Tax reductions: plenty of possibilities

Tax reductions: plenty of possibilities

The different governments of the country offer us different tax reductions for certain expenses. The list is quite long... and the corona crisis has made it even longer.

Federal tax reductions

You will receive 1 assessment notice, but in reality you pay your taxes partly to the federal government and partly to the regional government. Both governments offer tax reductions for expenses they consider important.

Federal tax reductions include classics such as long-term savings (tax reduction for retirement savings and life insurance), for gifts, for childcare, ... What's new there?

In principle, the amount of the tax reduction is adjusted annually to the cost of living. At the end of last year, this indexation was frozen for a number of these tax reductions. The index stop was postponed by one year for pension savings because the measure was only taken towards the end of the year and savers had actually adjusted their savings plan to the new amount. This means: in 2020 you could save up to 990 € in pension savings and for that you will receive a tax reduction of 30%. You could also save more (up to 1.270 €), but then the tax reduction is only 25%. So please note: if you save 1.000 € in pension savings, you have a 25% tax reduction on that amount (= 250 €) while, if you save only 990 €, you save 30% (= 297 €). These amounts will not change in the following years.

The tax reduction for donations was increased significantly. Donations made in 2020 entitle you to a tax reduction of 60% (instead of the usual 45%). You are only entitled to such a tax reduction if the donation amounts to at least 40 €. In principle, the donation must be made in cash, but there was also a (fairly complex) relaxation for 2020: if you donated medical equipment or computers, you can benefit from a substantial tax reduction, but you must carefully check the restrictions and conditions .
The relaxed scheme and the increased rate are temporary and will no longer apply in 2021.

The tax credit for childcare expenses was increased to 13 € per day and per child in 2020 (previously 11,20 €) and from 2021 to 13,70 €. Remember that you must apply this restriction yourself. In addition, the reductions now apply to children up to 14 years old (that was 12 years old until now).
In principle, you will only receive the reduction if the childcare was actually provided. There is a deviation from this for the period of the corona crisis: if you booked and paid for childcare and could not continue because of the crisis (e.g. a holiday camp), you will still receive the tax reduction, provided you have not claimed your money back, of course.

Finally, there is the tax credit for 'corona shares': if in 2020 you acquired new shares in an SME that suffered a serious fall in sales as a result of the pandemic, you are entitled to a tax credit, subject to compliance with a series of conditions, of 20%. The investment may not exceed 100.000 € (the company may not issue more than 250.000 € of these types of new shares) and your participation in the company may not exceed 30%. This measure was also temporarily extended.

Regional tax reductions and tax credits

You will also receive tax credits from the regions. For example, they are competent for the tax reduction for the first home, but much of that tax reduction no longer remains.

The tax reduction for service cheques is also a regional matter.
In the Flemish Region, you will only receive a tax reduction of 20% for the purchase of such cheques (instead of 30% for 2019), while the maximum amount of cheques is limited to 1.520 €.
In the Brussels-Capital Region, the tax reduction has been 15% for some time (also on an amount of up to 1.520 €).
Wallonia has a different calculation method. The tax reduction is 30% but only for the first 150 service cheques. In practice, a complex calculation will result in a tax reduction of 0,90 € per cheque.

In addition to "tax reductions", regions also grant "tax credits". Tax credits are in principle refunded if the amount of taxes due is insufficient.
In the Flemish Region there was already a winwin loan where you can get a tax credit of 2.5% for the loan you grant to a company established in the Flemish Region. In 2020, the friends' share or win-win capital was added to that. The friends' share is a tax credit of 2.5%, for 5 years, if you invested in shares of a Flemish SME. The maximum amount of the investment is 75.000 €. Since the measure was only officially announced on 23 December 2020, it is unlikely that many taxpayers still made use of it in 2020, but taxes can therefore be saved for next year's tax return.

Wallonia has had a kind of win-win loan (prêt coup de pouce) since 2017. Some changes were made to this, but these will also only apply from 1 January 2021. They will therefore only have an impact in next year's tax return. Broadly speaking, the principle is the same as the Flemish win-win loan, whereby a tax credit of 4% is granted during the first 4 years. After that, the tax credit drops to 2.5%. The maximum amount that you can contribute in this way is 50.000 €, but it has been increased to 125.000 € for 2021.

In 2020, the Brussels-Capital Region followed with the so-called Proxi loan. The measure has been effective since 15 October 2020. Here, too, a tax credit is granted (of 4% for the first 3 years, then 2.5%) for loans granted to Brussels SMEs. The maximum amount is in principle 50.000 € per lender, but for 2020 and 2021 it is immediately 75.000 €.

Personal tax return

For pension savings, you have to choose the amount on which you want a tax reduction. For childcare you must determine the correct amount yourself before completing the return. You must also enter amounts yourself for regional tax reductions and tax credits.

The filing deadlines have been known for a while, but we will still give you a brief note. Paper returns must be submitted by 30 June 2021 at the latest. If you submit your tax return via MyMinfin (Tax-on-web), you must do so by 15 July 2021 at the latest. If you appeal to a mandatory, he or she has until 21 October 2021 to submit your tax return.