Many companies in Belgium are currently busy increasing their capital, often by means of a contribution in kind, to take advantage of the so-called Notional Interest Deduction tax benefit.

Designed to replace a previous benefit, the “Coordination centre regime”, the newly introduced “notional interest deduction” is a general measure, available to all Belgian companies (and branches of foreign companies), granting a tax exemption of about 3.5 per cent of total equity.

Its practical impact has been calculated as effectively leading to a final corporate income tax burden of about 27 per cent, and potentially a zero per cent burden for certain equity funded types of entities.
To learn more about the timing, the planning opportunities and restructuring requirements, follow the link to http://www.kpmg.be, scroll down to find the “Belgian Newsletter”, double-click the link to former editions and browse to the June 2005 special edition on notional interest.