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Introducing the new tax deduction in Belgium – what you need to know?

Earlier this year the Belgian government introduced a new tax relief available for merchants and small businesses that purchase a payment terminal.

Any small business and sole trader registered in Belgium can claim between 20% and 60% of the terminal purchase costs by declaring the investment on their annual tax return. The initiative once again supports the government’s objective to popularize card payments and boost adoption among small businesses.

But how exactly you can claim the tax relief? Are there any requirements? Find answers to these questions below!

Do you qualify for the tax relief?

In order to avail of the tax relief, you should operate as a sole trader or own a small business registered in Belgium.

Which businesses fall under “the small business” category?

The Belgian law says this is any business that has maximum 50 employees and its annual turnover doesn’t exceed 9 billion EUR (without VAT). If you do not meet these criteria, you are not considered a small business and can’t claim the tax relief. The second condition is that the purchase of the payment terminal should take place from 1st January 2018 to 31st December 2019.

What do you need to do to take advantage of the tax relief?

  1. Buy a payment terminal
  2. Declare the investment on your tax return
  3. Benefit from 20%-60% tax relief

Now that you are aware of the requirements, let’s take a look at two examples which will give you an idea of the actual costs that you can recover.

Example 1:

Mr. Janssen owns a chain of 10 bakeries in Brussels and Ghent. In 2018 he decided to start accepting credit and debit cards and equipped all 10 locations with payment terminals. Their total cost was 2 500 EUR without VAT (250 EUR per payment terminal).

As a small business owner, Mr. Janssen is due to claim tax relief of 500 EUR (2 500 EUR x 20%).

Example 2:

Mr. Peters runs a small family bakery in Brussels’ suburbs. His clients often asked whether they can pay by card and he decided to purchase a payment terminal. As a sole trader, he is legally due to claim 60% of the costs. He paid 250 EUR for the payment terminal which means that he can recover 150 EUR (250 EUR x 60%).

The above examples explain in a nutshell how the new tax relief works and impacts small businesses and sole traders in Belgium. For convenience the leading Belgium card scheme Bancontact has asked tax lawyers to explain the new measure.

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