On November 14, 2023, reports from De Tijd and De Standaard confirmed that the Belgian government has finalized an agreement to make adjustments to investment tax credits, aligning

them with environmental considerations. Finance Minister Vincent Van Peteghem (CD&V) emphasized the government's commitment to supporting companies investing in their future to safeguard employment and foster growth.

The modifications to investment tax credits, which allow companies to deduct a portion of their investment costs from profits, irrespective of regular depreciation, aim to incentivize sustainable practices among businesses. The government plans to update the list of green investments eligible for deductions every three years, accompanied by adjustments to existing regulations.

Key changes include:

Basic Deduction Increase: The basic deduction for sole traders and small to medium-sized enterprises (SMEs) will rise from 8 to 10 percent. This applies to investments in various areas such as buildings, machinery, and transport. An additional 10 percent increase in the basic deduction will be applicable to digital investments in invoicing, customer relationship management, e-commerce, and cybersecurity.

Thematic Deduction for Green Investments: A new thematic deduction for green investments will be introduced, offering a 40 percent deduction for sole traders and SMEs and a 30 percent deduction for larger companies. Qualifying investments fall into four categories: efficient energy use and renewable energy; zero-emission transport, including electric delivery and freight vehicles; other green investments like improved water systems; and green digital investments, such as energy consumption monitoring software.

Technology Deduction: The existing deduction for research and development and patents will be rebranded as the technology deduction. Fixed percentages, rather than inflation indexing, will now determine these deductions. The one-off investment deduction for patents and environmentally friendly research and development investments will have a rate of 13.5 percent. Spread over several years, the rate for environmentally friendly research and development investments increases to 20.5 percent.

The CEO of Unizo, Danny Van Assche, expressed approval, describing the new system as a well-balanced compromise between legal certainty and innovation. The simplified regulation, set to cost an additional 100 million euros, is scheduled to take effect on January 1, 2025. Photo by European Commission - Photographer: Claudio Centonze, Wikimedia commons.