The investment deduction has a new look from January 1, 2025

Because legislators have long used the investment deduction to influence companies’ investment behavior (read: encourage desired investments), the current regime has become an incoherent tangle. A reform of the investment deduction should remedy this. For investments made from January 1, 2025, the application of the investment deduction will be simplified by working with only three “tracks” from that date. For each track, a fixed percentage applies by law, replacing the percentages that were indexed annually in the past.

In addition, a new, but temporary, increased cost deduction was also introduced in the context of mandatory electronic invoicing between VAT taxpayers in a B2B context from Jan. 1, 2026 as stipulated in the European Peppol standard.

Under the new regime, the basic deduction is similar to the current basic one-time investment deduction of 8%. Without many formal requirements, you can apply the basic deduction to investments that you use in a sustainable way for the business activity of your company.

This basic deduction is increased to 10% for investments from January 1, 2025 and can only be applied by sole traders and SMEs. The list of pre-existing exclusions will be expanded to discourage investments with a negative impact on climate or environment. The Council of Ministers will periodically update this list.

To optimally support your company in the challenges of digitization of billing, payments and accounting, among others, the basic deduction is increased to 20% for specific digital investments. These investments are recorded through Royal Decree.

The formalities that applied under the old regime are retained under the general track. These include preparing Form 275U/276U, with an addition as an attachment to the corporate tax return.

The basic deduction for investments as from January 1, 2025 is transferable without any time limitations. Under the old regime the basis investment deduction was only transferable for one year.

With this second track, the legislature intends to encourage specific investment types, specifically:

• Environmentally friendly investments
• Energy efficiency and renewable energy
• Carbon-free transport
• Supporting digital investments akin to the previous three types of investments

Through investment lists that will be drawn up by the Council of Ministers, entrepreneurs will be able to check which of their investments are eligible for the increased thematic deduction, and under what conditions. These lists would be updated every three years to keep pace with rapidly evolving technological developments.

The percentages for the increased thematic deduction are 40% for sole traders and SMEs and 30% for large companies.

Before your company can apply the increased thematic deduction, you must be in possession of a certificate sufficiently justified by the competent authority. This investment deduction is transferable indefinitely over time.

The technology deduction corresponds to the current increased investment deduction for patents and the increased investment deduction for environmentally friendly investments in research and development.

The percentages for this technology deduction are 13.5% for the one-time deduction (specifically on the acquisition or investment value) and 20.5% for the spread deduction (on the annual depreciation of the investments concerned).

The same percentages apply if your company chooses to apply the research and development tax credit instead of the investment deduction.

Also for the technology deduction, you must request a certificate in time, including a motivation by the competent regional authority. Once you have obtained this certificate, the technology deduction is also transferable indefinitely in time.

Below is an overview of the fixed percentages of the investment deduction that apply to investments made from January 1, 2025:

For investments made in the period January 1, 2024 – December 31, 2024, the current scheme is as follows:

The attentive reader will note that the investment deduction rates are linked to the calendar year, and not to an assessment year. As a result, you must consider different investment deduction rates and rules for fiscal years that do not coincide with a calendar year. Obviously, the taxpayer may only apply one type of investment deduction per fixed asset. Thus, double use is not allowed.

In 2024, the Belgian legislature introduced the obligation for VAT taxpayers to use electronic invoicing in a B2B context as of Jan. 1, 2026. This was done in the context of the European Peppol standard.

Since this new obligation may involve significant additional costs, a temporary increased cost deduction of 120% was provided for some specific costs. Specifically, these are:

• Costs associated with billing packages that enable structured electronic billing;
• Periodic subscription fees for billing packages;
• Consulting costs related to the switch to e-invoicing.

Depreciation on capitalized costs are not eligible for the increased cost deduction. When all conditions are met, however, they may be eligible for the investment deduction for digital fixed assets (cf. point 1).

The increased cost deduction can only be applied by the self-employed and companies that qualify as SMEs. In addition, it is also temporary in nature. It is in principle applicable to qualifying expenses incurred from January 1, 2024 (when related to tax year 2025) to December 31, 2027 (when related to tax year 2029 at the latest).