Investment deduction reform from 2025
June 2024 - On 20 March 2024, the chamber approved at first reading a new bill on investment deduction reform. We expect this revision to effectively pass the final reading, with ‘supporting the investment climate and green energy transition in Belgium’ being the main objective. The new investment deduction regime will apply to fixed assets acquired or created from 1 January 2025.
From now on, you should consider three categories of investment deduction:
· Higher basic deduction for sole traders and SMEs
The ordinary investment deduction is increased from 8% to 10% for SMEs and the self-employed. For digital investments related to invoicing, customer management, e-commerce and cyber security, basic rate increases to 20%.
· ‘Green’ thematic investment deduction
There will be a new thematic investment deduction of 40%, introduced for green investments by the self-employed and SMEs, and 30% for larger enterprises. What types of investments are eligible?
· Investments in energy efficiency and renewable energy (e.g. battery farms)
· Investments in zero-emission means of transport (e.g. hydrogen-powered vans and trucks)
Other environmentally friendly investments (e.g. economical water systems)
· Supporting digital investments related to the previous categories (e.g. software controlling energy consumption)
The legislator has imposed some restrictions on these thematic investment deductions, namely:
· No application possible by enterprises in difficulty or enterprises for which a recovery order is outstanding
· Only application to fixed assets for which no regional aid is requested
· No application if the investment causes unreasonable damage to the environment
· An attestation can only be granted if the investment appears on one of the lists.
· Existing R&D and patents deduction becomes ‘technology deduction’
The ‘technology deduction’ will be introduced for investments in patents and fixed assets to support research and development (‘R&D’) of environmentally friendly products and forward-looking technologies. This one-off rate - which will be pegged, and therefore no longer dependent on inflation - is 13.5%, but can also be applied over several financial years at an annual rate of 20.5% on the depreciation of the qualifying investment.
