Tax reductions: there is no shortage of possibilities
July 2021 – The various governments in the country offer us various tax reductions for certain expenses. The list is quite long... and has grown even longer in the wake of the coronavirus crisis.
Federal tax reductions
You may only receive one tax assessment, but you actually pay your taxes partly to the federal government and partly to the regions. Both offer tax reductions for expenses they consider important.
Among the federal tax reductions, there are the great classics such as the tax reduction for long-term savings (pension savings and life insurance), the tax reduction for gifts, the tax reduction for childcare costs, etc. What is new in this respect?
The size of the tax reduction is in principle adjusted annually to the cost of living. At the end of last year, however, the indexation was frozen for some of these tax reductions. The indexation jump was postponed by one year for pension savings, because the measure was only adopted at the end of last year and savers had in fact already adapted their savings plan to the new amount. In concrete terms: in 2020 you could save up to 990 euros in pension savings and in return receive a 30% tax reduction. You could also save more (up to 1,270 euros), but in this case the tax reduction is only 25%. So be careful: if you save 1 000 euros in pension savings, you will get a 25% tax reduction on this amount (= 250 euros), whereas if you save only 990 euros, you will get a 30% tax reduction (= 297 euros). These amounts will not change for the next few years.
For donations, the tax reduction has increased significantly. Donations made in 2020 are entitled to a tax reduction of 60% (instead of the usual 45%). You are only entitled to this tax reduction if the donation amounts to at least 40 euros. In principle, the donation must be made in cash, but here too there has been a (relatively complex) relaxation for 2020: if you have donated medical equipment or computers, you can benefit from a solid tax reduction, but there are limits and conditions to be respected.
The relaxed regime and higher rate are temporary and no longer apply in 2021.
The tax reduction for childcare costs has been increased to €13.00 per day per child in 2020 (it was previously €11.20) and will rise to €13.70 from 2021. Remember that you must apply this limit yourself. In addition, the reductions now apply to children up to the age of 14 (previously they applied to children up to the age of 12).
In principle, you will only benefit from the reduction if the care has actually taken place. For the period of the coronavirus crisis, there is an exception to this rule: if you have booked and paid for childcare and it could not be provided because of the crisis (e.g. a holiday camp), you are still entitled to the tax reduction, provided, of course, that you have not requested a refund.
Finally, there is the tax reduction for "corona shares": if, in 2020, you acquired new shares in an SME that suffered a considerable drop in turnover as a result of the pandemic, you are entitled to a tax reduction of 20%, provided you meet a series of conditions. The investment may not exceed €100,000 (the company may not issue more than €250,000 of such new shares) and your shareholding in the company may not exceed 30%. This measure has also been temporarily extended.
Regional tax reductions and credits
You can also benefit from tax reductions from the regions. For example, they are responsible for the tax reduction for the first home, even though there is not much left of this tax reduction.
The tax reduction for service vouchers is also a regional matter.
In the Flemish Region, you only get a 20% tax reduction for the purchase of these vouchers (instead of 30% for 2019), while the maximum amount of the vouchers is limited to 1,520 euros.
In the Brussels-Capital Region, the tax reduction has been 15% for some time (also on a maximum amount of 1 520 euros).
Wallonia applies a different calculation method. The tax reduction is 30%, but only for the first 150 service cheques. In practice, the complex calculation results in a tax reduction of 0.90 euros per voucher.
In addition to 'tax reductions', the regions also grant tax credits. Tax credits are in principle refunded if the amount of tax payable is insufficient.
In the Flemish Region, there was already a "winwinlening" which allowed you to benefit from a tax credit of 2.5% for any loan granted to a company established in the Flemish Region. The "vriendenaandeel" (or "winwinkapitaal") was added in 2020. The "vriendenaandeel" is a tax credit of 2.5%, granted for five years, to any taxpayer who invests in the shares of a Flemish SME. The maximum investment amount is 75,000 euros. Since the measure was only officially published on 23 December 2020, it is unlikely that many taxpayers will have made use of it by 2020, but there are savings to be made on next year's taxes.
Since 2017, Wallonia has had its own “winwinlening”, known as the “prêt coup de pouce”. Many changes have been made, but these will only apply from 1 January 2021. They will therefore only have an impact on next year's declaration. The principle is roughly the same as that of the Flemish “winwinlening”, i.e. a tax credit of 4% is granted for the first four years. The tax credit then falls to 2.5%. The maximum amount you can claim is 50,000 euros, but this has been increased to 125,000 euros for 2021.
In 2020, the Brussels-Capital Region followed suit with the Proxi loan. The measure has been running since 15 October 2020. Here too, a tax credit is granted (4% for the first three years, 2.5% thereafter) for loans granted to Brussels SMEs. The maximum amount is in principle 50 000 euros per lender, but this has been increased to 75 000 euros for 2020 and 2021.
IPP declaration
For pension savings, you must decide for yourself for which amount you want to benefit from a tax reduction. For childcare, you must determine the correct amount yourself before completing the return. The same applies to regional tax reductions and credits: you must fill in the amounts yourself.
The filing deadlines have been known for some time, but we would like to remind you of them.
Paper returns must be submitted by 30 June 2021 at the latest.
If you file your return via MyMinfin (Tax-on-web), you have until 15 July 2021 at the latest.
And if you use a proxy, the proxy has until 21 October 2021 to submit your return.
