Indexation suspended in tax matters
February 2021 – The coronavirus crisis costs money. A lot of money. So the government is trying to increase its income. One of the measures already used previously is the index jump to personal income tax. An almost imperceptible tax increase.
Nothing new
For the tax years 2021 to 2024, the indexation of a number of tax expenditures has been frozen at the level of the indexed amounts applicable for the 2020 tax year.
The Michel government has already done so once in 2014, suspending the indexation of a series of tax expenditures for the 2015 to 2018 tax years.
Caution: after this suspension, indexation will not resume where it was suspended. No, the calculation will have a new starting point in 2024 (as was also the case in 2018).
As with the previous suspension, there is some retroactivity. The measure already applies from the 2021 tax year. In practice, this means that it applies to income from 2020.
The indexed amounts applicable in 2020 had already been published in the Moniteur belge in January 2020. This notice is therefore partially cancelled.
What expenses?
Indexation does not apply to all amounts concerned by personal income tax. The minimum tax-exempt portion and the increases for child care, for example, are not affected and therefore continue to be indexed as normal.
What are the amounts involved?
The first exempt tranche of income from savings deposits, dividends, interest with a social purpose and the amount of loans through a crowdfunding platform, the interest on which is exempt (this amount was to be increased to 990 euros, but will remain at 980 euros).
The tax basket for the tax reduction for long-term savings (from the tax year 2021) and the first tranche of loans (loans taken out from 1 January 2020).
The tax reductions relating to the release of shares or units in the employer company.
The tax reduction for expenses incurred to acquire an electric vehicle (this amount was to be increased to 3,180 euros, but will remain at 3,140 euros).
The tax reduction for expenditure on a development fund (this amount was to be increased to 400 euros, but will remain at 390 euros).
The tax reduction for donations (this amount remains at 40 euros).
The tax reduction for domestic staff.
The tax reduction for expenses incurred in connection with an adoption procedure.
Tax reduction for premiums for legal expenses insurance (this amount was and remains 310 euros).
The tax reduction for low-energy, passive or zero-energy houses.
The expenses to be taken into account for the single-family dwelling deduction converted into a federal tax reduction.
The indexation of the amounts relating to tax reductions for pensions and replacement income continues.
Pension savings
The suspension of the indexation of the maximum amounts for pension savings is postponed to the 2022 tax year. The reason for this is that it had already been communicated at the beginning of 2020 that the maximum pension savings would be EUR 990 (30%) or EUR 1 270 (25%). Anyone who has already saved EUR 990 in 2020 would only be entitled to a tax reduction of 25% instead of 30% and pension savers who have already saved more than EUR 1 260 in 2020 would have to carry forward a small amount (EUR 10). This deferral would avoid this.
The maximum of 990 euros will also be maintained for subsequent tax years.
