Limitation on the deduction of interests

As from the 1st of January 2019 a company can only deduct net interest costs up to the highest of the 2 following thresholds: 3 million EUR, or, 30% of the earnings before interests, taxes, depreciations and amortizations (EBITDA). Net interest costs refer to the positive difference between paid - and received interests.

In case of Belgian group companies, the 3 million EUR threshold, the 30% EBITDA threshold and the net interest costs have to be calculated on consolidated basis.

The amount of net interest costs that exceeds the highest threshold can be carried forward to a future tax assessment year.

Interests related to loans concluded before the 17th of June 2016 will escape from the new limitation rule in case there have been no fundamental modifications of the loan agreement. Refinancing of a loan is considered as a fundamental modification.

The existing interest deduction rules that apply to interests paid to beneficiaries in offshore locations, or interests payments which are not at arm’s length will remain applicable. Also the intra-group debt/equity limitation rule of 5 Debt to 1 Equity will continue to apply to interests paid to beneficiaries.