Higher tax increase for insufficient upfront payments: from 6.75% to 9%
April 2024 - A company or sole proprietorship that makes too few advance payments of its income taxes must reckon with a tax increase. Until the financial year 2023, this increment was 6.75% or 4.5%. For the financial year 2024, it will be 9%. So, a proactive prepayment strategy is not a luxury!
Tax increase from 6.75% to 9%
As a Belgian company, you can already pay corporate tax during the taxable period when you realise profits. This is the system of advance payments: paying (part of) the tax due already during the current tax year on profits that will be made in that tax year.
However, these advance payments are not an obligation. Nevertheless, the tax authorities give entrepreneurs maximum encouragement to do so anyway. It does this through tax increases. Until the financial year 2023, this increment was 6.75% on the basic tax due. From the financial year 2024, this rate will be increased to 9%.
Neutralising tax increase
The earlier you make a prepayment, the higher the applied neutralisation is. This is shown in the following table:
Deadline for prepayment - Neutralisation increase (% last year)
VA1 10 April 2024 - 12% (9,00%)
VA2 10 July 2024 - 10% (7,50%)
VA3 10 October 2024 - 8% (6,00%)
VA4 20 December 2024 - 6% (4,50%)
It's good to know that during the first three financial years after their formation, small companies are exempt from this tax increase if certain conditions are met.
The above dates and rates apply to companies whose financial year started on 1 January 2024. Companies with a broken financial year will not be subject to the new rates until later. Thus, a company with a fiscal year ending on 30 December must apply the higher rates only from the fiscal year starting 31 December 2024. It is fiscally optimal to make an initial upfront payment before 10 April 2024.
Not enough cash to pay upfront?
Does your company have too little cash to make an upfront payment? Then, you can take out a loan for this purpose. The interest payable is tax-deductible for corporation tax purposes. This is in contrast to the increase due to insufficient prepayment, which is not a tax-deductible expense.
