The De Croo government has finalized its program law for 2021. In it, the government explains, among other things, which tax measures will take effect from 1 January 2021.
In recent days, the De Croo government has drawn up the budget for 2021 and the program law. These two must be submitted to the European Commission after approval by Parliament. We provide an overview of the tax measures that we will feel in our portfolio from next year.
Smoking is getting more expensive
For starters, there is bad news for smokers. From 1 January 2021, they will have to pay more for a pack of cigarettes or rolling tobacco. The price of a pack of 20 cigarettes will increase from 6.8 to 7.5 euros. The price of a pack of rolling tobacco will increase by 2 euros to 11.7 euros.
“The increase in excise duties is part of the government’s proactive policy to discourage tobacco consumption,” the government said.
6 percent VAT on demolition and reconstruction throughout Belgium
The VAT rate for demolition and reconstruction works will be reduced from 21 to 6 percent throughout Belgium. Today, that rate already applies in 32 urban areas.
Anyone who wants to benefit from the reduced rate must meet a number of conditions. For example, the house must be your sole and owner-occupied home for at least five years. In addition, the habitable surface must not exceed 200 m2.
The reduced rate will apply for two years.
Higher tax benefit for childcare
Families who make use of childcare will enjoy a larger tax reduction from next year to alleviate their costs.
Today families receive a tax reduction of 45 percent, with a maximum of 11.20 euros per babysitting day and child. For a single person, the reduction is 75 percent. The tax benefit only applies to children up to the age of 12, with the exception of children with a severe disability. In that case, the tax authorities apply an age limit of 18 years.
For the income year 2020, the maximum amount will be raised from 11.20 to 13 euros. The age limit increases to 14 years. The ceiling is raised to 21 years for children with a severe disability.
The government will continue to work on the ceiling amounts in 2021. The government wants to further increase the amount for that income year to 13.70 euros and index it every year thereafter. Although from then on you will have to submit a certificate to benefit from the tax reduction.
Higher tax-free allowance for informal carers
Anyone who takes care of a dependent family member benefits from an increased tax-free allowance. That sum will be increased from 3,270 to 4,900 euros from next year.
The increase applies to those who take care of a great parent, brother or sister over 65 years of age. Furthermore, there must be a reduced self-reliance of at least nine points.
“The government is striving to better reconcile work and family life and to valorise the care of older, live-in family members,” it said.
Tax limit indexation stop
The amount that you can contribute for tax purposes when, for example, you do long-term savings, is not indexed for the income years 2020 to 2023. For long-term savings, you can therefore contribute a maximum of 2,350 euros for tax purposes.
The indexation stop also applies to these tax benefits:
- interest exemption Belgian regulated savings accounts up to 980 euros
- tax benefit premiums for legal assistance insurance up to 310 euros
- the federal housing bonus up to 3,210 euros
- exemption from withholding tax on dividends up to 800 euros
- tax benefit for employer shares up to 780 euros