The Belgian Ministry of Finance has issued a Circular (Circ. 2020/C/45 of 23 March 2020) offering an additional support measure to professional taxpayers who are suffering far-reaching economic consequences as a result of Covid-19 (“Corona crisis”). The measure applies to all Belgian professional taxpayers (both legal entities and individuals).
The Circular confirms that the Corona crisis can be classed as an exceptional circumstance allowing the tax exemption for depreciations on trade receivables.
Belgian professional taxpayers can benefit from such an exemption under Belgian law if all the following conditions are met:
The tax-deductible professional losses must be clearly defined in terms of their object and must therefore relate to one or more properly identified receivables.
The depreciations must have been booked at the closing of the accounts for the taxable period and their amount must appear in one or more separate accounts.
The taxpayer must identify and specify any debtor with solvency problems in the separate statement 204.3, attached to its tax return.
The depreciation for each receivable must be evidenced by specific circumstances that arose during the taxable period; [typical general risks are excluded].
To benefit from the exemption, the taxpayer must therefore be able to demonstrate, in accordance with the fourth condition, that specific circumstances have arisen during the taxable period.
The Circular confirms that the Corona crisis qualifies as a specific circumstance. If the Belgian taxpayer meets the other three conditions, they will be entitled to benefit from the tax exemption for depreciations on trade receivables.
The Belgian tax authorities hope this measure will mitigate the adverse effects of the Corona crisis on the liquidity and solvency of affected companies.
Olivier Querinjean, Partner, Brussels
Arnout Vaninbroukx, Senior Associate, Brussels
Lancelot Decaesstecker, Junior Associate, Brussels
