Parliament Adopts Sweeping 2026 Tax Reform Bill with Retroactive Expat Incentives, Group Relief Expansion

Participation Exemption

The participation exemption will also apply to group contributions. This expansion implements the ECJ decision in Cockerill SA v Belgian State (Case C-135/24). Under Belgian domestic law, dividends received from subsidiaries are currently included in the taxable base and afterwards deducted. However, amounts received as an intra-group contribution are currently not deductible. The ECJ ruled in the above-mentioned case that this is incompatible with the Parent Subsidiary Directive 2011/96. This change will apply as from the assessment year 2026.

Investment Companies Investing in Shares

A 5% tax will be due on capital gains on the disposal of shares in investment companies that invest in shares of other companies (SICAV-RDT/DBI-BEVEK). The tax will apply for all comparable investment companies. The withholding tax on dividends received from such investment vehicle can only be credited if the receiving company has paid the required minimum wage for company directors (currently EUR 45,000). This change will apply as from the assessment year 2026.

Investment Deduction and Other Deductions

The earlier reported changes to the investment deduction apply from 1 January 2025, while the other deduction changes will apply from 1 January 2026. The deduction for energy saving expenses relating to an owner-occupied dwelling and the deduction for all interest payments for non-owner-occupied dwellings will be abolished from 2026.

The terms and the value of equivalent charges relating to the acquisition of a leasehold or building right or similar real estate rights will be deductible from the income from real estate from 1 January 2026.

Expat Regime

The reform makes the expat regime more attractive retroactively from 1 January 2025 by:

• increasing the lump-sum tax-free expense reimbursement from 30% to 35%;
• abolishing the maximum salary of EUR 90,000 based on which the benefit is calculated; and
• reducing the required minimum gross annual taxable salary from EUR 75,000 to EUR 70,000.

In addition, taxpayers who entered into employment in Belgium between 1 January 2025 and the 10th day after publication of this law in the Belgian Official Gazette and whose remuneration did not meet the threshold of EUR 75,000 as it existed before it was amended by this law, but who met all other conditions, may still submit an application for the expat regime within 3 months, starting from the tenth day after publication of this law in the Belgian Official Gazette.

Individual Income Tax Incentives

The increase in the tax credit for self-employed will apply from 1 January 2026.

Allowance for Dependent Children

The allowance for dependent children will significantly increase from EUR 1,800 to EUR 5,265 (to be indexed) from 1 January 2026.

Car Taxation

In addition to those already reported, the following measures will apply from 2026:

• fuel costs are no longer deductible, regardless of the type or acquisition date of the vehicle;
• electric charging costs remain fully deductible;
• low-emission hybrids emitting less than 50g CO₂/km qualify for a cost deduction of up to 95%, capped as from 2027 to ensure no advantage over fully electric vehicles;
• older company cars (acquired before 2018) fall under a new grandfathering regime under which 75% of the costs is deductible in 2026. This percentage will gradually decrease by 5% per year to reach 50% in 2031.

Statute of Limitations

In addition to the report changes, it must be noted that the maximum period of 7 years also applies to VAT. Furthermore, it is indicated that complex returns include DAC6 and DAC7 information from platform operators, provided that the amount involved for a specific taxpayer is at least EUR 25,000.

The measures apply retroactively from 1 January 2023.

Reporting Obligations

The first notification by the reporting agents of the balances of the securities accounts and crypto asset accounts will relate to the balances of these accounts as of 31 December 2025 and 30 June 2026, respectively.

The adopted text of Bill DOC 56 0963 is available here (in Dutch and French), and the announcement of the adoption is available here (in Dutch and French).

The parliament adopted the bill on 12 December 2025.

Report from Dr René Offermanns, Principal Associate, IBFD. Follow our reporting on this via our daily Tax News Service (subscribers only).