Belgium: Notional Interest Deduction

Alessandro PasutBelgium: Notional interest deduction

Belgium aligns the rules relating to the notional interest deduction (NID) with the judgment of the Court of Justice of the European Union issued in July 2013.

The NID is a tax deduction for corporate taxpayers based on their adjusted net equity. Typical adjustments were, among others, the net assets used by a foreign permanent establishment and the net assets invested in real estate located in countries with which Belgium has concluded a double tax treaty.

According to the Court of Justice of the European Union, the exclusion from the NID base of the net assets of the permanent establishment located in another member state of the European Union constitutes a restriction of the freedom of establishment as Belgian companies are dissuaded from establishing branches in other member states.

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