A sweeping federal budget agreement reached Friday promises significant changes to Belgium’s tax code and a range of other policy areas, from healthcare spending to automobile taxation. The bill, forged by the Arizona coalition, impacts individuals and businesses alike with reforms including the elimination of the federal housing bonus and adjustments to expatriate tax rules. Despite swift passage, the legislation already faces a constitutional challenge, signaling a potentially contentious rollout for the new measures [[1]].
A constitutional challenge to the proposed legislation has been filed by the “Ministry of Privacy” association, receiving support from Michel and Vincent Van Quickenborne (Open Vld). Niels Tas (Vooruit, majority) criticized the challenge, arguing it aims to “protect cheaters, rich fraudsters.”
The extensive bill, stemming from the Arizona coalition, includes provisions beyond data mining reforms.
Housing Bonus to Be Eliminated
The federal housing bonus will be discontinued starting with the 2026 tax year. For large companies, the investment deduction rate will increase from 30% to 40%, aligning it with the rate currently applied to smaller businesses. This change aims to standardize tax treatment across different company sizes.
The legislation also confirms an increase in the income threshold for flexi-jobs, rising from €12,000 to €18,000 beginning in 2025, with annual indexation to follow.
End of Internal Combustion Engine Sales Delayed: Hybrids to Remain Tax Deductible Longer
The tax regime for expatriate employees will also be adjusted. A gross annual salary of more than €70,000 (increased from €75,000) will now be required to qualify for the regime, allowing employers to pay up to 35% (previously 30%) of the gross annual taxable salary as a tax-exempt allowance, without a ceiling.
Hybrid Vehicles and Donations
The bill extends the deductibility period for hybrid vehicles by two years, to the end of 2027. The additional commuting allowance for distances exceeding 75 kilometers will be eliminated next year. These changes reflect a broader shift in automotive tax policy.
The legislation also confirms a reduction in the deductibility of donations (gifts) from 45% to 30% starting this year, as well as a reduction in the deductibility of alimony payments. The requirement for a first employment obligation within companies will also be removed.
Automobile Tax Reform: Timing Vehicle Registration Could Yield Savings
The timeframe for establishing tax assessments in cases of tax fraud will be reduced to seven years, from the current ten. This aims to expedite the resolution of fraud cases.
Finally, the legislation approves an optional increase in the meal voucher amount from €8 to €10 for 2026.
The bill also addresses healthcare, setting the growth standard for the healthcare budget, excluding indexation, at 2% in 2026 and 2027, 2.6% in 2028, and 3% in 2029. This represents a decrease from the current standard of 2.5%.
