Update to Belgian tax law - Increase of the annual tax on (I)NPO's

As of January, a new tax regime applies to (international) non-profit organisations ([i]NPO's) in Belgium.

Any (I)NPO's or private foundations with their registered seat in Belgium are subject to an annual tax calculated on the total value of their assets. Until 2023, this annual tax amounted to 0.17% of the value of the assets of the NPO (or private foundation), if the value was over 25,000 EUR.

As of this year, the Belgian legislator decided to modify and increase this annual tax. What has changed?:

• (I)NPO's and private foundations are now subject to a tax calculated on the total value of their assets, wherever their location, including real estate located abroad (while such real estate was not included in the tax base previously).
• The flat tax rate of 0.17% as been replaced with a progressive tax rate per bracket:
  • General tax relief mechanism on the first 50,000 EUR of assets (0% tax rate);
  • 0.15% tax rate applies between 50,000 EUR and 250,000 EUR of taxable base;
  • 0.30% tax rate applies between 250,000 EUR and 500,000 EUR of taxable base;
  • 0.45% tax applies above 500,000 EUR.

What does this mean? The new tax regime could result in a drastic tax increase, especially for (I)NPO's and private foundations with significant assets.

Note:  not all (I)NPO's and private foundation will bear this increase as the legislator provided for a derogatory regime for (I)NPO's and private foundations in various sectors (healthcare, social assistance, sports, education, culture, etc.). (I)NPO's and private foundations active in these specific sectors will still be subject to the new tax rates, but only on a limited portion (37.7%) of the value of their assets, resulting in a maximum tax rate of 0.17% above 500,000 EUR.

Do you want to learn more how this will impact your association? Reach out to our tax experts.