Coronavirus | Belgian measures for businesses
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 regular basis.
1. Tax related measures
Update January 2021
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 which were mandatorily closed entirely were initially entitled to a lump-sum compensation of €4,000 while businesses which could remain open on weekdays were entitled to a compensation of €2,000. Companies that are still required to remain closed after 4 April 2020, are entitled to an additional compensation of €160 per day. A compensation of EUR 2,000 is also foreseen for businesses that do not need to close but that can demonstrate that the turnover has decreased with at least 60% in a period of one month as of the reopening compared to a reference period last year. Funds are also made available in the Walloon and Brussels region for similar measures. These compensation payments are not taxed. This exemption applies until 31 March 2021. Compensations that were previously treated tax exempt but are reimbursed to the respective region shall not be considered a tax deductible expense.
Update 15 July 2020
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. The Ruling Commission announced to handle the ruling request within a short timeframe.
On 14 July 2020, the Belgian tax administration has now issued a circular letter allowing, under certain conditions, such a tax-free allowance in case of regular and structural homeworking carried out by employees, even without a ruling. If employees work at home for at least 5 working days per month, the employer may grant a lump-sum homeworking allowance of up to EUR 126.94 per month. As a result of indexation, this amount will increase to 129.48 euros per month from 1 April 2020. The circular letter can be found here.
Updated February 2021
At the beginning of the coronavirus in 2020, the Belgian government took various measures to defer the payment date for corporate income tax, personal income tax, legal entities tax, wage withholding taxes, VAT and certain excise duties. At present, no similar measures have been announced for 2021 yet.
Companies facing financial difficulties as a direct result of the Corona virus pandemic, regardless of their activity or sector, can however still request a number of tax and social security support measures from the Federal Tax Authorities, 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 Corona virus 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 which 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 an assessment notice or a request for payment. Application of these measures has been extended to 31 December 2020.
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 addition to the above, various measures are also announced at the regional levels.
The Flemish Government has for example announced that the payment of the immovable property tax (onroerende voorheffing / précompte immobilier) for 2020 is deferred for approximately four months (i.e. until 30 April 2021) for companies active in the Flemish Region. No late payment interest will be charged for that period. The deferral is granted automatically and companies may disregard the payment term of 31 December 2020 mentioned on the assessment notice. Self-employed persons can flexibly request a payment plan and, if necessary, a waiver of interest on late payments.
In the Walloon region the regional tax payments are for example suspended as the deadlines will be extended by the period corresponding to the crisis and the registration duty for converting mortgage mandates into a mortgage has temporarily been reduced to 0%.
In the Brussels region, the Brussels Government has for example announced that it will extend the two-month payment term for immovable property tax and road tax with an additional two-months and that the registration duty for converting mortgage mandates into a mortgage will temporarily not be collected.
For some additional measures regarding the payment of registration duties, reference is made to the section ‘Filing deadlines postponed’ below.
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.
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.
The measure shall apply to prepayments relating to a taxable period ending between 30 September 2020 and 31 January 2021 included.
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%.
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.
This measure does not apply to:
- companies that repurchase own shares, make a capital reduction or attribute/pay dividends between 12 March and the end of the relevant period;
companies that pay a variable remuneration between 12 March 2020 and the end of the relevant period to the main representative of the executive directors, to the chairman of the executive board, to the main representative of the other persons in charge of the management or to the main representative of the persons in charge of the daily management;
taxpayers that hold a direct participation between 12 March 2020 and the end of the relevant period in companies that are established in certain tax haven countries;
taxpayers that pay amounts of € 100,000 or more between 12 March 2020 and the end of the relevant period to companies established in certain tax haven countries if it is not demonstrated that these payments were made in the context of an actual and genuine transaction
Update 24 July 2020
The federal government has decided that all VAT taxable persons filing periodical VAT returns (i.e. monthly or quarterly VAT returns) are not obliged to pay the December advance payment in December 2020. As a result, the VAT due on the transactions carried out in December respectively Q4 of 2020 shall only have to be paid to the Belgian State on 20 January 2021 at the latest.
Update 10 February 2021
In 2020 the Belgian tax authorities allowed various extensions for the filing deadline of income tax returns, VAT returns, IC sales listings, annual client listing and CRS/FATCA reporting. It remains to be seen whether similar administrative tolerances will be granted in 2021.
Update 15 January 2021
Due to the security measures in place in Belgium in relation to the second wave of the coronavirus (as of 1 November 2020), notary offices and citizens are not always able to complete all (tax) formalities on time. The Flemish Tax Administration therefore provides, as a general measure, an extension of the deadline until 30 April 2021 if the deadline would normally expire between 1 November 2020 and 30 April 2021. It is not necessary to apply for this postponement. This implies that:
- no tax increase for a late inheritance tax return will be imposed if this tax return is filed no later than 30 April 2021. If, for example, an inheritance tax return should have been filed by 28 November 2020 at the latest, this deadline is now extended to 30 April 2021.
- no tax increase will be imposed if the period within which a deed must be submitted for registration is exceeded. If, for example, two parties agree to sell an immovable property and this sale should be registered by authentic deed on 28 November 2020, this deadline is now extended to 30 April 2021. In addition, the period of time to comply with the conditions to maintain a favourable regime is extended until 30 April 2021 as well.
This also implies that the payment of the registration duties can be postponed to the same extent
On 25 May 2018, the Council of the European Union (the Council) adopted the Mandatory Disclosure Directive ((Directive (EU) 2018/855), also known as DAC6). DAC6 introduces mandatory disclosure rules for EU-linked intermediaries and – under certain circumstances – taxpayers. As follows from the Directive, arrangements of which the first step is implemented between 25 June 2018 and 1 July 2020 must be reported before 31 August 2020. From 1 July 2020 onwards reporting is required within 30 days. In view of the COVID-19 situation, and in view of a political agreement reached between the EU Member States on an (optional) postponement of this obligation, the Belgian tax authorities decided to grant a postponement of 6 months by way of an administrative tolerance. Concretely, this results in the following deadlines for the notifications to be made to the Belgian competent authority:
- The reportable cross-border arrangements of which the first step is implemented between 25 June 2018 and 1 July 2020 have to be reported before 28 February 2021.
- The 30-day reporting period starts on 1 January 2021 for:
- Reportable cross-border arrangements being made available for implementation, being ready for implementation, or when the first step in the implementation has been made between 1 July 2020 and 31 December 2020;
- Intermediaries that have directly or indirectly provided aid, assistance or advice with respect to designing, marketing, organising, making available for implementation or managing the implementation of a reportable cross-border arrangement between 1 July 2020 and 31 December 2020.
- The first periodic report in respect of “marketable” arrangements should be submitted on 30 April 2021 at the latest.
This delay applies to federal taxes and regional taxes for which the Belgian tax administration is responsible. For Flemish taxes, such as Flemish inheritance taxes and certain registration duties, a similar delay has been granted by the Flemish tax authorities.
At the end of January 2021 a further delay was announced: arrangements to be reported during the months of January and February 2021 should be reported by 28 February 2021. The penalties provided for non-timely submission will not be applied during this period.
Update 24 July 2020
In principle, tax losses can only be carried forward and no carry-back to previous tax years exist in Belgium. However, in order to improve the cash position of businesses and companies, a one-time possibility is introduced to carry-back the losses incurred during the COVID-19 crisis to compensate the taxable profits of the previous financial year.
The loss incurred in the COVID-19 year should be estimated prudently as an over-estimation will result in a (non-tax deductible) tax increase (personal income tax) or in a (non-tax deductible) separate assessment (corporate income tax) becoming due.
Self-employed persons and businesses subject to personal income tax are allowed to carry back the loss expected in income year 2020 due to the corona crisis to income year 2019. The loss-carry back takes the form of an ‘economic exemption’ which needs to be claimed through a separate form since tax return form has ready been published in the Belgian Gazette. The exemption cannot result in a negative outcome. The amount that has been exempt is added to the taxable basis in 2020 (assessment year 2021) in order to avoid a double deduction of the same loss.
The following taxpayers are excluded from this rule:
- Enterprises that were already in difficulties according to art 2, §1, 4/2 when corona started (i.e. on 18 March);
- Taxpayers that are taxed on lump sum taxable basis.
Companies will be able to off-set the estimated loss incurred in the subsequent (i.e. the COVID-19) year from the taxable profit realised during a financial year closing between 13 March 2019 and 31 July 2020. Technically, the taxable reserves in the corporate income tax return are reduced for the amount of the estimated loss through the creation of a tax exempt reserve. The exemption cannot be higher than the adjusted result of the taxable period with an absolute max of 20mio€.
The amount that has been exempt is added to the taxable basis (through an increase of the taxable reserve) in the subsequent COVID-19 year in order to avoid a double deduction of the same loss. In addition, the taxable basis will be increased (through a disallowed expense) if the amount of the exemption is taxed in a subsequent year at a lower tax rate than the rate applicable at the moment the estimated loss was used to off-set the taxable basis. This measure was introduced in order to neutralize the benefit of this lower tax rate.
The following companies are excluded from the rule:
- Companies that distribute a dividend, repurchase own shares or perform a capital (or similar) reduction between 12 March 2020 up to and including the filing of the CIT return in relation to assessment year 2021;
- Companies subject to a special tax regime;
- Companies that hold a direct participation between 12 March 2020 up and including the filing date of the CIT return in relation to assessment year 2021 in a company established in certain tax haven countries;
- Companies that pay amounts of € 100,000 or more between 12 March 2020 up and including the filing date of the CIT return in relation to assessment year 2021 to companies established in certain tax haven countries if it is not demonstrated that these payments were made in the context of an actual and genuine transaction;
- Companies that were already in difficulties according to art 2, §1, 4/2 when corona started (i.e. on 18 March).
Update 2 December 2020
Companies are allowed to exempt part of their profits realised in assessment years 2022, 2023 and 2024 by booking these profits to an exempt "reconstruction reserve" for the purpose of strengthening their solvency which was affected by the COVID-19 crisis. This reconstruction reserve thus allows future profits to be treated in a fiscally advantageous manner, provided certain conditions are fulfilled.
The measure does not apply to:
- Companies that distribute a dividend, repurchase own shares or perform a capital (or similar) reduction between 12 March 2020 up to and including the filing of the CIT return in relation to the assessment year in which the reconstruction reserve was accounted for;
- Certain companies subject to a special tax regime;
- Companies that were already in difficulties according to art 2, §1, 4/2 when corona started (i.e. on 18 March).
The reconstruction reserve only remains tax exempt to the extent that:
- the reconstruction reserve is accounted for and maintained in a separate reserve account;
- The company does not hold a direct participation in a company established in certain tax haven countries between 12 March 2020 up and including the last day of the taxable period in which the reconstruction reserve is benefitted from;
- The company does not pay amounts of € 100,000 or more to companies established in certain tax haven countries between 12 March 2020 up and including the last day of the taxable period in which the reconstruction reserve is benefitted from (unless it is not demonstrated that these payments were made in the context of an actual and genuine transaction);
- Equity and employment are maintained.
Update January 2021
The investment deduction is a tax deduction that comes on top of the deduction of the depreciation of eligible assets. In order to benefit from the investment deduction, certain conditions need to be fulfilled. The one-time investment deduction is calculated as a percentage of the acquisition value related to the investments. The base rate for investments by small and medium-sized enterprises (SME) is 8 percent. In order to encourage investments by these enterprises, this base rate was increased to 20 percent calculated on the acquisition or investment value of fixed assets acquired or created between January 1, 2018 and December 31, 2019. Due to the COVID-19 outbreak and in order to stimulate investments in these difficult times, the base rate is set at 25% for investments made between 12 March 2020 and 31 December 2020. This measure has meanwhile been extended for investments made prior to 31 December 2022.
If the company has no sufficient taxable basis to use this investment deduction, this one-time investment deduction for SME’s can in principle only be carried forward for one year. Due to the negative financial impact of COVID-19, companies that could not (fully) use the investment deduction in relation to investments made in the period 2019-2021, will likely not be able to use any unused investment deduction in the subsequent year. For the investments made until 31 December 2021, the unused investment deduction can therefore exceptionally be carried forward for two years instead of one year.
Update 24 July 2020
In order to support certain sectors, employers have the possibility to grant consumption vouchers to their employees. These vouchers will be tax exempt in the hands of the employees and – contrary to other vouchers – fully tax deductible in the hands of the employer.
Update January 2021
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 in principle has 18 months or 24 months to incur expenses. In order to support this sector, some additional measures have been taken as well, such as the possibility to change the agreement in order to designate another work or art, the possibility for investors with liquidity problems to partially forego their investment or to postpone their payment with three months and more flexibility regarding the periods in which the expenses can be made for agreements concluded until March 2021.
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 2020 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.
Update January 2021
Although income from employment is generally taxable in one’s “home” state, employees which 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 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 Germany, France, Luxembourg or the Netherlands on the other hand.
Belgium and the Netherlands have agreed that - for the purposes of the application of article 15, § 1 of the double tax treaty concluded between Belgium and the Netherlands - working days for which remuneration was received and on which the employee worked at home solely because of measures taken by the Dutch or Belgian government to fight the COVID-19 pandemic, are deemed to be spent in the Contracting State in which the employee would be employed without these measures. This fiction cannot be applied to working days which, independently of these measures, the employee would have spent at home or in a third state. In particular, it cannot be applied by employees who, in accordance with their employment contract, generally exercise their employment from home. Employees who use the fiction are obliged to apply it in a consistent manner in both Contracting States and to maintain evidence (e.g. a written confirmation from the employer with respect to the days that an employee has been working at home due to the COVID-19 measures). This fiction can only be applied to the extent that the salaries for the days that were spent working at home are effectively taxed by the normal work state. The agreement is effective as of 11 March 2020 until 31 March 2021. The agreement also contains provisions with respect to payments that an employee receives during a temporary unemployment.
On 6 May 2020, a similar fiction is agreed upon between Belgium and Germany concerning article 15, § 1 of the Belgian-German double tax treaty for the days that an employee is working at home as a result of the COVID-19 measures taken by the Belgian and German Governments. Similar conditions apply. The agreement applies until 31 March 2021 as well.
Article 11, § 1 of the Belgian-French double tax treaty provides that salaries, wages and other similar remuneration are taxable only in the Contracting State on whose territory the personal activity, which is the source of such income, is exercised. On the basis of the rules on frontier workers laid down in the additional Protocol to this double tax treaty, the salaries, wages and other similar remuneration of a French employee working in the Belgian frontier zone are in principle taxable in France (i.e. the State of residence) if the employee has a permanent home exclusively in the frontier zone of France. However, there are several conditions that have to be met. One of the conditions is that the French frontier worker must not leave the Belgian frontier zone for more than 30 days per calendar year in the physical exercise of his/her activity. Article 7(b) of the Protocol contains a list of cases which are not taken into account for the application of this 30-day rule, including cases of force majeure beyond the control of the employer and the employee. Already on 13 March, the Belgian and French authorities agreed that the COVID-19 situation will be such a case of force majeure as of 14 March 2020. As a result, the presence of a French frontier worker in his place of residence in France (in particular to telework there) will not be taken into account for the calculation of the 30-day period. The measure applies until 31 March 2021. This agreement concerns only the French frontier worker but does not provide a solution for other employees working from home. That is why Belgium and France also agreed on 15 May 2020 to give all other employees resident in a Contracting State who habitually carry out their activity (full-time or part-time) in the other State the possibility of using the same fiction as mentioned above (under similar conditions). This possibility applies from 14 March 2020 until 31 March 2021.
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. In addition, an agreement has been reached on 19 May 2020 between Belgium and Luxembourg that is similar to the agreement that Belgium concluded with the Netherlands, Germany and France for other employees that work cross-border. The agreement applies from 11 March 2020 to 31 March 2021.
On 17 June 2020, the Belgian tax authorities published FAQ on the impact of corona on cross-border employment which can be viewed here. According to the FAQ, home working days due to the pandemic are not disregarded for employees residing in Belgium and generally working in another country than France, Germany, Luxembourg or the Netherlands. Hence, the former country of work may not keep its taxation right.
With effect from 1 January 2019, Belgium introduced a new interest limitation rule in line with the Anti-Tax Avoidance (ATAD). According to this rule, any “exceeding borrowing costs” are only tax deductible up to the maximum of 30% of the taxpayer’s EBITDA or EUR 3 million. A Grandfathering was introduced for existing loans: loans that are concluded prior to 17 June 2016 are excluded from this rule if no essential changes have been made on or after this date. Essential changes include a.o. a change in the parties, the interest rate, the duration or the amount borrowed.
The exceptional situation caused by Covid-19 and the measures imposed in that respect by the federal government will inevitably have an adverse effect on the liquidity and solvency of some companies. In this context, specific payment methods (e.g. a deferral of interest or capital payment) may be authorised for certain loans. A circular letter now clarifies that the authorisation of specific payment arrangements for loans concluded before 17 June 2016 should not be considered as a fundamental change when:
- the taxpayer can demonstrate that the payment problems are the result of the crisis caused by COVID-19, and
- the terms of payment appear in an approved application to a financial institution or are included in a supplementary agreement.
In other words, these loans will be able to continue to benefit from the grandfathering rule.
These payment problems, which are the result of a general liquidity and solvency problem, may be reflected in particular in a fall in turnover or activity, temporary or total unemployment among staff or temporary closure as a result of the measures imposed by the federal government as part of the fight against COVID-19.
Updated 24 July 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 to supplies made since 1 March 2020 up until 1 September 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.
- Certain institutions mentioned under article 44, §2, 2° of the Belgian VAT Code:
- Retirement homes
- Homes for people with a disability
- Schools and universities
- Humanitarian aid organizations (for their interventions relating to COVID-19)
- Approved institutions referred to in Regulation 2020/491
- Other government institutions
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 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.
In order to mitigate shortages of computers in Belgian schools, a similar measure was adopted to stimulate the donation of computers to schools established in Belgium. The same documents are required as for donations of medical supplies. This measure will also apply for supplies made since 1 March 2020 up until 31 December 2020.
Income tax consequences
Update 24 July 2020
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 of the above mentioned medical goods done between 1 March 2020 and 31 July 2020 will not qualify as an abnormal or benevolent advantage and the costs associated with the donated medical goods will be tax deductible. A similar measure is introduced for donations of computers to schools established in Belgium between 1 March 2020 and 31 December 2020.
Please note that other natural persons subject to personal income tax (resident/non-resident) that donate these medical goods and computers to certain institutions can exceptionally and temporarily receive an increased tax deduction.
In order to stimulate the supply of goods which are required to comply with the preventive measures in the fight against the COVID-19 pandemic, the Federal Government has decided to temporarily apply the reduced VAT rate of 6% (instead of the standard VAT rate of 21%) on the supply, intra-Community acquisition and import of:
- face masks, classified under the CN codes 4818 90 10 00, 4818 90 90 00, 6307 90 98 10, 6307 90 98 91, 6307 90 98 99 and 9020 00 00 10. As from 1 January 2021 the combined customs nomenclature has changed with an impact on the classification of face masks. As from this moment, this measure applies to face masks classified under the following CN codes: 4818 9010 00, 4818 9090 00, 6307 9010 00, 6307 9093 11, 6307 9093 19, 6307 9093 20, 6307 9093 90, 6307 9095 11, 6307 9095 19, 6307 9095 20, 6307 9095 91, 6307 9095 95 and 9020 0010 90, and
- hydro alcoholic gels classified under the CN codes 2207 20 00, 3808 94 10, 3808 94 20 and 3808 94 90.
This measure will apply as from 4 May 2020 until 31 December 2020. This period has been extended with 3 months, and therefore will also apply to all supplies, intra-Community acquisitions and imports of the abovementioned goods for which VAT becomes due as from 1 January 2021 until 31 March 2021 (see Circular letter no. 2021/C/6 of 18 January 2021).
This national measure complements the European Commission’s decision – in the fight against COVID-19 – to temporarily waive customs duties and VAT for State bodies and charitable organizations when importing medical devices and protective equipment from third countries.
The European Commission already decided to waive VAT and customs duties on imports of necessary medical equipment destined for distribution free of charge by State bodies or approved organizations through its decision of 3 April 2020. With its decision of 28 October 2020, the European Commission has extended the application of this measure until 30 April 2021.
The Council has adopted amendments to the VAT Directive to allow EU Member States to temporarily exempt COVID-19 vaccines and testing kits, as well as closely related services, from VAT when sold to hospitals, medical practitioners and individuals.
This measure only concerns COVID-19 vaccines which have been authorized by the Commission or by the EU Member States and COVID-19 testing kits that comply with the applicable EU legislation.
The measure will apply until 31 December 2022.
EU Member States may also apply a reduced VAT rate to testing kits and closely related services, if they choose to do so (instead of a zero rate). This possibility was already available for vaccines.
The Belgian Minister of Finance has in this respect decided that COVID-19 vaccines and in vitro diagnostic medical devices for this disease are subject to a 0% VAT rate. This measure applies as from 1 January 2021 until 31 December 2022.
The supply, intra-Community acquisition and import of the following goods is subject to the 0% VAT rate (see Circular letter no. 2021/C/3 of 11 January 2021):
- COVID-19 vaccines that have been granted a European market authorization and are registered as medicines by the Minister of Public Health, and
- Diagnostic tests for this disease, such as PCR tests (nucleic acid test) and antigen tests via a sample taken from the nose, serological tests via blood sampling and (antibody) self-testing. The diagnostic tests must meet the requirements of the EU in the field of medical devices for in vitro diagnostics (see a.o. Directive 98/79/EC of the European Parliament and of the Council of 27 October 1998 on in vitro diagnostic medical devices and Regulation 2017/745 of the European Parliament and of the Council of 5 April 2017 on medical devices, amending Directive 2001/83/EC, Regulation (EC) No 178/2002 and Regulation (EC) No 1223/2009 and repealing Council Directives 90/385/EEC and 93/42/EEC).
This 0% VAT rate also applies to services which are closely linked to the aforementioned vaccines and medical devices (e.g. taking the test, analysis of the test at the assigned lab, administering a vaccine). This means that no VAT shall be due on the services of medical, paramedical, pharmaceutical and support staff in the vaccination centers.
The Minister of Finance has also decided that the provision of personnel by a city, municipality or CPAS to a first-line zone in the context of the organization and operation of vaccination centers can also take place under the 0% VAT rate (and so that no VAT would be due).
Update 21 December 2020
Men, women and men-women hairdressers can benefit from a modification to the calculation of their forfeit to adapt their turnover to the corona crisis.
The number of type services that should be taken into account on the calculation sheet for 2020 (box II) that serves as a base for the VAT return related to Q4 2020 are:
- For men: 307 instead of 1140
- For women: 144 instead of 534
2. Employment related measures
Updated on 27 November 2020
Telework mandatory for non-essential undertakings
Teleworking is in the second lockdown period (starting 2 November 2020) compulsory in all companies, associations and services for all staff members, unless it is impossible due to the nature of the function or due to reasons of continuity of the business, activities or services. The employer will provide staff members who are unable to telework with a certificate or any other evidence confirming the need for their presence at the workplace.
Businesses, private and public companies and services necessary for the protection of the vital interests of the nation and the needs of the population as described in the Royal Decree of 1 November 2020, as well as producers, suppliers, contractors and subcontractors of goods, works and services essential to the activity of these companies and services, are not subject to the mandatory telework.
All companies, associations and services shall however take appropriate and timely preventive measures to ensure the rules of social distancing and to provide a maximum level of protection. The staff members as well as third parties shall be informed of these measures and staff members will be provided with the appropriate training.
A recently updated "Generic Guide to prevent the spread of COVID-19 at work", is made available on the website of the Federal Public Service Employment, Labour and Social Dialogue, supplemented by guidelines at sectoral and/or enterprise level, and/or other appropriate measures offering at least an equivalent level of protection.
Employers who do not comply with these government measures risk severe sanctions. The social inspection and police have the task of monitoring compliance with the government's measures.
Pretracing foreign employees in construction, cleaning, agricultural, horticultural and meat processing industry
Every employer or user performing activities in the construction, cleaning, agricultural and horticultural work and meat processing sector who temporarily uses an employee or self-employed person residing or living abroad, is obliged to collect and keep up to date a number of data of said employee or self-employed person as of the start of the works.
As an employer or user in the construction, cleaning, agriculture and horticulture and meat processing sector, you must ensure that the Passenger Locator Form has been completed for those employees, prior to the starts of the works in Belgium.
Temporary unemployment due to force majeure – simplified procedure reinstated
On 6 November 2020, the federal government decided to reintroduce the simplified temporary unemployment procedure due to force majeure (COVID-19) for all employers and employees as from 1 October 2020 until 31 March 2021. Consequently, all temporary unemployment due to COVID-19 can again be considered as temporary unemployment due to force majeure, whereby force majeure is to be interpreted broadly. It is irrelevant whether the employer is recognised as an exceptionally hard-hit company or belongs to an exceptionally hard-hit sector.
The employees will receive a benefit equal to 70% of their average capped salary (the cap is € 2,754.76 per month), regardless of the reason of temporary unemployment. In addition, the employees receive a supplement of € 5.63 per day paid by the National Unemployment Office on top of their unemployment benefit. Until 31 March 2021, a reduced payroll tax of 15% will be deducted from the unemployment allocation.
Temporary unemployment due to force majeure – childcare and quarantine
Temporary force majeure unemployment due to COVID-19 also includes temporary unemployment due to childcare and due to quarantine. Temporary unemployment can thus also be invoked for employees who are not sick, but who have to stay at home because of quarantine and for employees who are unable to work because of childcare because the crèche, school or centre for the disabled is closed by a government measure. In the latter case, the employees will provide the employer with a certificate of closure due to COVID 19 provided by the institution.
Temporary unemployment – artists and temporary employees for events
It is possible to apply for temporary force majeure COVID 19 'events' if one can prove a promise on an employment contract (dated 15 April 2020 at the latest) for an event that should have taken place between 14 March 2020 and 31 August 2020. A more recent FAQ list on the website of the NEO extends this period until 31 December 2020.
Government partially financing the holiday pay for temporarily unemployed employees
Days of temporary unemployment are equated with days worked for the calculation of holiday pay. In implementation of the social partners' agreement, the government will intervene in the financing of vacation allowance for temporarily unemployed workers.
Compensation for social security contributions Q3
A compensation will be granted to employers in certain severely affected sectors or employers who have had to close down on the basis of the Ministerial Decisions of 28 October 2020 and 1 November 2020. The compensation will be equivalent to the basic net employer contributions and the student solidarity employer contributions due for the 3rd quarter of 2020. The compensation will be capped per company.
This will also apply to suppliers of these companies insofar as they can demonstrate a loss of turnover of at least 65%.
Postponement of payment social security contributions until 15 December 2020
Employers who were obliged to close in the first COVID-19 wave, as well as employers who shut down on their own initiative and employers who saw their economic activity significantly reduced for Q2 of 2020, were eligible to benefit from deferral of payment of social security contributions. The deferral concerned the contributions due as from 20 March 2020 until the end of Q2 of 2020.
The deferral of payment ends on 15 December 2020.
Amicable repayment plan for social security contributions Q3 and Q4
An adopted legislative proposal extends the possibility for employers affected by the socio-economic consequences of COVID-19 to request an amicable repayment plan for the payment of social security contributions to Q3 and Q4 of 2020.
In contrast to the "traditional" amicable instalments, no contribution surcharges, flat-rate additions and/or interest will be charged for the delayed payments.
Possibility to delay monthly advances on social security contributions until the end of the quarter
An adopted legislative proposal stipulates that the flat-rate additions in the event of failure to comply with the obligations relating to the payment of advances are not due for Q3 and Q4 of 2020, which makes it possible to defer the payment of monthly advances until the due date for balances of quarterly social security contributions.
Supplementary allowance for sick employees
A supplementary benefit will be granted to employees incapacitated for work if the incapacity allowance is lower than 70% of the average gross monthly salary (capped at 2,754.76 EUR). In that case, the allowance will be increased to this amount. The supplement will be achieved by means of a supplement of 5.63 EUR per day.
Supplement on top of the end-of-year premium
The National Unemployment Office will pay a supplement on top of the end-of-year premium to employees who have been temporarily unemployed for at least 52 days in 2020.
The supplement will be equal to 10 EUR per additional day of temporary unemployment (on top of the 52 days). For those eligible, the total supplement will always amount to a minimum of 150 EUR.
The pension measures that ended on 30 September 2020 are being extended. Building up both the statutory pension and pension in the second pillar will be safeguarded for workers who are temporary unemployed.
This will entail the extension of a special legal measures that previously applied in the context of the COVID-19 crisis and which ensured that affiliated employees could continue to benefit in the same way during the period of temporary unemployment from the accrual of the supplementary pension and from coverage for death, health care, incapacity for work and/or invalidity, even if the pension regulations did not provide for this. The supplementary pension and other coverages continued as if the workers were employed, with the calculation parameters (e.g. the reference salary) applicable on the eve of the period of temporary unemployment. The employer had to expressly indicate if he did not wish to implement this measure. Even in that case, the coverage for death foreseen in the plans remains guaranteed.
The new pension measures will also ensure that pensioners who take on additional jobs as employees or self-employed workers, can combine their pension with a benefit for temporary unemployment or a bridging right. It also prevents pensioners who temporarily return to work, for example in the care sector or education sector, from losing part of their pension.
“Double crisis bridging right” until 31 December 2020
The double crisis bridging right is intended for self-employed persons, helpers and assisting spouses working in sectors which have had to cease all or part of their self-employed activity because of the COVID measures. Self-employed persons, helpers and assisting spouses who are active in sectors dependent from the abovementioned sectors and who have had to fully stop their self-employed activity altogether also benefit from the double crisis bridging right. Self-employed persons from the latter category who only partially interrupt their self-employed activity are eligible for the relance bridging right, but not for the crisis bridging right.
The “double crisis bridging” right will be applicable until December 2020 for all sectors that are closed. For a self-employed worker without a family, this amounts to 2,583.40 EUR per month. For a self-employed worker with a family, this amounts to 3,228.20 EUR per month.
If the self-employed person did not have to close down and is not dependent on a compulsorily closed sector, the self-employed person can fall back on the possibilities that the traditional bridging law provides. The classic form of bridging law applies in the event of forced interruption where the self-employed person has to stop his activity due to external circumstances. The COVID-19 crisis falls under this definition. The amounts are however lower than the double crisis bridging right.
The relance bridging right is available for self-employed persons who were obliged to stop their activities for at least one full calendar month due to the closure measures and were allowed to resume these activities at the earliest after 3 May. This right is also extended until 31 December 2020.
New bridging right as of 1 January 2021
There will be a new bridging right from 1 January 2021, which will always be invokable in times of crisis. To be eligible, a strong decrease in turnover will need to be demonstrated.
Temporary improvement of the classic bridging right
In addition to the extension of the crisis bridging right and the introduction of a new bridging right, the classic bridging right will be temporarily improved by, among other things, making it more accessible to starters and by providing for the preservation of pension accrual.
Extension of the supplementary allowance for sick self-employed workers
The personal scope of the supplementary allowance for sick self-employed workers will be extended. This means that not only single self-employed workers and self-employed workers with a family burden can make use of it, but also cohabiting self-employed workers. In concrete terms, this is a additional allowances of more than 300 EUR per month.
Moratorium on the payment of social security contributions
Any self-employed person affected by the COVID 19-measures, can submit a written request to his social security fund to postpone the payment of his social security contributions by one year, without any increases being charged and without any impact on benefits. This application must be submitted before 15 December 2020.
The measure applies to the provisional contributions of Q1, Q2, Q3 and Q4 of 2020 and to the regularisation contributions of quarters of 2018.
Waiver of increases
Self-employed persons who do not pay their provisional social security contributions for Q1, Q2, Q3 and Q4 of 2020 by 31 December 2020 will not have to pay any increases for late payment. The same applies to the delayed payment of regularisation contributions to be paid in the course of 2020. Those increases will automatically lapse. Therefore, the self-employed person does not have to submit an application. However, increases are due if those contributions have still not been paid by 31 March 2021.
Reduction of provisional contributions
Self-employed persons experiencing difficulties as a result of the COVID-19 crisis may request a reduction in their provisional social security contributions for the year 2020 if their professional income is below one of the statutory thresholds.
Exemption of social security contributions
Self-employed persons who are unable to pay their social security contributions may apply for the exemption from contributions. This exemption from payment can be applied for the provisional contributions for the Q1, Q2, Q3 and Q4 of 2020, as well as the regularisation contributions of quarters of 2018 which expire during the course of 2020.
Self-employed workers who have been granted a moratorium on the payment of social security contributions will be able to qualify for amicable repayment plans while retaining the right to reimbursement of health care costs until 31 December 2021.
3. Banking & Finance
Updated November 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 31 December 2020 to viable non-financial undertakings in financial difficulties as a result of the coronavirus.
The Royal Decree of 14 April 2020 on the granting of a state guarantee for certain credits to combat the consequences of the coronavirus crisis sets outs the details and the conditions according to which the state guarantee can be called upon.
Key take-aways are:
- A portfolio approach: the State does not guarantee individual credits, but guarantees credit portfolios per credit institution. Each credit institution receives an “envelope”, e. a share in the total amount of the state guarantee (EUR 50 billion) within the limits of which it can build up its portfolio of guaranteed credits. The envelope amount is based on the market share of each credit institution on 31 December 2019.
- Risk mutualization: dividing the exposure to potential financial loss by granting the guarantee to all new credits with a term of maximally 12 months accorded by the Lender to a Borrower between 1 April 2020 and 30 December 2020.
- Some credit agreements are explicitly excluded, e.g. refinancing; drawings granted before 1 April 2020; credit agreements that are “deselected” by the lender (opt-out possibility); and credits allocated only to the borrower’s non-Belgian activities.
- Thus, a guaranteed credit cannot be used for the purpose of activities outside Belgium, even if such activities are carried out by a legal person having its real seat in Belgium (e.g. a borrower established in Belgium that forms part of an international group). The funds can therefore not be transferred to activities outside Belgium (e.g. cashpooling). Such use is to be excluded in the credit agreement.
- The 'Lender' is a Belgian credit institution or a Belgian branch of a foreign credit institution
- The 'Borrower' must be a non-financial undertaking registered in the Belgian Crossroads Bank for Enterprises. Also eligible are SMEs, self-employed persons and non-profit organisations, except in case such borrower:
- Was experiencing financial difficulties before the coronavirus crisis;
- Was 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;
- Was subject to active credit restructuring with one or more credit institutions on 31 January 2020;
- Is considered, on the basis of available information, “an undertaking in difficulties” in the meaning of Article 2(18) of the Directive 651/2014;
- Some credit agreements are explicitly excluded, e.g. refinancing; drawings granted before 1 April 2020; credit agreements that are “deselected” by the lender (opt-out possibility); and credits allocated only to the borrower’s non-Belgian activities.
Per se excluded are: governmental entities, financial counterparties, persons whose main or exclusive activity consists of offering credits on a professional basis and holdings of financial entities.
- Maximum amount per Borrower: on a consolidated basis, the lowest of either EUR 50 million or an amount equal to the liquidity needs during a period of 12 months (or 18 months for SMEs). The limit of 50 million can only be exceeded upon request by the Borrower and acceptance by the King.
- the Ministerial Decree of 29 April 2020 sets out the procedure for requesting such deviation. Entry into force: 1 April 2020
- The Eligible Borrower must file the request with the Eligible Lender.
- The Eligible Lender verifies whether the Eligibility conditions are fulfilled (see above) and forwards the request to the General Administration of Treasury. The request should be accompanied by:
- proof of compliance with the eligibility conditions;
- proof of compliance with the Guaranteed;
- a statement from the Eligible Borrower of all current credits granted to it since 1 April 2020 (incl. credit term + principal amount);
- the last (approved) financial accounts of the Eligible Borrower;
- provided a positive decision has been taken, a confirmation of the Eligible Lender to grant credit. Proof must be submitted that article 9 RD has been complied with (on interest rates, see below)
- a motivation for the deviation of the max. amount of EUR 50 million (mentioning can be made of securities; preservation of employment; the essential character of the business activity on Belgian territory)
- the Ministerial Decree of 29 April 2020 sets out the procedure for requesting such deviation. Entry into force: 1 April 2020
- The assignment, even in the form of a pledge, of a guaranteed credit, entails that the state guarantee extinguishes in respect of such transfer, except if one or more guaranteed credits is pledged to the National Bank of Belgium.
- Share of losses: the banking sector and the State each will shoulder part of the losses:
- up to 3 % losses: fully covered by the financial sector –
- between 3% - 5% losses: 50/50 covered by the financial sector/State
- over 5 % losses: 20/80 covered by the financial sector/State
The State guarantee will only intervene for those losses that cannot be recovered from borrowers, 3rd parties or in any other way.
! Credit institutions cannot call upon the guarantee in case they do not comply with the payment deferral granted by the Belgian banking sector in respect of facilities granted to undertakings and mortgage credits granted to natural persons:
- Facilities granted to undertakings:
- 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 undertakings, SMEs, the self-employed and non-profit organisations that meet the following 4 conditions:
- The undertaking experiences payment difficulties as a result of the corona crisis
The undertaking is permanently established in Belgium
The undertaking 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 undertaking 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
- The undertaking experiences payment difficulties as a result of the corona crisis
! 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 undertaking and the leasing resp. factoring undertaking is of course possible).
- Mortgage credit 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').
- income has fallen or is entirely lost as a result of the coronavirus crisis and the measures taken by the government in relation thereto;
The payment deferral applies until 31 December 2020 at the latest.
The federal government also specifically pays attention to the financial needs of small and medium-sized companies (SMEs). SMEs often require longer term credit, exceeding a term of 12 months.
Therefore, an additional (SME) guarantee scheme is created for credit agreements with a term between 12 and 36 months. The legal basis for this guarantee scheme is laid down in the Law of 20 July 2020.
Key take-aways are:
- Guaranteed are new credits with a maturity between 12 months and 36 months and may be granted until 30 June 2021. By royal decree, this period could be extended if necessary as a result of the coronavirus crisis.
- Excluded from the guarantee are refinancing credits, drawdowns of credits, leasing agreements, factoring agreements, consumer credits and mortgage credits.
- The new state guarantee scheme is optional.
- “Eligible Lenders”, e. lenders that are capable of granting these guaranteed credits, are those mentioned in the Law of 27 March 2020 (see above).
- “Eligible Borrowers” are (non-financial) SMEs, as defined in the Belgian Code on Companies and Associations Code, registered with the Crossroads Bank for Enterprises, incl. self-employed persons and the non-profit sector.
- Please note that enterprises ineligible for this additional guarantee, can receive financial support through the state guarantee scheme.
- Lenders may use up to 20% of the envelope allocated to them pursuant to the Law of 27 March 2020 and the Royal Decree of 14 April 2020. Concretely, a number of credits with a combined principal amount of maximally EUR 10 billion can benefit from the new state guarantee (by royal decree, it could be decided to amend this %).
- The guaranteed principal amount per borrower is limited to the higher of the following amounts (on a group basis in each case):
- the borrower's liquidity needs for 18 months as attested by the borrower;
- twice the borrower's total annual wage bill;
- 25% of the borrower's turnover.
- The state guarantee covers 80% of the loss incurred on each credit. The state guarantee applies at the level of the individual credit. It is a guarantee under the legal privilege of execution.
- The premium shall be 50 bps on an annual basis of the maximum principal amount for each credit covered. Credits placed under the guarantee by the lender may have an interest rate of up to 2% on an annual basis (excl. the imputation to the borrower of the aforementioned fee).
- The Law of 20 July 2020 also specifies the obligations of lenders and borrowers and provides for criminal sanctions, by amending the Belgian Banking Law.
Eventually, the Belgian government also agreed on a payment extension in respect of consumer credit.
Applications had to be submitted before 1 September 2020.
To prevent credit insurers from cutting back on their activities the federal government, Assuralia (the federation of insurance undertakings) and the private trade credit insurers have concluded a reinsurance programme whereby the Belgian State will guarantee part of the possible losses that credit insurers have to swallow. To do so, it turned to Credendo, the state-owned credit insurer.
The Re-Insurance Programme applies to products of trade credit insurance and surety between companies (B2B); it also applies to trade receivables from both Belgian buyers (debtors) and buyers abroad and to suretyships in favour of both customers in BE and abroad.
A maximum budget of EUR 903,2 million is available – this amount represents the maximum losses for the Belgian State under the Re-Insurance Programme.
Which risks are covered? Risks attaching to the period from 1 January 2020 until 31 December 2020, incl. losses occurring before 27 March 2020. It applies to risks located worldwide, with the exception of countries under sanctions.
The maximum risk per debtor for an insurer is EUR 50 million. This amount can be exceeded by means of a special acceptance by Credendo.
Credendo will act as a kind of reinsurer that takes on part of the losses incurred by the credit insurers. However, the programme still foresees that credit insurers will bear a significant part of the losses. In exchange for government reinsurance, the credit insurers promise to keep the credit limits they had for companies before 1 March unchanged as much as possible.
Assuralia has also announced a similar package of measures in favour of natural persons laid off temporarily because of the coronavirus crisis, and vulnerable undertakings 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 undertakings, 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 undertakings:
- 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 undertakings 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 undertakings 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 undertakings to obtain a bridging loan guaranteed for existing non-bank debts no older than 3 months.
The enlarged guarantee scheme now allows undertakings 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.
In respect of debts under existing credit facilities and leasing agreements not yet covered by the guarantee arrangement, a guarantee covering 50 % of the commitments can be granted to the extent that the bank agrees to retain the credit agreement for another 3 months or to grant a payment extension of minimum 3 months.
Coverage of commitments by aforementioned guarantees is only possible in case no insolvency proceedings were initiated against the undertaking on 31 December 2019 and the undertaking does not fulfill the national criteria to become subject to insolvency proceedings at the initiative of its creditors.
Lastly, in respect of bank debts that are already covered by the guarantee arrangement, the guarantee will be extended on the condition that a payment extension of six months is allowed.
The applicant who wishes to make use of the guarantee, should contact its bank or leasing undertaking, and will have to motivate that the guaranteed credit will be reserved for solving the coronavirus-related financial problems.
! Commitments can only be covered by this guarantee arrangement on the condition that they do not benefit from the federal state guarantee or do benefit from the banking sector’s payment extension of six months, as mentioned above.
Additionally, via Participatiemaatschappij Vlaanderen (PMV), the Flemish government grants guarantees through its so-called Gigarant-arrangement (total limit: EUR 3 billion) for amounts exceeding EUR 1,500,000 for loans made to undertakings. 80% of the underlying financing can be covered. The guarantee is for a maximum of 6 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. Guarantees can be granted until 31 December 2020.
- Eligible to receive such Gigarant-guarantee, are small, medium-sized and large undertakings 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.
- In accordance with European regulations, the maximum amount of guaranteed funding per company will be limited to either twice the total annual gross wage bill 2019 or 25% of total turnover 2019 or, subject to justification, the liquidity requirements for the next 18 months for an SME and for the next 12 months for a large company.
- All 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 undertaking 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 undertakings by means of capital participation and/or contributions by means of a (ordinary, mezzanine or subordinated) loan. In this respect, PMV particularly addresses undertakings that face a turnaround or a strategic transition. PMV is prepared to assist by means of a guarantee for 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. In addition, undertakings making use of PMV’s Start-up Financing (Startlening/Prêt de démarrage), Co-Financing (Cofinanciering/Cofinancement) or Co-Financing + (Cofinanciering + /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.
The Gigarant-arrangement complements the federal state guarantee arrangement (see above). Financing applications eligible for the federal guarantee scheme must make use of this scheme. In addition, an appeal to the Gigarant-guarantee is possible. In other words, the same credit cannot benefit from a double deposit guarantee; however, a federal deposit guarantee covering a credit does not exclude a Flemish deposit guarantee for an additional credit.
In the Walloon Region, guarantees on short-term credit lines and investment credit type loans may be granted by regional agencies up to:
- 50 %, on existing short-term lines, granted by banks initially without a guarantee, in order to maintain these resources at the disposal of the undertakings affected;
- max. 75%, on the increases in short-term lines which would be granted to undertakings to help them get through this period of crisis.
- max. 75% on new short-term credit lines to enable undertakings to benefit from additional cash resources
The Brussels government will provide a guarantee on bank loans for a total amount of EUR 20,000,000. As this guarantee scheme supplements the state guarantee, the details of which have recently been agreed upon, further details should follow soon.
Updated November 2020
The Federal government decided that self-employed individuals (main and secondary occupation) and assisting spouses who have been struck financially as a result of the coronavirus crisis, are entitled to transitional rights (“overbruggingsrecht”/”droit passerelle”).
Different eligibility conditions apply in respect of transitional rights during the months March 2020 until (and including) June 2020 and July 2020 until (and including) December 2020.
Situations are assessed on a case-by-case basis.
This measure can be combined with the nuisance premium and the corona compensation premium (see below).
Next to the transitional rights, temporary measures have been taken to support the relaunch of self-employed persons (Royal Decree No 41 of 26 June 2020). To be entitled to this aid measures, self-employed persons must fulfill 4 conditions:
- its activities can be categorized in of the sectors subject to closure for at least one calendar month (between the end of March and the beginning of May) as a consequence of the governmental Covid-19 measures;
- its activities could only start again since 4 May 2020 or later, without restrictions save for the rules on social distancing. These sectors include: the hotel and catering sector, non-food retail trade, markets, hairdressers and beauticians;
- in respect of the quarter preceding the month for which the request for support is submitted, a fall of at least 10 M in turnover or orders was experienced, compared to the same quarter of the previous year;
- its business has not benefitted from another crisis transitional right on the basis of another provision laid down in the Law of 23 March 2020.
The relaunch support is granted for the months June, July, August, September and October 2020.
From September onwards, self-employed persons that are put in quarantine as a consequence of which they have to interrupt all of their activities during 7 consecutive calendar days, are entitled to transitional rights provided that they can submit a quarantine certificate. The same holds true for self-employed persons that had to interrupt their activities due to children care.
During the first wave, the Flemish Region offered various premiums to undertakings that had to shut down as a consequence of the government’s coronavirus-related measures. Requests to obtain these measures can, however, no longer be submitted.
In respect of the second wave, the Flemish government has again introduced financial support measures. Flemish entrepreneurs who suffer a loss of turnover of at least 60% between 1 October and 18 November 2020 due to the stricter corona measures, can call upon the new Flemish Protection Regime (“FPR”). The conditions for support are set out in the Decree of the Flemish Government of 23 October 2020.
(VLAIO) grants a subsidy to undertakings amounting to 10% of their turnover, excluding VAT, achieved in the period from 1 October 2019 to 15 November 2019 or in the period from 19 October 2019 to 18 November 2019.
Self-employed persons in secondary employment receive 5% support. For undertakings that had not yet started in 2019, the decrease in turnover will be compared with the expected turnover in their financial plan.
Undertakings have the choice of applying for the period from 1 October 2020 to 15 November 2020 or for the period from 19 October 2020 to 18 November 2020. The maximum amount of aid will be as follows:
- if opting for the period from 1 October to 15 November 2020:
- 11,250 euro - with 9 employees
- 22,500 euros - with 10 or more employees
- if opting for the period from 19 October to 18 November 2020 as well as for companies that are compulsorily closed:
- 7,500 euros - with 9 employees
- 15,000 euro – with 10 or more employees
The company must have a fall in turnover of at least 60% as a result of the coronavirus measures.
Enterprises active in the catering sector (full or restricted eating establishments and cafes and bars) which have been compulsorily closed due to the corona virus measures do not have to demonstrate a decrease in turnover.
- For them, too, the subsidy amounts to 10% of turnover (or 5% for self-employed workers in a secondary occupation) excluding VAT for the period from 19 October 2019 to 18 November 2019. This derogation does not apply to companies whose turnover in this period relates to take away activities of 50% or more. The latter will therefore still have to demonstrate a 60% decrease in turnover.
- Pubs and restaurants may also choose to apply for the period from 1 October to 15 November 2020 in the event of a fall in turnover of at least 60%. In this case, however, they will have to demonstrate a reduction in turnover. They can therefore receive 10% aid on the turnover realized during the period from 1 October to 15 November 2019 with a maximum of €11,250 in the case of a social security scheme with up to 9 employees and a maximum of €22,500 for companies with 10 employees or more.
The company submits its request via the VLAIO website, stating its company number and the turnover included in its VAT return for the fourth quarter of 2019. The online application will be possible from 16 November 2020. Requests must be submitted by 31 December 2020 at the latest.
In addition, financial aid is granted to undertakings whose turnover has decreased with 60 % or more between 1 August and 30 September 2020 compared to the same period in 2019:
- 7,5 % of the fixed costs will be reimbursed if they open their business as much as the year before (excl. annual closure).
- If the above condition is not met, only 3,75 % of the fixed costs will be reimbursed.
- Support is limited to a total amount of EUR 15,000 per undertaking
- Requests can be submitted with VLAIO via the website between 1 October 2020 and 15 November 2020.
- Undertakings subject to mandatory closure due to the recent measures can request an advance payment of max. EUR 2,000 (catering business: 3,000 EUR, on the condition of having a registered cash system (“witte kassa/caisse blanche”);
Lastly, PMV will grant subordinated loans for a term of 3 years to viable undertakings in order to bring their turnover and cash flow to a higher level, and to give investors and financiers a leg-up.
The subordinated loans are intended primarily for startups and scale-ups, but can also be granted to mature companies (SMEs and self-employed persons) that temporarily run into difficulties as a result of the corona crisis and need financial support to overcome the crisis’ consequences.
The above types of undertakings should comply with various condition such as, inter alia, not having any arrears on their current loans, taxes, VAT or social security contributions or having certain employment rates (or intending to return to effective employment in the near future). In August, it was decided to soften some of the conditions.
Eligible undertakings can apply for subordinated loans of which the amount (ranging between EUR 25,000 and EUR 2,800,000) and interest rate depend on the undertaking requesting the loan:
- for startups and scale-ups, a combined interest rate applies:
- up to EUR 800,000: a convertible, subordinated loan with a term of 3 years at an interest rate of 5 %
- above EUR 800,000: a subordinated loan with a term of 3 years at a minimum interest rate of 6 %
- for SMEs and self-employed persons, a fixed interest rate applies:
- for the entire amount up to EUR 2 million: 4,5 %
The maximum amount of the loan is the highest of the following amounts: (i) 100 % of the wage costs, or (ii) 12,5% of the turnover.
A cap of EUR 2 million applies in case PMV is the only lender. The amount can be increased only if other investors or lenders join PMV.
The loan granted must fully cover an undertaking’s financing needs during at least 12 months, possibly combined with investments made by other parties. The applicable interest rates are 5 % for startups and scale-ups, and 4,5 % for SMEs and self-employed persons.
Startups and scale-ups can repay the loan in full on the maturity date. If this would not be feasible, there is also the option of a convertible loan in which case PMV will acquire shares (with a discount).
SMEs that have a recurrent cash flow are exempted from repayments during the first 24 months.
Requests for subordinated loans can be submitted until 15 November 2020. The goal would be to effectively grant the loan within one month following the request.
The subordinated loan cannot be combined with the nuisance premium and the corona compensation premium. In case undertakings have received one or both of these premiums and want to request a subordinated loan with PMV, they shall have to reimburse the premium amounts.
In the Walloon Region, the Walloon Government has decided to grant direct intervention in the loss of income for undertakings that are still suffering the full impact of the health measures.
The Government has decided on a new support mechanism that takes into account both the turnover of the businesses/self-employed but also their size in terms of staff (number of full-time equivalents (FTEs)). This support is granted to undertakings active in certain sectors, such as the catering sector, the event sector and travelling sector.
Undertakings that can justify a loss of turnover of at least 60% in the 3rd quarter of 2020 (compared to the same period in 2019) will receive compensation of 15% of turnover with maximum intervention ceilings as follows:
- minimum amount of intervention – EUR 3,000
- intervention ceiling of EUR 5,000 - 0 FTEs
- intervention ceiling of EUR 10,000 – 1-9 FTEs
- intervention ceiling of EUR 20,000 – 10-49 FTEs
- intervention ceiling of EUR 40,000 – 50+ FTEs
The platform https://indemnitecovid.wallonie.be will be used. Information concerning the start date for the submission of applications will be communicated at a later date.
The amount mobilised is €53 million.
Specifically, for the catering sector additional financial support is granted: EUR 3,000 – EUR 9,000 (full-service catering / restricted service restaurants / cafés and bars / other public houses). The amount again depends on the number of FTEs:
- intervention ceiling of EUR 3,000 - 0 FTEs
- intervention ceiling of EUR 5,000 – 1-4 FTEs
- intervention ceiling of EUR 7,000 – 5-9 FTEs
- intervention ceiling of EUR 9,000 – 10+ FTEs
The Government mobilizes EUR 81.6 million to set up this scheme.
Following the latest emergency measures taken in the Brussels-Capital Region to limit the spread of COVID-19, in particular the closure of bars and cafés for one month, the Brussels Government will grant a new bonus of 3,000 euros for cafés and restaurants that had to close as part of the health crisis.
More specifically, the following undertakings will be eligible for this one-off bonus: cafés, bars, pubs, tearooms, refreshment bars and any other place offering the consumption of alcoholic or non-alcoholic beverages on the premises that have been forced to close as a result of the Decree of 8 October 2020.
The terms and conditions of this bonus, as well as the application form, will be available on the administration's website from 16 November.
Specifically for hotels and apart-hotels: under certain conditions, they can benefit from the following financial aid. Depending on the capacity (number of accommodation units), the premium differs (ranging between EUR 20,000 and EUR 200,000). The application must be submitted by 13 November 2020 at the latest.
The Region also supports undertakings in the event industry, nightlife, tourism and culture sectors, which have been hard hit by the Covid-19 crisis. Under certain conditions, companies in these sectors can benefit from a bonus ranging from EUR 3,000 to EUR 9,000. The application form is available from 4 November. You have until 4 December 2020 inclusive to apply for the premium.
At the request of the Government, finance&invest.brussels supports, through loans, restaurants, cafés, hotels and their suppliers who are affected by the coronavirus crisis.
Another support measure is a microcredit of up to EUR 15,000 at a reduced rate for the self-employed, very small enterprises (micro-enterprises) and social enterprises. RECOVER is an emergency loan that helps to reduce cash flow tensions and to promote the restart and development of economic activities impacted by the current crisis.
Furthermore, the "Proxi" loan aims to mobilize citizens' savings for the benefit of SME financing via a tax credit on one or more loans granted by a Brussels resident to an SME. The Proxi Loan allows the borrower (the self-employed person or the manager of an SME with an economic activity established in the Brussels-Capital Region) to take out a loan at a reduced rate for a fixed period of 5 or 8 years from a private individual (close relative, family or any other person interested in his or her activity, etc.), with a maximum ceiling of 250,000 euros for the borrower.
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.
Natalie ReypensPartner Attorney at Law
Natalie Reypens is a member of the Loyens & Loeff International Tax Services Practice Group and heads the Belgian Transfer Pricing Team. She is a partner in our Brussels office. She focuses on corporate and international tax law.T: +32 2 743 43 37 E: firstname.lastname@example.org
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Marc VermylenManaging Partner Belgium Attorney at Law
Marc Vermylen is Managing Partner of Loyens & Loeff Brussels. He is a member of Loyens & Loeff’s Banking & Finance Practice Group and heads the global Projects Team at Loyens & Loeff. He is recognised worldwide as an expert and influential lawyer in banking law and finance law.T: +32 2 743 43 15 M: +32 475 52 31 66 E: firstname.lastname@example.org
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