Tax optimisation: which levers can your company use legally?

In brief

Pay less, but legally. Belgian law gives companies many levers: deductible expenses, depreciation, a reduced rate and incentive schemes. Sound tax optimisation combines several of these tools. It always rests on real, documented transactions.

Tax optimisation or abuse: where is the line?

The boundary fits in one idea. You may choose the least taxed route, provided it matches economic reality. By contrast, Article 344 of the CIR 92, the Belgian income code, targets artificial arrangements. The administration can then disregard the transaction and assess as if it never existed.

In practice, lasting tax optimisation answers yes to three questions. Does the transaction have a business purpose? Do supporting documents exist? Would an inspector grasp the logic within five minutes?

Deducting all your business expenses

An expense is deductible if it serves to earn or keep taxable income. Yet many companies forget legitimate costs.

• Rent and charges for business premises.
• Fees for your accountant, lawyer or consultant.
• Business insurance.
• Training costs linked to the activity.
• Software and digital tool subscriptions.
• Part of phone and internet costs, in line with business use.

Each deduction requires an invoice or supporting document. File these documents as soon as they arrive, not at year end. That discipline forms the basis of any tax optimisation.

Depreciating your investments

You deduct a long-lasting investment over time, through depreciation. Commonly accepted periods give a benchmark.

• IT equipment: 3 to 5 years.
• Office furniture: 5 to 10 years.
• Commercial vehicles: 5 years.
• Buildings: 20 to 33 years.

A laptop costing 1,800 euros, depreciated over three years, thus creates an expense of 600 euros a year. Since 2020, declining-balance depreciation no longer exists for new assets. The straight-line method therefore remains the rule. Good tax optimisation aligns these periods with actual use.

Setting up provisions

A provision anticipates a probable cost: a pending dispute, a doubtful debt or a warranty given to a customer. It becomes deductible if it covers a precise, individualised and justified risk at year end. A flat "just in case" provision does not qualify.

The 20% reduced rate

A small company pays 20% on its first 100,000 euros of profit, instead of 25%. The saving reaches up to 5,000 euros a year. The key condition concerns pay. At least one director must receive at least 45,000 euros, or an amount equal to taxable profit if that figure is lower. Any SME tax optimisation starts with this check before year end. Our guide to the ISOC return covers the other conditions.

Salary or dividends: finding the balance

A director can take income in two ways.

• Salary remains deductible for the company, but it faces progressive personal taxation and social contributions.
• A dividend comes out of profit that has already borne corporate taxation. It carries a 30% withholding, sometimes reduced under conditions.

The optimum depends on your situation: private needs, other income and company plans. Many directors combine a salary sufficient for the reduced rate with dividends for the rest. Our article on dividend taxation describes the reduced schemes. This trade-off lies at the heart of successful tax optimisation. A figures-based simulation with your accountant remains essential.

The company car

The benefit in kind depends on the list price and a coefficient linked to CO2 emissions. For the company, deductibility depends on the engine type and the order date. Zero-emission vehicles receive the most favourable treatment. Before any order, have the total cost worked out, including the driver's benefit in kind.

Incentive schemes

Several schemes reward investment and innovation.

• The innovation income deduction exempts 85% of certain income from patents and protected software.
• The investment deduction targets certain assets, with rates that change regularly.
• The risk capital deduction rewards stronger equity.
• The liquidation reserve sets profits aside in exchange for a separate 10% levy.
• The start-up investment scheme mainly helps your private investors.

These schemes make tax optimisation a structural approach rather than a one-off move.

Capital gains: spreading the taxation

Selling a building or a machine at a gain? Under conditions, you can spread the taxation if you reinvest the sale price within the legal period. The charge then follows the depreciation of the new asset. Build that reinvestment into your investment plan.

Mistakes that undermine tax optimisation

• Passing off private spending as business expenses.
• Creating a structure without real economic substance.
• Forgetting the salary condition for the reduced rate.
• Neglecting advance payments and suffering a surcharge.
• Deciding without a figures-based simulation or qualified advice.

In short

Effective tax optimisation uses simple tools: full expenses, depreciation, the reduced rate, a balanced salary and incentive schemes. Each choice must reflect economic reality and leave a written trail. Check the current rules on the FPS Finance website. Next, explore the benefits available to SMEs. Juristelo then helps you simulate the effect of these choices in your financial plan.