Belgium – Federal Government Agreement 2025-2029: Non-profit sector

The "Arizona" government agreement of January 31, 2025, includes a series of measures and objectives that may impact non-profit organisations.

Below is an overview of the key proposals that could affect or benefit the operations of associations in the near future.

Review of the Legal Entities’ tax framework

The tax framework of non-profits and associations will be reviewed in light of the new Companies and Associations Code. 

The revision aims to assess the effectiveness of the profit distribution prohibition and tackle the increasing misuse of non-profits for illegitimate business activities and personal gain, often without paying taxes. 

One of the key objectives of the revision is to ensure the financial stability of non-profit organisations, with a focus on simplification, legal certainty, and clarity. All taxes that may impact the non-profit sector, e.g., legal entity income tax and the recently updated annual wealth tax, will be in scope.

Evaluation of the Current Companies and Associations Code

The current Companies and Associations Code will be evaluated in consultation with the sector, with a focus on non-profit organisations. It remains unclear what the specific focus areas of the evaluation will be, but it is evident that the legal landscape for non-profits will be in the spotlight.

Legal Entity Income Tax Period Adjustments

The taxable period for legal entity income tax may deviate from the calendar year, allowing greater flexibility and alignment with the accounting year. However, this will not have an impact on the VAT reporting for non-profit associations filing returns on a quarterly basis. Those will still be based on calendar year quarters.

Mandatory Filing of Financial Statements 

Non-profit organisations will no longer need to file financial statements with the court registry. Instead they will need to file financial statements with the National Bank of Belgium’s central balance sheet office. Small non-profits will benefit from a waiver of filing fees.

Monitoring of suspicious non-profit organisations 

Authorities are stepping up efforts to monitor suspicious non-profit organisations along with government funding for these entities.

Administrative simplification

The government is streamlining administrative processes, continuing its digitalisation efforts to allow electronic submission of statute amendments and annual financial statements. The Just-on-Web portal (Belgian Official Gazette) will be expanded to enable digital filing and access to private amendments and financial statements for associations and businesses.

The tax deduction for donations is set to decrease from 45% to 30%

Under the current personal income tax provisions, donations qualify for a tax reduction of 45% of the donated amount, subject to specific conditions. The proposed changes seek to reduce this tax benefit to 30%. This will have a noticeable impact on the non-profit sector. Currently, the changes only seem to relate to the personal income tax provisions.