Belgium Approves Extensive Tax Reforms to Reduce Mounting National Debt

Government Confirms New Tax Package

The Belgian government has formally approved a series of new tax measures, with Finance Minister Jan Jambon confirming the decision on Wednesday, December 24, 2025. These measures are integral to a larger budget agreement designed to address Belgium's significant national debt and achieve specific budgetary targets. The nation currently faces a federal debt of €551 billion, representing 106.8% of its gross domestic product (GDP), placing it as the fourth highest in the European Union. The government aims to realize savings of €9.2 billion over its mandated period through these reforms.

Key Adjustments to VAT and Indirect Taxes

A significant component of the new tax regime involves adjustments to Value Added Tax (VAT) and various indirect taxes, set to impact several sectors:

• An increase in VAT from 6% to 12% will apply to sports, cultural, and leisure activities, as well as overnight stays in hotels and campsites, and takeaway meals and drinks, effective March 2026.
• Conversely, the VAT on non-alcoholic beverages in the hospitality sector will see a reduction from 12% to 6%.
• Excise duties on natural gas and heating oil will gradually increase, while those on electricity will be reduced.
• New excise duties will be introduced on e-cigarettes, alongside an increase in duties on tobacco.
• A €2 tax will be levied on small parcels imported from outside the EU.
• The air passenger tax is slated to rise from €5 to €10 in 2027, with further increments planned for 2028 and 2029.

Reforms in Financial and Corporate Taxation

The approved package also introduces substantial changes for financial institutions and corporations:

• The banking tax and the securities account tax will be raised, with the latter doubling from 0.15% to 0.3%.
• Insurance taxes are set to increase from 9.25% to 9.6%, effective April 1.
• A new 'solidarity contribution', effectively a capital gains tax, of 10% will be introduced on future realized capital gains from financial assets, including crypto assets. The first €10,000 of such gains will be exempt, and losses can be deducted within the same fiscal year.
• For liquidation reserves formed after December 31, 2025, the withholding tax rate will increase from 6.5% to 9.8%, resulting in an effective total taxation rate of 18%.
• A specific and competitive tax regime for 'carried interest' will be established, with a maximum rate of 30% on movable income.
• The minimum salary condition for Small and Medium-sized Enterprises (SMEs) to qualify for the reduced corporate income tax rate (20% on the first €100,000 of income) will be increased from €45,000 to €50,000 and will be indexed annually.

Impact on Personal Income and Employment

Measures affecting individuals and employment aim to both generate revenue and improve purchasing power:

• The expat regime will be enhanced, increasing the tax-free allowance from 30% to 35%, abolishing the €90,000 ceiling, and lowering the minimum gross salary requirement to €70,000 from €75,000.
• The flat-rate deduction for copyright-related expenses will be abolished for most, except for those with specific arts work certificates.
• Tax relief for second homes will be abolished starting from 2024.
• The government plans to increase net salaries through tax reforms starting in 2026, aiming to reduce the tax burden on employees by approximately €500 by 2027.
• The maximum employer contribution for meal vouchers will increase by €2, while other vouchers like eco-cheques and culture vouchers will be phased out.
• The minimum wage is set to rise by €50 from April 1.

Prime Minister Bart De Wever described the negotiations leading to the budget agreement as 'a tough exercise,' emphasizing the coalition's commitment to making necessary decisions to stabilize public finances. While many measures are slated for implementation in 2026, some will take effect in 2027 and 2029, with the initial program law expected to be published before July 1, 2025.