Covid-19 support for companies: two-year extension of 25% investment deduction for small companies!

  • By Leyton Benelux
    • Feb 04, 2021
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In our previous newsletter of October 8, 2020, we informed you on the so-called “Corona III[1] Act” which introduced a temporarily increased investment deduction of 25% for investments made by “small” companies between March 12, 2020 and December 31, 2020.

Only certain investments are eligible for deduction, namely: 

  • Investments in tangible fixed assets (e.g.: buildings, equipment, machinery, lease, …) or in intangible fixed assets (e.g.: R&D expenses, patents, …);
  • Newly acquired assets or assets produced by the company itself;
  • Assets are used in Belgium for the professional activity;
  • Amortization over at least 3 years.

The reviving of private investments was one of the current government’s objectives as laid out in the coalition agreement of September 30, 2020. The government has acted upon this objective by putting a bill to parliament[2] that provides for an extension of the temporarily increased investment deduction of 25% for two years, until December 31, 2022.

Furthermore, the carry-forward of the unused deduction to two (instead of one) subsequent accounting periods, a measure already in place for investments made in 2019, would extended as well to include investments made in 2020 and 2021. Parliament adopted this bill on December 11, 2020[3].

We are satisfied with this new support measure that aims to provide tax relief to companies that invest in difficult times. The extension of the increased investment deduction will have a positive impact for companies that are struggling due to the current health crises.  However, we do regret that the government limited the 2-year carryforward of unused deduction to investments made in 2020 and 2021, thus excluding investments made in 2022 even though such investments are still eligible for the increased rate.

[1] Act of 15 July 2020 CORONA III (Belgian Official Gazette du 23.07.2020, p. 55187).

[2] Draft Program Act « confection du budget 2021 », Belgian Chamber of Representatives, DOC 55 1662/001 of November 25, 2020, p. 5.

[3] Draft Program Act, Belgian Chamber of Representatives, DOC 55 1662/010 of December 11, 2020.

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