The "notional interest deduction" in Belgium

Every Belgian company subject to the Belgian corporate income tax in principle benefits from the "notional interest deduction" (NID). Conceptually, the NID means that, for tax purposes, a company is treated as if it had borrowed its own funds (equity) at a yearly rate equal to that of the ten-year government bond. This "notional" interest is deducted from the tax base. This article discusses the general background of and reasons for the NID and examines its technical aspects. The article concludes with some practical observations.