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In brief

A recent Law has shortened the initial period to which losses incurred by Belgian taxpayers in the course of the COVID-19 crisis can be carried back under the general one-off loss carry-back regime from December 31, 2020 to July 31, 2020 Read about it in our newsflash.


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Time limitation to loss carry-back regime

In our Tax Alert of July 2, 2020 we discussed the Law of June 23, 2020 introducing a general one-off loss carry-back regime for losses incurred by Belgian taxpayers in the course of the COVID-19 crisis.

A new Law was adopted recently (i.e. the Law of July 15, 2020 published on July 23, 2020) which, amongst others, made a small but important change to the carry-back regime, more specifically with respect to the determination of year to which the losses can be carried back, i.e. the pre-COVID-19 year.

Initially, the Belgian legislator intended to allow a carry-back to the financial year that ends between March 13, 2019 and March 12, 2020. Such period would, however, not allow companies that close their financial year on March 31, 2020 or at any other date in the beginning of the COVID-19 year crisis in Europe, and that logically only suffer the most significant COVID-19 losses after that period, to sufficiently offset those losses against their prior financial year profit. Hence, the Law of June 23, 2020 determined the pre-COVID-19 year as the financial year that ends in the period from March 13, 2019 to December 31, 2020. This should have allowed many taxpayers to have the choice as to which year they would consider the pre-COVID-19 year. However, the Belgian Minister of Finance considered this extension as technically infeasible. Moreover, some members of Parliament considered that the extension created an unreasonable distinction between corporate taxpayers and individuals. Hence, the Law of July 15, 2020 has now shortened the aforementioned period to July 31, 2020.

For more information, please contact your regular Baker McKenzie Tax contact.

Author

Marie Krug is an Associate in Baker McKenzie's Brussels office.

Author

Julie Permeke is a senior associate in the Tax Practice Group of the Brussels office. She joined Baker McKenzie in 2016 after several years of experience as a tax lawyer in other Brussels-based law firms. Julie also works as a voluntary researcher in the tax department of the Free University of Brussels (VUB).

Author

Géry Bombeke is a partner in the Tax Practice Group of the Brussels office. He joined Baker McKenzie in 2004, after several years of experience in a Big 4 and related law firm. He became partner in 2010.