A federal tax reduction, a so called tax shelter, on income tax and on non-resident tax can be granted to people investing in micro-businesses or SMEs. In return they obtain new shares following the establishment of a company, or an increase in capital of an existing company within four years after its establishment. The shares must be paid in full immediately.

A tax reduction of 30% is provided on the invested capital in SMEs, amounting to 45% for investments in micro-businesses.

A micro-business is a company that meets at least two of the following three criteria:

  1. Balance total: maximum 350.000,00 EUR;
  2. Turnover (ex VAT): maximum 700.000,00 EUR;
  3. Average number of staff: maximum 10.

An SME is a company or a natural person which/who, based on section 15 of the Company Code, does not surpass more than one of the following threshold levels:

  1. Balance total: 3.650.000,00 EUR;
  2. Turnover (ex VAT): 7.300.000,00 EUR;
  3. Average number of staff: 50.

To avail of the tax reduction, natural persons may invest up to EUR 100.000,00 in the aforementioned types of companies per tax period and they have an obligation to keep the shares in those companies for at least 4 years. Failure to observe the period will result in a (partial) reversal of the tax cut.

It is important to note that managing directors do not qualify for this measure as regards shares in their own companies.

Other conditions that must be observed in order to qualify for the tax measure include:

  • The company must be a domestic company or a company established in the EEA with a fixed establishment in Belgium;
  • At the time of the investment the company must be a small business as defined in section 15 of the Company Code;
  • The company may not be a real estate company, a management company, an investment company or financing company, a listed company or a company in trouble;
  • No capital depreciations or dividend payments may have occurred in the past;
    The funds received may not be used to pay out dividends, to provide loans or to sell shares;
  • The total contribution may not exceed EUR 250.000,00.

If you are interested in this tax shelter, please don’t hesitate to contact either of our tax consultants at any time.