Investment deduction in corona times: from 8% to 25% under certain conditions

The governments of our country use several techniques in order to boost the economy in the post-corona era. One of these is a tax reduction for who continues to invest.

From 20% via 8% to 25%

When you invest in depreciable fixed assets you can, on top of the depreciation, deduct a certain percentage from your taxable result. This is the so-called investment deduction. By doing so, they want to stimulate self-employed professionals and small businesses to make investments.
The investment deduction was already used to encourage investments in the past. In 2018 and 2019 the deduction rate was 20%. But there are also a number of special rates in order to encourage investments in specific fixed assets. For example, investments in security, eco-friendly investments, patents, etc.

For investments in 2020, the general investment deduction was decreased to the 'old' 8% rate. But then came corona.
As an economic boost measure, the government decided that for investments which you make between 12 March and 31 December 2020, the applicable rate will be 25%, and not 8%.
If you e.g. invest 100.000 euro in depreciable assets, you can, on top of the depreciation, deduct 25.000 euro from your taxable income in your tax return.

Conditions

The investment deduction is by definition only possible for investments in a) tangible and intangible fixed assets which b) are newly acquired or created during the year or accounting year and c) are used in Belgium to pursue a professional activity.
The deduction is available for self-employed persons, liberal professions and 'small' companies.

The concept of small company is explained in the Code of Companies and Associations (the “CCA”). These are companies with legal personality which on the balance sheet date of their last closed accounting year do not exceed one of the following criteria:

Annual average of employees: 50;

Annual turnover, ex. VAT: 9.000.000 euro;

Total balance sheet: 4.500.000 euro.

You will only shift from small to big if the exceeding occurs for two consecutive accounting years.
These figures should be considered on a consolidated basis.

Transferable investment deduction for 2019

In case you do not have sufficient profit in the year when the investment is made, you can transfer the deductible amount of the investment deduction. Self-employed persons and liberal professions can transfer the amounts unlimited in time. Companies can only transfer once.
Practical example: if you make an investment in 2020 and you have insufficient taxable income, you can transfer the investment deduction to the taxable income of 2021. Afterwards the balance is lost for companies.

As an exception, the investment deduction for investments in 2019 will be transferable twice. When you had insufficient profit in 2019, then 2020 was the year in which you could still apply the investment deduction according to the general rule. But since there is a big chance that you will have again insufficient profit in 2020, you can transfer the balance of the unused 2019 investment deduction one more time, to 2021.
This is a one-time situation, and only for the investment deduction of 2019. After 2021, the balance of the 2019 investment deduction is definitively lost.