The revenues from withholding tax increased by 32% in Belgium, reaching 6.6 billion euros over the first eleven months of 2024. This significant jump reflects tax adjustments and targeted policies on interest income and dividends.
This increase fuels debates on tax fairness and the budgetary strategies of the federal government. The proposed adjustments could disrupt the tax landscape for savers in the future.
An impressive increase in revenue in 2024
According to the Federal Public Service Finance, revenue from withholding tax, a tax applied to interest and dividend income, jumped by 1.6 billion euros compared to last year, to reach 6.6 billion euros. This growth is attributed to the combination of higher financial income and tax reforms strengthening collection. The withholding tax is currently applied to a preferential rate of 15% on interest exceeding 1,020 euros for savings accounts, which favors small savers while taxing higher income.
However, this system is questioned by the European Commission, which considers it discriminatory towards other types of investments such as funds or shares. Faced with this observation, Belgium could be forced to modify this regime, with consequences on savings and investments. Discussions around these changes have also reignited the debate on tax fairness between different income categories in the country.
Divergent proposals on tax reform
The success of the 2024 revenues is accompanied by divergent proposals to reform the withholding tax. There N-VA and theOpen VLD presented alternatives aimed at reducing tensions around exemption thresholds and applicable rates. While the N-VA proposes an exemption extended to 2.000 euroscoupled with a progressive rate reaching 30%, the Open VLD favors a moderate approach with an exemption to 1.800 euroswhile maintaining the current rate of 15%.
These proposals come in a context where Belgian taxation is under the watchful eye of European institutions as well as that of many economic players. There European Court of Justice was referred to rule on the possible non-compliance of the Belgian regime with Union rules. At the same time, opinions from organizations such as Testachats and the Court of Auditors are expected to guide decisions. These debates reflect the complexity of finding a balance between tax fairness and incentives to save.
