
Employers who do not comply with these government measures risk severe sanctions. The police have the task of monitoring compliance with the government's measures.
In order to facilitate teleworking for employees who do not normally work from home, the Ruling Commission has set up a fast-track procedure to allow the employers to allocate their employees, regardless of their job category, a tax-free allowance of up to EUR 126,94 per month (see above). National Office for Social Security already applied this (maximum) lump sum cost allowance before the Covid 19-crisis in the context of regular and structural telework. Although employees working from home solely because of the Covid 19-crisis, probably did not do so before, this will fall under the scope of regular and structural telework for the purposes of this cost allowance.
Please note that this is an option, not an obligation.
3. Banking & Finance
UPDATED 8 APRIL 2020
The Law of 27 March 2020 granting authorization to the King to provide a state guarantee for certain credits to combat the consequences of the coronavirus formalizes an agreement between the federal government and the National Bank of Belgium to establish a EUR 50 billion guarantee programme for all new additional loans and credit lines with a maximum term of 12 months (excluding refinancing loans) granted by Belgian banks (or Belgian branches of banks) until 30 September 2020 to viable non-financial companies in financial difficulties as a result of the coronavirus.
- Eligible to obtain the above guarantee are viable non-financial companies, small and medium enterprises, self-employed persons and non-profit organisations. A Royal Decree will be enacted, which will elaborate on the term 'viable'.
- At the end of the guarantee arrangement, losses on the guaranteed credits will be shared between the financial sector (and the public sector, as follows: losses up to 3% will be for the account of the financial sector, losses between 3% and 5% will be shared on 50% basis, and any losses higher than 5% will be covered by public sector for 80% of such losses).
- The NBB and Febelfin (the official Belgian federation of the financial sector) monitor the above measures.
With the support of the National Bank of Belgium and the federal government, the banking sector has agreed to allow payment extensions in respect of facilities granted to companies and mortgage credits granted to natural persons:
- Facilities granted to companies:
- a payment extension of 6 months will be granted, only applying to the principal amount; the interest still has to be reimbursed. The total term of the credit will be extended in accordance with the period of payment extension. No administrative costs or handling fees are attached;
- for non-financial enterprises, small and medium-sized enterprises, the self-employed and non-profit organisations that meet the following 4 conditions:
- The enterprise experiences payment difficulties as a result of the corona crisis
- The enterprise is permanently established in Belgium
- The enterprise was not already in default with regard to current credits or tax payments or social security contributions on 1 February 2020 or had less than 30 days arrears on aforesaid debts on 29 February 2020
- The enterprise has performed its contractual obligations with all banks during the last 12 months prior to 31 January 2020 and is not subject to active credit restructuring
! Please note that public authorities cannot apply for a deferral of payment;
- for all usual types of credit, except leasing and factoring (a bilateral agreement between the company and the leasing resp. factoring company is of course possible).
- Mortgage credits granted to natural persons:
- a payment extension of 6 months will be granted, applying to both the principal amount and interest. The total term of the credit will be extended in accordance with the period of payment extension. No administrative costs or handling fees are attached.
- For natural persons who meet the following 4 conditions:
- income has fallen or is entirely lost as a result of the coronavirus crisis and the measures taken by the government in relation thereto;
- on 1 February 2020, there were no arrears in payment in respect of the mortgage credit for which payment extension is requested;
- the mortgage credit is entered into on the only residence being also the borrower’s main residence in Belgium (at the moment of submitting the request for payment extension);
- at the moment of submitting the request for a payment extension, all movable assets arising from the sight deposit accounts and savings accounts and from a securities portfolio with the bank should not exceed EUR 25,000. Retirement savings are not taken into account.
- The payment extension will not be registered in the Central Individual Credit Register ('Centrale voor Kredieten aan Particulieren/La Centrale des crédits aux particuliers').
The federation of insurance companies (Assuralia) has also announced a similar package of measures in favour of natural persons laid off temporarily because of the coronavirus crisis, and vulnerable companies hit by the coronavirus crisis:
- For natural persons laid off temporarily:
- Extension of cover for pension, death, disability and hospitalisation under group insurance. Payment extension for premiums until 30 September 2020.
- Interest and capital repayments on mortgage loans contracted with insurance companies, as well as payment of premiums on mortgage protection insurance are suspended until 30 September 2020, provided that policyholders can prove they face coronavirus-related financial difficulties. In addition, payment deferral until 30 September 2020 can be obtained for home insurance premiums linked to mortgage loans falling due between 30 March and 30 September 2020.
- For other types of insurance: policyholders should contact insurer/intermediary
- For companies:
- Automatic premium reduction for insurance cover (often already provided for in insurance policies concerning accidents at work, third-party liability, etc.) in the event of any reduction in business activity.
- In case of having to suspend activities in accordance with government measures: possibility to obtain payment deferral, by agreement with their insurer.
- For loans: the insurers will follow the conditions applicable to the banking sector, being loan repayment delay (interest payments and capital repayments) until 31 October 2020.
In the Flemish Region, the existing guarantee scheme to finance debts is enlarged. For this purpose, the government adds EUR 100 million to the existing capacity of EUR 300 million. The aid measures allow companies that are unable to pay their personnel, purchase raw materials or pay invoices, to find financing for their working capital from the bank.
The existing guarantee scheme already allows companies unable to conclude financing agreements due to a lack of sufficient guarantees to have up to 75% of the commitments covered in exchange for a one-off premium of 0.50 %. The current scheme also enables companies to obtain a bridging loan guaranteed for existing non-bank debts no older than 3 months.
The enlarged guarantee scheme now allows companies suffering financially as a result of the coronavirus crisis to obtain a guarantee for bridging loans in relation to existing non-bank debts no older than 12 months in exchange for a one-off premium of 0.25%.
The duration of the guarantee scheme is limited to a maximum of 10 years for amounts up to EUR 750,000.
Finally, bank debts under existing credit facilities and investment credits not yet covered by the guarantee arrangement, can be guaranteed to the extent that the bank is prepared to grant a payment extension of minimum 3 months.
The applicant who wishes to make use of the guarantee, should motivate that the guaranteed credit will be reserved for solving the coronavirus-related financial problems.
Additionally, via Participatiemaatschappij Vlaanderen (PMV), the Flemish government grants guarantees through its so-called Gigarant-arrangement for amounts exceeding EUR 1,500,000 for loans made to businesses. 80% of the underlying financing can be covered. The guarantee is for a maximum of 8 years, and only benefits of the business and personal sureties established by the bank for the guaranteed loan. Borrowers will pay a guarantee premium (in line with market conditions) and will bilaterally agree with PMV on employment in Flanders.
- Eligible to receive such Gigarant-guarantee, are small, medium-sized and large companies that:
- can present a properly substantiated business plan,
- (preferably) have growth or investment plans,
- allocate the underlying financing to economic activities in Flanders,
- are not in financial difficulties,
- do not operate in the fisheries or agricultural sectors.
- All the usual types of credit in euro can be guaranteed, including financing for working capital, investment loans, long-term loans, leasing, factoring, bank guarantees, acquisition loans, etc. Existing loans, as well as new loans, qualify for the guarantee.
- The funds cannot be used to make direct or indirect payments to company shareholders or management (unless such appropriation arises from existing agreements in line with the market).
- Via the Gigarant-arrangement, PMV is also able to invest in companies by means of capital participation and/or contributions by means of a (ordinary, mezzanine or subordinated) loan. In this respect, PMV particularly addresses companies that face a turnaround or a strategic transition. PMV is prepared to assist such companies with a guarantee for their external financing as well as a co-investment with private investors. For new dossiers, such investment is limited to maximally 1/4th of the requested guarantee. Businesses that make use of PMV’s Start-up Financing (Startlening/Prêt de démarrage), Co-Financing (Cofinanciering/Cofinancement) or Co-Financing + (Confinanciering + /Cofinancement + ) scheme, temporarily do not have to reimburse these loans. This suspension lasts for 3 months and, if necessary, can be extended to 6 months.
- PMV will also grant subordinated loans for a term of 3 years, a support measure only available to SMEs, in order to bring their turnover and cash flow again to a higher level, and to give investors and financiers a leg-up. The support measure is only addressed to SMEs that continue their activities or recommence their activities on the short-term; in case an SME already experienced financial difficulties before the coronavirus crisis, it is not eligible to receive a subordinated loan.
Lastly, PMV will contact businesses that have been granted a loan by PMV or businesses in which PMV has a capital participation, in order to evaluate the impact of the coronavirus crisis and to take all useful measures and other important financial decisions.
The Brussels government will provide a guarantee on bank loans for a total amount of EUR 20,000,000.
The authorities promise an accelerated or timely treatment, commitment and settlement of expansion aid for corporations of the horeca, tourist, culture and event sector.
Finally, the government intends to strengthen the counselling of corporations suffering financial difficulties by increasing the dotation of the Centrum for Corporations in financial difficulties (Centrum voor Ondernemingen in moeilijkheden/Centre pour Entreprises en difficulté).
UPDATED ON 8 APRIL 2020
The Federal government decided that self-employed individuals (main occupation) and assisting spouses who have to interrupt their self-employed activities between 1 March 2020 and 30 April 2020 as a consequence of the coronavirus crisis can be entitled to transitional rights (“overbruggingsrecht”/”droit passerelle”), including a replacement income. Situations are assessed on a case-by-case basis.
The Flemish Region offers a so-called one-off nuisance premium to all corporations and stores (e.g. clothing stores, electronics stores, do-it-yourself stores) that have to shut down as a consequence of the government’s coronavirus-related measures
- EUR 4,000 – compulsory closure.
- EUR 2,000 – closure only during weekends.
- Upon expiry of the initial lockdown period (5 April 2020) the lump sum amount is replaced with a daily compensation of EUR 160.
- The premium is awarded per establishment, on the condition that at least one staff member is employed at the establishment’s location; one request can be submitted in respect of up to 5 establishment units.
- Requests can be submitted as from Monday 27 March onwards via the website of Flanders Innovation & Entrepreneurship ('Agentschap Innoveren en Ondernemen', commonly referred to as 'VLAIO'), within 30 days following the date of (full/partial) closure of the business. The deadline to submit a request is 5 May 2020. It is expected that VLAIO will pay the nuisance compensation 14 days after receipt of valid requests.
In addition, a one-off incentive premium is introduced for corporations that suffer a decline in production, in turnover or in orders as a consequence of the coronavirus crisis. The monthly premium, granted to the companies’ employees, ranges between EUR 68.00 and EUR 172.00. In order to qualify for this compensation, the applicant needs to demonstrate a fall in production of at least 20 % and needs an approved plan of collective fall in working hours. The applicant can submit a request to receive the incentive premium until 30 June 2020.
Finally, a one-off corona compensation premium of EUR 3,000 is introduced for businesses and their suppliers that are allowed to continue their economic activities but (can proof that they) encounter at least 60 % loss of revenue in the period 15 March-30 April 2020 compared to the same period last year.
Also eligible to receive this premium are self-employed persons; start-ups; and non-profit organisations that have at least one full-time employee. Further details are to be announced by VLAIO.
In the Walloon Region, EUR 233 million is made available to financially support Walloon businesses.
Corporations (including the hotel and catering industry, travel agencies, the retail trade, etc.) having to close as a consequence of the coronavirus crisis will receive a one-off premium of EUR 5,000; businesses subject to partial closure are entitled to EUR 2,500. Requests to receive aforesaid compensation can be submitted with the Walloon Administration for Economy, Employment and Research ('Service public de Wallonie Economie, Emploi et Recherche') from 27 March 2020 onwards; they must be submitted within 60 days following the date of (full/partial) closure of the business.
Eligible to receive the premium are (i) small enterprises and micro-enterprises that (ii) can prove they carried out economic activities before 12 March 2020; (iii) carry out their activities in Wallonia, (iv) have paid social security contributions in 2018; (v) are active in one of the eligible sectors.
Several Walloon agencies (a.o. SOWALFIN, SRIW, SOGEPA) offer some financial comfort by:
- Suspending the obligation to reimburse outstanding loans until the end of March 2020 (and if extended, until the end of April 2020), without charging any costs in case the outstanding amount does not exceed EUR 2,500,000. If the outstanding amount does exceed the aforesaid amount, an individual assessment of the credit file is undertaken.
- Granting guarantees on short-term credit facilities and investment credits
- Offering urgent support to facilitate companies’ cash flow by providing a loan of EUR 200,000 with a fixed interest rate of 2% and a deductible repayment of one year.
The Brussels-Capital Region also intends to introduce a one-off premium of EUR 4,000 for businesses subject to compulsory closure as a consequence of the government’s coronavirus-related measures.
Eligible to receive this premium are businesses (i) obliged to put their business activities on hold on the basis of article 1 of the Ministerial Decree of 23 March 2020, (ii) employing fewer than 50 full-time employees ('voltijds equivalenten/équivalents temps plein') in the entire company (not in each establishment), and (iii) active in one of the sectors listed in the Annex to the Ordonnance of the Brussels’ government of 26 March 2020.
The request can be submitted online via the site of Brussels Economy and Employment (BEE), until 1 June 2020. Per company, one request can be submitted in respect of up to 5 establishment units.
- The request must be accompanied by (1) the last quarterly (or monthly) VAT return; and (2) a bank certificate relating to the company's account.
- It is expected that BEE shall communicate the granting decision within three months after receipt of the request.
In addition, Finance & Invest.brussels has been assigned to take the following initiatives:
- Provide loans against low-interest rates to key-suppliers in the catering sector which must allow to offer an extended term of payment to their catering clients;
- Provide loans against low-interest rates to catering businesses employing more than 50 employees.
Finally, the Brussels government will apply a moratorium on a case-by-case basis, to the reimbursement of capital of loans granted by Finance & Invest.brussels to the corporations affected of the aforementioned sectors.
The Belgian regulator, the FSMA, prohibits short selling during one month for all shares traded on Euronext Brussels and Euronext Growth.
Initially, the short selling ban only targeted a limited number of shares which had taken some blows. However, given that the consequences of the Covid-19 crisis continuously evolve, including the adverse effects on the real economy and the financial markets, and given the measures that are taken on a national, supranational level around the globe, the FSMA decided to introduce a general short selling ban in respect of shares of companies listed on the aforementioned stock markets) that lasts for one month, until 17 April 2020.
Note that the prohibition does not apply to the activity of market making (i.e. members of trading venues (e.g. credit institutions and investment firms) that deal as a principal in a financial instrument in any of the two capacities (posting quotes/fulfilling orders).
The Dutch-Speaking Enterprise Court in Brussels has taken a list of measures to ensure the continuance of its activities, albeit in a limited way.
Court sessions concerning bankruptcy are only held in case of urgent matters.
Currently, bankruptcies proceedings will not be closed. Typical creditors, such as the federal public services ‘Social Security’ and ‘Finance’ are requested to, to the extent possible, postpone their summons in bankruptcy.
The European Central Bank (ECB) has announced a ‘Pandemic Emergency Purchase Programme’ (PEPP) in light of the Covid-19 crisis.
Concretely, the ECB will mainly engage in a temporary asset purchase programme of private and public sector securities for which it makes available EUR 750 billion.
The programme will terminate once the ECB considers the Covid-19 crisis to be over, but will in any case last until the end of the year. Further actions consist of the expansion of the range of eligible assets under the corporate sector purchase programme, and to ease collateral standards. The ECB clearly looks forward, stating that its Governing Council “will do everything necessary within its mandate” and “will explore all options and all contingencies to support the economy through this shock”.
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