With the end of the year in sight, it is useful to consider a number of measures that could have an impact on the tax position of companies.
Below we list a number of tax points of attention.
For tax years 2021 and 2022 (financial years 2020 and 2021), the possibility has been foreseen to transfer certain old tax-free reserves to the taxed reserves and to have them taxed at a favourable rate of 15% or 10% if certain investments were made during the financial year.
Tax year 2022 is therefore the last time that this favourable regime can be used. However keep in mind that this transfer to the taxable reserves leads to effective tax. The taxable base cannot be offset with any deductions, nor can any imputations be done.
In order to absorb the impact of the Covid-19 pandemic on the equity of companies and to restore their solvency, the reconstruction reserve was introduced as one of the measures to give companies more financial breathing space.
The reconstruction reserve offers companies the possibility, under certain conditions, to create an exempt reserve in tax years 2022, 2023 and/or 2024 up to the amount of the accounting loss they incurred in the financial year ending in 2020 (in some cases, for the financial year ending in 2021) with an absolute maximum of 20 million euros. For each taxable period, however, the creation is limited to the taxable reserved profit before creation of the construction reserve.
Tax year 2022 is the first year in which the reconstruction reserve can be built up. Maintaining the exemption requires that no distributions are made from equity and that the employment level is maintained at the same level.